Sales Cycle

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A Sales Cycle is a sequence of stages a company undergoes to identify, engage, and convert a prospect into a customer.

With a sales cycle in place, you always know your next move and where each lead is within the cycle.

A sales cycle helps you replicate successful sales and identify areas where you need to improve.1

Visual Representation

sales cycle visual representation

Stages of the Sales Cycle

  1. Prospecting or Lead Generation: Identifying potential customers.
  2. Initial Contact: Establishing communication, often via email, calls, or social media.
  3. Qualification: Assessing the prospect’s need, budget, and purchase authority.
  4. Presentation: Demonstrating the product or service to the prospect.
  5. Handling Objections: Addressing any concerns or questions from the prospect.
  6. Closing the Sale: Finalizing the deal and making the sale.
  7. Follow-up and Relationship Building: Maintaining contact for future sales opportunities.2

Purpose

The main goal of understanding and managing the sales cycle is to make the sales process more streamlined, efficient, and effective in turning leads into customers.

By dividing the process into clear stages, sales teams can better organize their tasks and concentrate their efforts on the most likely prospects.

A well-defined sales cycle also aids in predicting future sales, allocating resources efficiently, and tracking sales performance.3

Usage

The sales cycle is used in virtually every industry selling products or services.

Here are some key areas where you’ll commonly find the sales cycle being actively managed:

  • Companies Selling to Other Businesses (B2B): Sales cycles are essential here because selling items like factory equipment or business software can be complex and take a long time since several people usually decide whether to buy.
  • In Companies Selling to Consumers (B2C): This is common in places like real estate or car dealerships, where buying something is a big decision and customers need more time to think.
  • Software and Tech:  The sales cycle is critical for demos, trials, and consultations before purchasing direct consumer software (B2C) and enterprise software (B2B).
  • Financial Services: For things like getting insurance or a loan, the sales cycle helps manage the steps from the first conversation to when a customer signs up.
  • Healthcare and Pharmaceuticals: The sales cycle helps coordinate the many approvals and decisions needed, whether it’s selling medical devices or medications.
  • Services Like Marketing or Consulting: These businesses use the sales cycle to manage everything from pitching their services to sealing the deal.4

Example

Here’s an example of how a sales cycle works for a software company that offers enterprise solutions:

  1. Lead Generation: The company starts by creating leads through online content and participating in trade shows.
  2. Initial Contact: Sales representatives contact these leads after contacting potential customers.
  3. Qualification: Sales reps then qualify these leads by checking if they have the budget and the authority to make purchasing decisions.
  4. Demonstration: The company schedules demonstrations for qualified leads to showcase how their software works.
  5. Proposal and Negotiation: After the demonstration, the company presents a proposal and enters a negotiation phase to finalize the sale details.
  6. Closing the Sale: The sale is closed once the negotiation is successful and both parties agree.
  7. Follow-Up: After the sale, the company follows up with the customer to ensure satisfaction and discuss potential upgrades or additional services that might be beneficial.

Related Terms

References:

1. Bean, J., & Director. (2022, July 29). Sales cycle: What it is and how to use it to close deals faster. Zendesk. https://www.zendesk.com/blog/sales-cycle/

2. The sales cycle: 7 steps every business uses to sell. Lucidchart. (2020, October 7). https://www.lucidchart.com/blog/sales-cycle-stages

3. Prater, M. (2023, January 10). The sales cycle: The backbone of a successful sales effort. HubSpot Blog. https://blog.hubspot.com/sales/sales-cycle

4. Pryor, R. J., Campbell, J. J. (2015). Lean Selling: Slash Your Sales Cycle and Drive Profitable, Predictable Revenue Growth by Giving Buyers What They Really Want. United Kingdom: AuthorHouse. https://www.amazon.com/Lean-Selling-Profitable-Predictable-Revenue/dp/1496955536/

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