Tweet

Reengineer Your Sales Cycle: Reduce your time-to-sale and increase your lead-to-close rate

Written by: Bryan Feller

Article Overview: The sales cycle is a system of activities that starts when a new lead is generated and ends when a sale is booked. Like any business process, the sales cycle can be streamlined to reduce inefficiencies, decrease time between lead and order, and increase the lead-to-sale conversion rate. We've provided a way to streamline your sales cycle.

Reengineer Your Sales Cycle: Reduce your time-to-sale and increase your lead-to-close rate

The sales cycle is a system of activities that starts when a new lead is generated and ends when a sale is booked. The key players in this system are the customer (or prospective customer), the marketing department, and the sales department. The sales cycle should not be confused with the buyer’s journey; the process the buyer goes through when he or she makes a purchase of a product similar to yours. For the sake of this article, we will focus on the sales cycle: the buying process from the viewpoint of the selling company. Like any business process, the sales cycle can be streamlined to reduce inefficiencies, decrease time between lead and order, and increase the lead-to-sale conversion rate. Here’s how:

Key Assumptions

Before we improve a company’s sales cycle, there are some key assumptions that must be understood:

1. The sales cycle must start with a clear understanding of the buyer's journey, which refers to
how decisions are made about the type of products you sell.
2. The sales cycle is a team effort between marketing and sales. The more coordination there is
between these two groups, the higher the potential of process improvement.
3. You cannot manage something you don’t measure. The cycle must be modeled, measured and managed.

Keys to Improving Your Sales Cycle

Once you have the right assumptions, there is a wide variety of tools and tactics you can use to improve practically any sales cycle:

1. Use your current process as the baseline. Customers are use to working with you in a certain
way. Before coming up with a new process, map out the current process and understand it from
the customer’s eyes. What are the steps involved in turning a lead into a closed deal? How long
does it take? How many prospects "leak" from the sales funnel at each step? What is your close
percentage for new leads? Use your current process and associated metrics as your baseline upon
which to improve.
2. Remove "self service" buyers from the sales funnel if possible. If you have markets or customer
segments that can serve themselves, set them up to do so. In terms of operations and business
effectiveness, the more you can push customers to low-cost buying channels, the better. This
frees up your sales force for value-added (and most likely higher sales) interactions with
other markets or customers. Before you start migrating your customers to cheaper channels, make
sure that this move makes sense. Consider the added value that your sales force brings to the
segment in question and assess the benefits of self-service versus retaining a more personal
touch. If the latter is making a real difference, don’t make the change.
3. Identify milestones. There are events or milestones in the sales process that can be measured.
Examples include activities like making a presentation, submitting a quote, or sending a
contract. To use these milestones as the basis for pipeline forecasting and sales activity
management, look at your historical performance and come up with tentative forecasts for
individual milestones. For example, you may decide, based on historical results that 50% of
prospects who have had demos, 70% who have received proposals, and 90% who are sent contracts,
will close. Use these numbers to forecast and assess sales results. Keep in mind that these
percentages are theoretical when starting out. Validate and adjust by collecting real data
going forward. Results will vary from salesperson to salesperson. At some point, you may want
to get more detailed in your forecasting by tracking individuals rather than the department as
a whole.
4. Remove friction from the client side. The longer prospects stay in the sales funnel, the higher
the possibility they will not buy. Brainstorm how to eliminate barriers that keep customers
from moving through the process. Start with the milestones you identified and look at ways to
improve them. For example, what will it take to reduce your team’s response time to customers?
How can demos be improved to increase the percentage of customers who move to the next step?
5. Standardize execution on the sales side. In many organizations, sales people have great
latitude when it comes to how, when, and what activities they engage in with clients. Too much
flexibility can cost you. It is important to implement standard operating procedures that
ensure prospects are handled consistently while still providing latitude to your sales
personnel. Create tools that help your reps address key objections at each stage of the cycle.
6. Fix leaks in the funnel. Some people will never buy, and there is nothing you can do about it.
However, in many cases, lack of follow-up is responsible for funnel leakage. Mobilize your
marketing team to plug these leaks by implementing contact programs with special offers aimed
at reactivating prospects. Highly personalized direct mail, email, and coupons are examples of
tactics that work to reawaken dormant leads. As with any customer-facing campaign, these
efforts must be well coordinated with the sales team to ensure that prospects are getting
consistent messages from marketing and sales. Mixed messages are confusing and make your
company look incompetent.
7. Remove stalled buyers. When buyers stall in the process, it tends to confuse the efforts of
sales people. The stalled buyers create higher numbers of people in the CRM system, which
causes the sales people to lose their ability to monitor and prioritize them. If your best
sales people are not extremely organized (and most aren’t), this dynamic can have a snowball
effect. They stop calling the high-priority buyers, spending most of their time on low-
potential contacts. You need to identify simple criteria that sales people can use to re-
categorize these buyers. Take them out of the sales follow-up funnel and put them into the
marketing follow-up funnel. Marketing can send them personalized letters, emails and sales
literature with the intention of reactivating these buyers into the sales funnel.
8. Use the carrot AND the stick. Buyers need to know what makes your product or service compelling
enough to choose over competitors. They need an offer that makes them want to respond and move
to the next level in the process (the carrot). They also need to know the bad things that will
happen when they don’t chose your company or take too long to choose (the stick). At each stage
of the cycle, marketing and sales need to communicate with buyers in a way that gently goads
them to move forward. In most cases it is client pain, or fear, that is most effective at
achieving this. Without some kind of pain, prospects are rarely compelled to buy.
9. Create accountability. Sales and marketing managers must know how their people are performing
in order to improve the process. Make sure your sales management can get detailed, relevant r
reports that cover key milestones. Timely reporting allows the manager to manage exceptions and
take action to keep prospects moving through the funnel.

