How B2B Sales Cycles Are Changing
As Dylan wrote, “The times, they are a-changing,” and B2B sales cycles are no exception. In particular, social media and the dragging economy have caused major ripples in the business world. But regardless of the factors at play, it stands to reason that learning more about what’s happening to sales cycles can help sales and marketing departments figure out how to shorten them.
First, let’s define “sales cycle.” The definition listed by the Business Dictionary is “The course of time between the initial contact being made with a customer, the identification of services or goods to be procured, the acceptance of the intended purchase, and the transaction that completes the sale.” As you might expect, shorter sales cycles generally lead to greater profits, since more deals are being closed faster. Conversely, long sales cycles tend to bring with them reduced cash flow and less-than-stellar revenue performance.
There are conflicting reports on how the recession has affected B2B sales cycles. Tight budgets, fear of making bad decisions and increased available options have delayed buyers’ plans and contributed to the length of sales cycles in many circles. However, for the few projects that are ready to go, sales have been closing at lightning speed.
Additionally, social media and user-generated content have really changed the sales process and cycle length. Prospects can find information, ask questions online and learn more about a brand than ever – sometimes before even seeing it, knowing where to buy it or communicating with the organization that offers it. By the time many leads make contact, they are already close to making a decision and require less marketing resources to clinch the sale.
For prospects who are undecided, though, early-stage lead nurturing is more crucial than ever. If marketers don’t spend enough time working with the lead in the early stages of the sales cycle, it can end up dragging on or petering out. A sales professional who ensures that he or she has an understanding with the customer early on is much more likely to close the sale without having to retread part – or all – of the process.
Most organizations have a large number of sales leads that are of little or no value. Some say the typical salesperson spends an average of 150% of their time on deals that are eventually lost. Opportunities that fall through after long periods of time actually cost businesses money, due to time and effort expended on what eventually just becomes a dead lead. The true cost of these long “fail” cycles is misallocated resources, inaccurate sales forecasts and missed opportunities for sales to move on more promising leads. Successful lead management can help give direction on where these commodities could be better spent.
Carefully identifying your target audience can also help immensely. Once your brand has developed a compelling message, it should be aimed at those people or companies that are most likely to need the product or service offered. This may sound obvious, but far too many organizations are selling themselves short by trying to market to everyone. Clear, targeted messaging that lets the right prospects know exactly what your brand is, how it will benefit them and why they should choose it over the competition will generate demand and produces more sales.
Another way to shorten the sales cycle is to create compelling offers that provide incentives for prospects to take immediate action. Such valuable offers first attract prospects’ attention, then compel them to buy your product or service before time runs out. A special offer can not only shorten the sales cycle – it can energize a company’s entire system of revenue generation.
There are several factors that can contribute unpredictability to sales cycle lengths. However, armed with some knowledge about what may be affecting them, businesses and marketing teams can increase the quality of their leads and concentrate on prospects that are most likely to result in sales.