This article explores the concept of sales cycle length and its importance in sales forecasting and revenue growth. It discusses different methods of tracking the sales cycle and offers tactics to decrease its length, ultimately increasing revenue. Readers will gain insights into the various approaches to measuring sales cycle length and strategies to optimize their sales process.

Key Takeaways:

• A sales cycle refers to the step-by-step process of closing a deal, and its length can vary across industries and companies.
• Different methods of tracking the sales cycle include starting from lead creation date, opportunity creation date, or conversion start date.
• Shortening the sales cycle can lead to increased revenue, and strategies such as better lead qualification, lead nurturing, and disqualifying unlikely prospects can help achieve this.
• Effective communication with decision-makers and aligning with their objectives can also expedite the sales process.
• Analyzing sales cycle data provides insights into inefficiencies and opportunities for improvement.

What is a sales cycle?

There are many variations of the sales cycle definition, but not a single one of them pertains to all industries. That’s mainly because every company has different steps and actions in their sales cycle that determine how they define it.

In general, a sales cycle refers to a step-by-step process of closing a deal. It can be described as a series of events that take place from the initial contact with a prospect up to the moment when the sale is closed. Others define sales cycle as the time it takes to convert a qualified lead to a won deal.

The average length of a sales cycle is a hugely important sales metric and it is closely related to the Sales Velocity Formula. It can help you make your sales forecasting more predictable. By looking at a number of leads you have in the pipeline, you can confidently project weekly, monthly and even quarterly sales figures. High-growth companies often set themselves a KPI to reduce the Average Sales Cycle Length to accelerate sales and consequently their revenue growth.

Lead creation date

One of the most obvious ways to track the sales cycle is to start from the moment a lead is created in your CRM, and end when the sale is closed. It’s a well-liked method of many sales operations managers because it gives them a clear and structured view of a customer’s buying journey – from the first touchpoint to the final ‘yes’. Pinpointing areas in a sales cycle where leads slow down and even drop off or identifying the stages where the process speeds up, allows sales teams to learn, iterate and shorten the sales cycle to achieve sales faster.

However, this method is not without its shortcomings. The biggest issue is that a lead can be created at any time, but it can stay dormant in your CRM for weeks, months or even years. It usually happens with companies that want potential customers to be well-educated about their solution before a sales rep gets in touch. They can buy leads and use content marketing or other lead nurturing techniques to prep them for the sale. Once leads start engaging with the company (download an ebook, sign up for a webinar, request a trial, etc.), duplicate leads may start popping up in the CRM at every new touchpoint. It greatly complicates how the sales cycle length is measured. With several leads attached to one opportunity, how can you decide where the “real start” of the sales cycle is?

To make sure the analysis is not skewed and the sales cycle length is accurate, sales operations managers need to keep a close eye on the CRM, constantly checking in with their sales reps to ensure there are no duplicate leads and to clean the CRM when needed.

Opportunity creation date

To avoid having to deal with inaccurate data and unreliable analysis, some companies choose to consider the beginning of a sales cycle as the moment when a lead is converted into an opportunity.

The trouble with this method is that it completely ignores the entire top of the funnel. For established companies that have strong marketing and sales processes in place, it doesn’t make much of a difference. However, for businesses that are still trying to figure out and constantly iterate their sales cycle to create the most efficient buying journey, the touch points that bring a lead to when it is converted into an opportunity can be truly illuminating.

Another struggle that comes with this method is the need for strict rules defining when a lead should be converted into an opportunity. It’s not uncommon for leads to be converted into sales opportunities right before the sale is closed, which throws off the data and makes it almost impossible to make accurate sales forecasts.  

Conversion start date

The last method is probably the most laborious. It allows companies to measure the sales cycle length from the moment when an opportunity is converted into a deal. This requires sales reps to manually update the CRM for every email and call leading up to a sale, even those leads that get qualified out. It often takes several emails and calls before a sales rep decides that a lead is an opportunity, and the data for those leads that are lost is largely irrelevant. However, for the deals that get closed, the data recorded in the CRM is the most accurate way to gauge the actual sales cycle length.  

How to decrease your sales cycle length?

Shortening the length of your sales cycle is one of the most straightforward tactics you can use to increase your revenue. The faster leads come in and out of your pipeline, the more sales you can make. Driven by the desire to find the most effective method for shortening the sales cycle, sales teams have discovered a number of methods, ranging from better lead qualification, to lead nurturing, to faster follow-ups.

