What is a Good Sales Cycle?

A sales cycle is a structured, multi-step process that sales reps use to ensure leads convert into customers in a repeatable fashion. With a well-thought-out sales cycle, sales reps and leadership can measure success and identify opportunities for improvement, while new sales reps have a solid foundation to ramp up their training more quickly

💡Understanding what a good sales cycle is

A good sales cycle is the foundation of any successful sales organization. At its core, your sales cycle should be a repeatable, multi-step process that all sales reps use to convert leads into customers. And since it’s repeatable, it can easily be measured and compared on a sale-by-sale basis to identify areas of success and friction for both the buyer and the seller. 

A good sales cycle will benefit both sales reps and leadership. For sales reps, it provides a solid foundation to attack every sale and guide their next move, and it also allows new sales reps to ramp up quickly, knowing that the sales process has delivered success in the past. For leadership, it can point out areas of success or friction so they can coach reps or adjust the overall process to improve efficiency. 

The challenge with a good sales cycle is ensuring it doesn’t get out of touch with your buyer’s needs. As you review your sales cycle, you should consider:

• Time–Is the time between the sales cycle stages getting longer?
• Closing Success–Have close rates dropped recently?
• Missing Steps–Is the team missing critical information that could negatively impact the likelihood of closing?

Even if your sales cycle is humming like a well-tuned sports car, it is always a good idea to monitor and evaluate each stage to improve efficiency–potentially speeding up the time to close. 

🖋 Takeaway

A good sales cycle is a structured, multi-step process that serves as the foundation of any successful sales organization. 

A good sales cycle has several benefits–it provides repeatability for sales reps and allows them to always know what the next move should be. And for leadership, it provides insights into rep performance and acts as a template for training new reps. Over time, you should consider how efficient your sales cycle is, looking for key indicators like the time between sales stages or close rates to make sure it is dialed in correctly. 

Regardless if you are a startup or a well-established enterprise, you should consider your sales cycle as an indispensable component of your overall sales strategy to ensure you have a repeatable and successful way to secure new customers.

What is a good average sales cycle length?

A good average sales cycle length is a hard number to nail down for every business because of all of the potential variables. However, there are some guidelines to consider when thinking about your sales cycle and how it compares to others out there. 

• Price. This one is pretty straightforward–more expensive products will take longer to sell. There are multiple reasons, but with a more expensive product, you likely have multiple stakeholders involved, complex buying processes to navigate, and more scrutiny placed on the purchase. The more experienced you are at navigating these steps can shorten the cycle but expect it to take longer with more expensive products. 
• Product Complexity. As with price, the more complex your product is, the longer your sales cycle will likely be. This oftentimes comes down to building a customized product for a buyer vs. an off-the-shelf product that a majority of your buyers can easily utilize. Additional steps in the sales cycle are typically used to scope the needs of the customer to align your product to solve their unique needs. 
• Stakeholder Involvement. As you might have guessed, the trend of a longer sales cycle continues when you have more stakeholder involvement in the purchasing process. This also relates back to price and product complexity, but it’s worth noting that even simple products may have multiple stakeholders to navigate depending on the purchasing company’s internal buying process. There may be multiple functional teams impacted by your product, requiring buy-in from multiple stakeholders. There also can be a long paper process involving security and legal reviews. Unfortunately, you rarely see any two companies follow the exact same process, so be prepared early on in the sales process to ask questions about what their buying process looked like for similar products in the past so you can predict how quickly you can move this time around. 
• Company/Product Maturity. As a new company, you often build your brand reputation from scratch or have very few proof points to back up your product’s claims. Think of it from a consumer’s point of view–you typically trust brand names more than an unknown brand. If you find yourself in this situation, it’s often a good idea to account for additional time in the sales cycle to explain the value of your product and its various use cases. As you build more social proof through case studies or customer testimonials, you’ll find you can cut down your sales cycle length. 
• Enterprise vs. SMB Sales. There are a ton of distinctions between selling to these markets. Enterprise sales often involve large deal amounts, high customization levels, and multiple stakeholders, while SMB sales can fall on the opposite end of that spectrum. Your sales process should be customized to each market you’re selling to, impacting the sales cycle length–longer for Enterprises and shorter for SMBs. 
• Trials Length. If you are a SaaS company that offers a free trial, you should account for added time in the sales cycle for customers to go through a “try-before-you-buy” phase. Try experimenting with trial length as a lever for shortening the sales cycle.
• Rep Experience. Regardless of how well you have every other variable dialed in, it comes down to a sale rep having to execute at every stage of the process. An inexperienced rep can easily lose their footing at any stage, leading to delays. However, the most experienced sales reps not only know how to handle each stage of the process, but they have the foresight to see roadblocks or potential problems coming their way and already have a clear plan on how to overcome them.