Making it Happen

What makes sales cycle improvement so difficult is the cultural divide between marketing and sales. The creative personalities of marketers tend to be in direct conflict with the results-driven personalities selling face to face with the client. Marketers talk about "buzz", awareness, and impressions. Salespeople talk about closing deals. Marketers blame sales people for not closing leads while sales people blame marketers for generating poor quality leads that cannot be closed.

Sales cycle improvement requires close collaboration of these two groups. Without it, you will have little improvement. It takes strong leadership to bring these two groups together and set the tone for collaboration in a no-blame atmosphere. Given this prerequisite, marketing and sales need to hold regular After Action Reviews where, together, they review the sales scorecard. During these After Action Reviews, the sales and marketing team must identify root causes of performance, brainstorm solutions, and run experiments to test them.

With good leadership, planning, and follow through, implementing the recommendations in this paper will net greater improvements than you may be ready for.

Related Articles
  A Little more on applying Little's Law to Lean your Marketing!
  Research Supporting ROI Based Selling
  Improve your Marketing Cycle, Increase your Revenue
  The easy way to close more sales
  Sometimes Unintended Consequences Are A Good Thing

Article Tags: assumptions, baseline, business process, conversion rate, coordination, cycle 1, inefficiencies, journey, marketing department, metrics, new leads, process improvement, prospective customer, prospects, s sales, sake, sal, self service, team effort, viewpoint



Related Forum Posts
Re: First Facebook Ad - Experiment! - Hi GT, Thanks for the prod! As you know, this was my first ever Facebook campaign and results have been... so so! Here are the latest stats: Impressions 115,246 Clicks 44 CTR 0.038% CPC $0.75 CPM $0.29 TOTAL SPENT $33.04 Subscribers 1 Sales 1 A single sale brings in $100 so I'm ahead of the game, but won't be for much longer at this rate!! I tweaked the ad a couple of times. I also need to point the ad to a landing page. At the moment it sends people straight to the sales page. I'm going to set up a Facebook Fan page and see if that converts better. The Cost Per Click has been slowly going up. I was getting a better rate, but suddenly clickthroughs have dipped down to ZERO on Saturday, and just 1 per day thereafter. Best number of clicks in a day was 6. The ad is now in its second week. I'm letting it run for four weeks to try and see if any pattern emerges.
Online Sales and Marketing vs Traditional - Hi Evan, I am noticing that many of the posts in the Sales/Marketing section deal with online marketing, SEM and and SEO and Affiliates. I was wondering if it might be a good idea to separate that section into two; 1) Online Sales and Marketing; 2) Traditional Sales and Marketing
Re: Online Sales and Marketing vs Traditional - [quote="ltrahan":31w9r2iz]Hi Evan, I am noticing that many of the posts in the Sales/Marketing section deal with online marketing, SEM and and SEO and Affiliates. I was wondering if it might be a good idea to separate that section into two; 1) Online Sales and Marketing; 2) Traditional Sales and Marketing[/quote:31w9r2iz] I second the request...
enRoute ads - 10 days with my new salesmen - Hi Guys, As some of you may know I hired a sales person for my business. I picked him amongst 50+ interviews, so I did do my due diligence. For any of you who have had experience with outbound sales reps in your company could you please shed some light on these statistics and let me know what you think: Days Employed: 11 Calls Made: 200 Average length of call: 3 minutes Sales: 0 Closing Rate: 0 Previous closing rate at Astral Media: 5% He is selling billboards instead of radio, for an unestablished company vs. an established one There seems to be large gaps in calling made in his daily log, on average he is making 20 calls a day. I am going to try to increase this by providing him with calling lists versus him creating his own. (I will keep you posted on this). I am just wondering, in your experience, what kind of regiment do you have your cold callers work on, 6 hours? 4 hours? 7 hours? And did you notice a curve occur with closing rates as time progressed and experience increased? If so when did you notice this begin to occur, I have him on a 1,500.00 NON-RECOVERABLE sales draw salary which ends in 6 weeks (approx).
Re: Kevin's Case Study #7 - How do you promote your new book? - Hi Kevin, Normal conversion rate is 2% for me. High conversion rate can be 5-6% or more probably. But if you use Google Adwords techniques properly and have the good sales letter, then it can be 25-30% or more. It depends on books too. If it is exciting and shocking book with great sales letter then it will determine the rate of conversion, too. Orxan


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Do You Pretend To Listen To People?

Google Panda and Your Search Engine Rankings

Steps For Starting A Small Business

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.