5 Rules of Thumb to Shorten Your Sales Cycle
Besides businesses that operate with negative working capital like cable TV — where you pay before receiving the service — I don’t know any company that thinks their sales cycle is too short. This is especially true for thinly capitalized startups, where survival can hinge on landing a single marquee client and getting paid in a reasonable amount of time. The following offers 5 common reasons why sales cycles stretch and a rule of thumb for each to diagnose whether this is affecting your business.
1. Reason: Your Initial Target Market is too Broad
Startup consultant Verne Harnish refers to an overbroad market as a Sandbox problem — one where there’s a lack of commitment to dominating a single customer category or sector. Chasing the largest pool of customers possible seems prudent at first, but this “safe” path exposes you to too many heterogeneous buyers operating at wildly varying scales, margin profiles, and buying processes, as well as an unlimited number of competitive substitutes. In practice, a go-broad strategy presents as a sales pipeline that appears stable or growing in dollar terms, but whose individual opportunities churn by 100% every 6–9 months.
Rule of Thumb: If there is greater than a singular, narrower customer classification that your product serves, your target market definition is too broad. For example, you say that your product serves salespeople, but in reality it best serves the sub-classification of inside sales resources, or worse, the sub-sub-classification of inside sales teams focused on a single vertical market. If this is the case, expect a meandering sales path filled with unfocused customer interactions while your prospect ponders whether or not there’s a fit for their needs.
2. Reason: Your Sales Process Lacks the Necessary Data to Identify Key Inflection Points that Reveal When the Odds of Closure Flip to Your Favor
From prospecting to closure, all sales processes have individual steps or “gates” they must pass through. For laborious, business-model-busting cycles that last for months, transiting these steps can be doubly frustrating because, in addition to the negative cash burn, accurate forecasting is virtually impossible. Even probability-weighted pipelines are unreliable for planning and resource allocation.
Rule of Thumb: Whether your individual sales process has 6 steps or 60, if you’ve mapped the gates accurately, there’s typically a fulcrum point 40%-60% through the process where both the probability of closure and the predictability of timing improve dramatically. Whether it’s the 2nd time that every decision influencer meets in person or 45 days after a successful pilot, look deeply at your prior successes and you’ll discover a moment when there’s a palpable shift in momentum. Forecasts before this point are generally meaningless and projections after are highly reliable. We have some companies who don’t even identify specific opportunities that fall before certain pivot points, because the closing probability is too random. If you locate this fulcrum and eliminate every single friction point that falls before it, it’s possible to double your sales efficiency through a compressed process and focused resources.
3. Reason: You’ve Done a Good Job of Profiling Your Prospects, but Haven’t Authentically Calibrated their Propensity-to-Buy
Propensity-to-Buy (PtB) analysis has been a darling analytical tool for marketers of late. Using galaxies of data, marketers segregate audiences who elegantly match an ideal customer profile and practically guarantee that all your ad spend will hit the bullseye. The challenge is that these PtB formulas may indeed predict a prospect’s propensity to buy, but not necessarily to buy from you.
Rule of Thumb: If your PtB modeling is less than 50% predictive of conversion, you’re missing at least one, and possibly several, non-numeric variables in your analysis. Beyond their ability to buy, are your prospects exceptionally brand conscious? Are competitors’ products bundled with other services that remove buying process friction? Do buyers make more confident purchasing decisions when they’re executed through 3rd party integrators? Identifying these subjective factors and assigning appropriate weights to each of them immediately separates the able and ready buyer for anybody’s products from those who are the right targets for you.
4. Reason: Your Product Does Many Things Reasonably Well, but Nothing Exceptionally Well
All-things-to-all-people products generate buzz and heaps of “qualified” sales leads because they appeal to many different customer types, all of whom need some portion of the proposed solution. But this frenetic sales activity masks a lack of product-market fit and creates a perfect recipe for extended sales cycles. Regardless of how much they might appreciate the breadth of your solution, buyers generally go with simpler, less expensive choices that address their immediate requirements.
Rule of Thumb: Sometimes expressed as a Swiss Army Knife vs. Scalpel problem, if you can’t craft a message that fully encompasses your product’s features, capabilities, and value proposition in 3 bullet points or less, the product is too general. If this describes your situation, you now have the unpleasant job of trimming your product’s vision and narrowing its functionality. But just as dolphins are nimbler than whales, this difficult task results in a slimmed down version that sells faster.
5. Reason: Your Pricing Strategy is Opaque or Radically Diverges from Industry Norms without Providing a Clear Reason Why
The old dictum is true: A confused buyer never closes — although they may never confess that their bewilderment is the reason they won’t commit. Few things extend sales cycles more than uncertainty about what an offering includes and what’s extra. Underlining this doubt is a misalignment between what the customer is presented for purchase and how they actually receive value from the product. You’re left with prospects that haunt sales pipelines like ghosts, burning resources but never converting.
Rule of Thumb: If your customers can’t divine your pricing scheme, it’s almost certainly because you started with an inside-out/cost-based approach to pricing rather than an outside-in/value-based process — one that begins with the buyer and ends with the cost to produce and deliver the product. Approaching pricing this way may seem counterintuitive and could expose challenges to your cost structure, but when done right it actually accelerates sales velocity with any customer for whom you have a truly competitive offering because they instantly understand what they’re paying for and how it compares to alternatives.
Shortening sales cycles reduces inefficiencies and starts the cash flywheel spinning faster, creating momentum for the sales team and the enterprise as a whole. Use these 5 rules of thumb to shift from reacting to your market’s natural sales cycle so that you can take control of the process rather than being controlled by it.