Which is better–a short or long sales cycle?

The prevailing thought throughout this article seems to be that a shorter sales cycle is better…

…But is it?

We can probably all agree that getting more deals to close quicker would help drive an increase in revenue. But there can be trade-offs to that calculation. 

• Can you maintain the same, or increase ACV, or is the value of your deals dropping due to this quicker cycle? 
• Can you properly scope out the overall project, or are you missing out on additional areas of revenue due to a project not being completely vetted out? 
• And are you maintaining the same or better levels of churn after the sale, or have you put yourself at risk of losing customers after they’ve signed due to an oversight in the initial sales process?

If you can confidently say you’re coming out ahead in these areas, then those adjustments to shorten the sales cycle are working–great job! But if not, a faster sales cycle might be doing more harm than good. 

What are the KPIs for a sales cycle?

If you can’t measure it, you can’t improve it!

Peter Drucker

And your sales cycle is no exception!

In order to make any meaningful change to your sales cycle, there must be a few KPIs that you track and work on improving. 

While different businesses may value one set of KPIs over the other, one set of guiding metrics that most businesses can agree upon is the 3VC framework—Volume, Value, Velocity, and Conversion. 

The 3VC framework is a set of core revenue levers that you can measure and adjust when looking for areas of improvement for your overall sales process. It can also guide you to develop specific KPIs for measuring your sales cycle. 

Here are a few examples:

Velocity

• Lead Response Time–how quickly are you responding to new leads?
• Sales Cycle Length–what is the overall time from lead creation to closed-won?

Value

• Average ACV–over a given time period, which direction is your opportunity ACV trending?

Volume

• Lead to Opportunity Ratio–How many leads are converting into opportunities, and can you adjust that ratio by increasing/decreasing the volume of leads or opportunities created?

Conversion

• Win Rate–at what rate are leads converting into closed-won opportunities?
• Loss Rate by Stage–where in the sale process is that conversion breaking down and deals are being lost?

What’s fun to see is that several of these KPIs can actually exist across multiple dimensions of the 3VC framework. Lead to Opportunity Ratio, for example, can be addressed by tweaking the volume of leads being sent to sales or by trying to improve the conversion rate of your leads without adjusting volumes. 

When trying to measure and improve your sales cycle, it’s important to remember that there isn’t just one lever to pull but potentially multiple levers over multiple dimensions that can bring a positive impact to your sales cycle. 

What are the 7 stages of a sales cycle?

Back to the definition of a sales cycle–it should be a repeatable, multi-step process that all sales reps use to convert leads into customers.

But what are those steps?

Luckily, for almost all businesses, those steps can be simplified down to about 7 distinct steps that are often referred to as the sales stages.

Each company may have a different name for each of these stages, but they generally boil down to these 7 stages:

1. Prospecting–Finding your ideal customers. This can be from outbound, like sending LinkedIn prospecting messages, or even inbound efforts, but no sale can start without first identifying and targeting the prospects you want to sell to.
2. Make Contact–It can be as simple as picking up the phone to call a new inbound lead or as complex as mapping key stakeholders and preparing a highly-customized pitch to break into an account. Whatever your approach is, it should be well thought out and repeatable–you’re going to be making a lot of attempts at this stage!
3. Qualify your Prospect–Once you’ve made contact, you need to really understand if your prospect can benefit from your product or service. Having a clear framework for qualifying prospects is key–a common criterion used at this stage is BANT (Budget, Authority, Need, and Timeline). Whatever your criteria are, make sure you address them all, or you’ll find yourself wasting time with deals in later stages that will never close. 
4. Nurture your Prospect–In this stage, you assist your prospect through an information-gathering phase. It could be educating them on the problem you’re addressing, how it impacts their business, or how you compare against competing options. It is important to be helpful and reliable in this phase to build credibility.
5. Present your Offer–After you’ve answered their questions and you’ve scoped out a solution, you have to present an offer to start the closing process. It could be a proposal, a contract, or a customized presentation, but it should always be targeted to meet the prospect’s specific needs. 
6. Overcome Objections–Rarely will you encounter a prospect that doesn’t have an objection or two. You should be well prepared with responses for common objections around the price, timelines, or scope of work and be nimble enough to probe deeper with questions when a new objection comes up.
7. Close the Sale–When you’ve navigated every preceding step, there’s only one logical conclusion–closing the deal. But a closed deal is still not guaranteed, so it’s important to consider closing as a final stage. A close plan is a great tool at this stage–an agreed-upon checklist of milestones you and your prospect need to check off to get the deal over the finish line. This could include obtaining signatures from multiple stakeholders or accounting for legal and security reviews, all of which should be tied to deadlines to hold each other accountable.