The heart of the sales funnel is the sales cycle. A sales cycle is a progressive relationship between a buyer and seller made to create a transaction. When you hear a salesperson say, “I have a new lead” or “I have a new sales opportunity” that’s a sales cycle.
In its easiest form, a sales cycle exists between a salesperson and a decision maker from a prospective company. It comes about when a salesperson is prospecting for new business. A first contact is made with the prospect and the relationship is started. If there is any degree of interest on the part of the buyer in the seller’s product, the sales cycle relationship will start to take shape.
Here’s a common sales cycle scenario to give you an example.
- The Buyer has a problem and needs a solution.
- The Seller has a solution and is proactively looking for the Buyer.
- The Seller solicits the Buyer through a marketing communication. The Seller calls the Buyer and a sales cycle is created.
- The Seller asks the Buyer some qualifying questions. The Buyer doesn’t want to waste his time.
- The Seller tells the Buyer about the features and benefits of his product.
- The Buyer works through his problem-solving steps to determine if the Seller’s product is the right solution.
- The Buyer and the Seller develop a strategy to complete a transaction.
- The Buyer purchases the product from the Seller to solve problem.
Sales cycles are often mistakenly referred to as “opportunities.” A sales opportunity is part of a sales cycle. The sales cycle runs from the beginning of the relationship with the buyer to the completion of the purchase. A sales opportunity is usually defined as starting when a lead is qualified.
Any company that is creating customers has sales cycles. As companies become more sales savvy, they learn to manage their sales cycles using software. The popularity of Customer Relationship Management (CRM) software has brought sales cycle management to the forefront.
The sales cycle relationship is a progressive relationship. It exists for the sole purpose of completing a transaction. Sales relationships have an accepted pattern that both the buyer and the seller have come to expect.
At a seminar I gave, I met a business owner who owned a wholesale business. He was an astute business person but wasn’t strong in marketing and sales. We talked a few times about how to improve his business, but he wasn’t ready to make a move. Over the course of a year and several more conversations the owner decided to make changes. We started his new marketing plan. A year later his target markets were clearly identified and being strategically marketed. His product messaging was greatly improved. His sales teams were working efficiently, and sales were growing. It was a year-long process to finally close the engagement. The engagement itself took a year. A two-year sales cycle is a long haul, but it was a successful campaign.
Sales Cycles between buyers and sellers follow a general pattern that can be identified, monitored, tracked and, ultimately, managed.
Every company operating in an industry within an economy has a general pattern of how sales cycles flow. Sales cycles take on characteristics that make them each slightly unique. A retailer has a different style of sales cycle than a manufacturer or a distributor. Some businesses thrive on repeat customers whereas others never get repeat customers.
The type of product or service that provides the value of the transaction largely dictates the style of the sales cycle. Coca-Cola selling for $1.59 at 7-Eleven has a different sales cycle than a custom bicycle from Japan.
A cycle is an interval of time in which a certain succession of events is completed, and then returns repeatedly, uniformly, and continually in the same order. When you’ve set your sales stages and manage them, you are building cycles. From your target market, leads become prospects, prospects become customers. Again, and again, even after a customer buys, the buying cycle can create repeat purchasing.
The sales cycle is a formal description of the relationship between the buyer and the seller. These sales relationships are vital to the successful outcome of the sales cycle. When working with sales cycles we tend to talk about them in a mechanical manner. We’re discussing the trust and commitment that occur between a salesperson and the customer as well as between the buyer’s company and the seller’s company.