Understanding your sales cycle is critically important to your overall business development strategy.
When we talk with business owners, we often show a “Sales Funnel” image. Interestingly, about 25% of those owners we speak to, have not seen a Sales Funnel previously. And of those who are familiar; less than 5% actually track their sales cycle with either a CRM or a Visual Representation of some sort (sales board, etc). Understanding and tracking your sales cycle is vital in for many reasons. Here are two:
Client Acquisition and Cash Flow
You must define the common amount of time it takes your organization to originate new business. What efforts are needed to get in front of qualified buyers? How long do those efforts take? Once you’re talking to, or meeting with those qualified prospects, what happens next? Do they place an order over the phone? Set an appointment to meet? Define the next steps and timeline involved. If you’re meeting with qualified buyers you must know or define whether your product/service will be purchased at that first appointment, or whether you’ll need follow-up meetings to deliver proposals, conduct presentations, involve other stakeholders, etc. All of these variables mean one thing: time. Defining the steps and the amount of time involved in your sales cycle helps you forecast growth, cash flow from new business, and future service demands once the clients are on board. Understanding the steps and time is critical to your sales process.
Maintaining a Healthy Sales Funnel
The steps are important along with a visual representation of your sales funnel. By defining each step, and maintaining a record of where various prospects are within your funnel, you are ensuring that your business development efforts are always healthy. Many Owners we talk with have a results “roller coaster”. Their business is slow, and so they focus efforts on Business Development. Sure enough, a few months later (or whatever their sales cycle time) they’re riding high on a wave of new customers. What happens next? Yep, you guessed it; they’re so busy serving customers that Business Development efforts are ceased, or slowed. This leads to another valley in the “roller coaster” down the road. When you define steps, and have a visual representation of your sales funnel, you’re able to actually see how many prospects, first meetings, follow ups, proposals, client engagements, etc, that you have on any given day. This information assists in holding you accountable to maintaining that healthy sales funnel rather than being “head down, buried in work”.
CRM’s and Other Stuff
Most CRM applications will let you define and illustrate your sales funnel and measure results. If you’re not using a CRM, you should be. That said, a CRM is as good as the information you input to the system. The weakness of CRMs is tied to sporadic use by you or your team because “you don’t know how” (training), or “you’re too busy” *(you’re not – use the darn CRM).
We like visual representations of the sales cycle in addition to any CRM. White boards, posters, thermometers, something. Track those items critical to your sales cycle. How many qualified prospects are you meeting? How many presentations are you delivering? New clients? Money? You get the idea. You can use these visual representations for tracking, or for contests. Either way, you must start to understand and master your sales cycle in terms of time, process, outcomes, and overall health.