Here are a few ideas that can get the ball rolling:

• Execute lead qualification better. Many businesses have opted for automated lead scoring and grading to ensure that only top-quality leads are passed on to sales reps. If sales and marketing can work together to define what a qualified lead means to their business and set a threshold score, sales reps can really focus on closing instead of wasting their time on leads who aren’t good matches for the product.
• Implement lead nurturing. CRMs enable marketers to craft “drip campaigns” that automate lead nurturing and ensure every prospect is being engaged with content that’s timely and relevant to their place in the sales cycle. It’s a surefire way to help prospects complete their research and reach the sales-ready stage much faster. When sales reps take over, the leads are much easier to work. 

• Disqualify prospects that are unlikely to close. The more your sales team is obsessed with the health of your pipeline, the easier it will be to shorten the sales cycle. The biggest favor you can do for your business is to closely examine all won, lost and “no decision” opportunities to learn to recognize their specific characteristics as early in the deal as possible. Once you master the art of telling apart a winner from a time-waster, your sales team will be able to breeze through dead leads and focus on closing winners instead, thereby decreasing the length of your sales cycle.
  

• Communicate with all decision-makers. What was once the responsibility of a manager or the business owner, is now a decision reached through a consensus process. Today buying decisions involve all stakeholders – from departmental heads to implementers, to users. For sales reps, it means their ability to communicate the right benefits to the right people in the right language is a crucial factor of success. A smart sales rep will keep the process upbeat and moving forward by providing everything a prospect might need to make the decision – from relevant data to case studies. Ensuring your prospects are spending their time and energy on deliberating the decision, not gathering data that you can provide, is an effective tactic to close deals faster. 

• Align with their objectives, not your solutions. The popular belief is that selling solutions to problems is the best way to make people commit. But there is another school of thought that claims prospects are much more inclined to buy if the product is aligned with their key objectives. Essentially, it’s a matter of framing the pitch to fuel the prospect’s desire to achieve their goals, instead of addressing their pain points. The risk of focusing on a problem is that the prospect might not be aware of it or does not think solving that problem is a priority. Aligning with their objectives and enabling them to achieve the objectives faster, easier or using fewer resources, will require less vigor and time on your side to close the deal.

Conclusion

Shortening your sales cycle allows you to bring in more revenue, hit your goals and even spot the inefficiencies of your sales process that are stalling your growth. The best thing about this metric is that it is completely in your control. If you decide to overhaul your sales process to enable your sales reps to close deals faster, you can dig deeper and analyze the data by sales stage, for individual reps, and by Won-Lost deals. This will give you a complete, 360 view of your sales cycle.

To learn more about how Teamgate can help shorten your sales cycle length, request a demo today, or get started with a 14-day free trial.  

FAQs: Sales Cycle Length

Q: What is sales cycle length?

A: Sales cycle length refers to the time it takes for a lead to progress through the sales process and convert it into a closed deal. It measures the duration from initial contact with a prospect to the final sale.

 

Q: Why is sales cycle length important?

A: Sales cycle length is important because it affects sales forecasting and revenue growth. By understanding the average length of your sales cycle, you can make more accurate sales projections and identify opportunities to shorten the cycle, leading to increased revenue.

 

Q: How can I track the length of my sales cycle?

A: There are different methods to track the length of your sales cycle. You can start from the lead creation date, the opportunity creation date, or the conversion start date. Each method has its own considerations and advantages, depending on your specific sales process.

 

Q: What are some strategies to decrease the length of the sales cycle?

A: There are several strategies you can employ to shorten your sales cycle. Better lead qualification, implementing lead nurturing campaigns, and disqualifying prospects that are unlikely to close can help streamline the process. Additionally, effective communication with decision-makers and alignment with their objectives can accelerate the sales cycle.

 

Q: How can analyzing sales cycle data help improve my sales process?

A: Analyzing sales cycle data provides valuable insights into inefficiencies and bottlenecks in your sales process. By examining the data by sales stage, individual reps, and won-lost deals, you can identify areas for improvement, refine your strategies, and optimize the sales cycle for better results.

 

Q: Can shortening the sales cycle lead to increased revenue?

A: Yes, shortening the sales cycle can lead to increased revenue. When the sales cycle is shorter, more deals can be closed in a given time period, resulting in higher revenue. It allows you to capitalize on opportunities faster and achieve sales goals more efficiently.