Pipelines and ForecastsSales Leaders Blog

The Sales Revenue Half Marathon

Know Where to Start Measuring Your Sales Cycle

When we ask CEO’s and CSO’s how long their average sales cycle is they often describe it in terms of the time between the initial discussions with a prospect and when a sale is actually closed or lost.  They often see it as a short distance race from need identification to close.  In reality, the actual sales cycle begins when a prospect has an unfulfilled need and begins exploring options – both internally and externally – that can satisfy this need. This part of the sales cycle is hidden from most laggard companies because their processes lack the visibility into real prospect behaviors.

Best in class companies have invested in tools and processes that help them understand the time frames associated with the hidden portion of the selling cycle and ways to determine when a lead becomes qualified.

A good first step is to stop measuring your sale cycle from the point initial sales engagement.  It’s far more important to understand the timeline between when a lead is identified and when the lead becomes qualified.  In other words, if it takes 12 weeks on average for your marketing team to identify a lead and determine that the lead is qualified, and 12 weeks for your sale team to engage, propose, and close a deal your real sales cycle is 24 weeks long.  Misunderstanding the real length of your sales cycle is a problem that can cause very inaccurate forecasting in the later stages of a sales year.

When you enter a new plan year you should have a good feel for how the first quarter or two will turn out based on your historical closing percentages. Many companies typically struggle on quarters three and four because qualified prospects don’t materialize as fast as they anticipated.  As pipelines shrink many sales leaders will suggest that the last quarter will be a big one, the reality is that inadequate pipelines cause erratic sales results.

Sales cycles are much like an airport runway; the larger and highly complex sales take a lot more runway than a small simple sale.  Savvy CEO’s know that selling is more like a marathon than a sprint and understand that sales teams need conditioning and a steady stream of qualified prospects to keep the sale pipeline brimming with new clients.  Short runways are where most of the crashes occur!

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