Sales Trend 11 from the Barrett 12 Sales Trends Report for 2018 explores the sales cycle and looks at the factors that are making it longer.
In a B2B environment, the sales cycle is usually defined as the days/ weeks/ months that pass from the first time a salesperson makes contact with a lead to the moment the client signs the contract. However, most definitions of ‘sales cycle’ have flaws because it’s nearly impossible to have one definition applicable to every business. Sales cycles vary enormously from industry to industry and organisation to organisation.
Regardless of what your definition of a sales cycle is, or more importantly where it starts, there are key factors that determine such a cycle. These include the sales process, size of the sales, complexity of the solution and how many people are involved in the decision making process.
This sales trend is seeing sales cycles becoming unprecedentedly long and more unpredictable. When some years ago businesses could know for sure that their sales cycle was 10 weeks or 6 months, now it has become unknown territory – in the current state of flux there is no predictability that businesses can rely upon.
The rise of micro management
The flow on effect to sales forecasting and pipeline is seeing a rise in micro management by sales leaders who, in turn, are being micro managed by the senior executive team who want predictability so they can manage the numbers and report stable results to the board and so on. Ironically, the more senior management micro manage the sales pipeline the more their sales team is distracted from effectively working the sales cycle to bring in good results.
Salespeople can manage, to certain degree, some of the factors that affect the sales cycle, like making prospecting and new business development a regular part of their sales week, sticking to the sales process that works for their business and customers and helping the buyer understand and navigate the complexity of the solution. However, there are factors outside the salesperson’s control that have an immense impact on the sales cycle making it longer and more unpredictable.
Risk aversion and too many stakeholders
The ever growing culture of risk aversion is impacting the sales cycle because buyers are making decisions across departments so that responsibility for the decision is spread. Each buyer comes to the decision committee with their own priorities and understanding of the challenges, so it becomes very difficult for the group to agree on a purchase decision and this, in turn, cultivates a climate of indecision which adds further delays.
Research highlights that in B2B sales the buying committee consists on average of 6.8 people involved in every purchase.[i]
Organisations have changed how they buy and engage with suppliers, in particular there’s a new found appeal in all companies of various sizes putting forth Request for Quote (RFQ), Expressions of Interest (EOI), Tenders, Request for Proposal (RFP) etc. that once were only the domain of big corporations. These, of course, take time to prepare and then take time to review. The increasing amount of options for every solution adds to the complexity of decision making and increases the difficulty to engage, hence the time it takes to make a decision; it also contributes to ‘buyer paralysis’ – the indecisiveness we referred to earlier.
Buyers ahead of the game
Added to this, buyers are dictating the sales journey. Buyers now have all the information they feel they need to know about a product or service when they decide to engage with a seller. So, at the moment where the salesperson wants to start a conversation and learn about a prospect and their situation, the buyer wants to know the price because, in their mind, they think they have all their bases covered. Whether the buyer does or doesn’t know the full impact of their decision, it puts the salesperson on the back foot from the start. At this moment, buyer and seller are having different conversations.
Buyers are becoming increasingly frustrated with buying
Amongst this sea of contributing factors to make the sales cycle longer and unpredictable, we need to stop and consider another key factor: buyers are struggling with the length of the sales cycle as well. Buyers are finding that it takes them double the time than it did a few years ago to even get in contact with a supplier. Their own buying cycle has become difficult and long. They, too, are frustrated that after spending so much time in getting things going there’s a big chance that no purchase will be made and hence leave them with another unresolved problem.
The buying selling paradox
Here’s the rub, buyers have never been easier to identify but harder to engage and sell to. No one is lonely or bored, yet the value of genuine relationships are critical to effective buyer seller relationships. The average transaction is getting smaller but it is taking longer to sell in.
Conclusion: the cost of sales is going up. It takes more effort to get less. Weird indeed.
Where are the opportunities?
And here lies the opportunity for extraordinary sales professionals. Salespeople who understand the buyer’s challenges and can help them from the get go will have a clear advantage in the purchasing process. For example, a typical scenario in B2B is that the sale gets to a point, close to the end, where everything is going well and, suddenly, 2 or 3 new stakeholders – technicians, users, managers etc. – come in to play. This means that – best case scenario – the sale is going to be delayed. So, salespeople can avoid that, or minimise it, by asking from the beginning who needs to be involved, who will be using the solution or be affected by it or who will, for any reason, be involved in the purchase process at one point or another. Working with everyone involved from the get-go will prevent some of the issues that come later in the process. This also helps the buyer, who now knows they are in good hands with someone who understands their process.
This, however, doesn’t solve the problem of the long sales cycle. Smart organisations know that there are things they can do to manage this, like having up-to-date, clear, consistent and well-communicated sales process that supports an effective buying process. These organisations also know that they have to work with what they cannot control and make the best out of the situation. They make sure their teams keep the CRM up to date with the stages they are at, people involved etc. and, most importantly, adjusting the date an opportunity will be close to allow for better pipeline management. Smart businesses use the ‘extra’ time to learn more about their clients and how to better help them, adjust the solution as necessary and guide them to navigate their way internally if need be.
The state of affairs means that sales cycle are longer and more unpredictable. This doesn’t necessarily mean worse sales results, it means we need to be flexible and open to respond to the markets and our customers’ needs.
We need to work smarter for sure.
Remember everybody lives by selling something.