So Long, Sales Cycle

Written by Albert Motz

If today’s customers want salespeople to collaborate with them, why is the foundation of most sales activities still designed to sell at them?

As long as sales has existed, so has the sales cycle, a collection of four, five, six or more phases of actions that a salesperson drives a buyer through as that buyer “progresses” from cold lead to closed deal.

By using this cycle, it is universally understood when you are in the lead development, requirements identification, value demonstration, proposal or negotiations phase (or something similar to this group of actions). We manage to it, train and forecast to it, buy systems to automate it, and untold numbers of companies have been founded to help us manage it more effectively. The trouble is, significant changes in the buying environment mean most buyers can no longer be dragged through a sales cycle, but rather manoeuvre themselves through their own cycles with dynamics that change regularly. The significance of this reality can’t be understated; it means that at the heart of nearly every sales activity in nearly every organization today, there lies a fatal flaw.

No Thanks, I'll Drive

The fundamental change that has taken place between buyer and seller over the last five years or so has much to do with the control and flow of information. Information used to be a precious commodity; it was held closely by the salesperson and shared only when it was needed to move the sale forward. This is why using an inward-focused tool like the sales cycle worked so well; the salesperson really did know when a buyer advanced in the process with some degree of precision. Now, with the knowledge of the wide range of information available to them, buyers decide which information needs must be filled before their comfort level has been met.

Adding to the mix is the rise of group, or influencer-based decision making. This trend has become more pronounced due to a growing requirement for cross-functional purchasing in today’s corporations, as well as a general aversion on the part of individual buyers to bear all the risk of a purchase. Thus, even in organizations where your salespeople had to identify and sell to multiple groups, additional levels of complexity and influence likely have been added.

These factors – and many others – have combined to mean that salespeople must realize that their prospects are the ones who in the end establish the process and the pace by which a purchasing decision will be made. Salespeople influence the process by collecting and providing information when it is needed; marshalling other resources to satisfy the various players in the buying cycle; creating different types of value (solution- or business-based); and focusing more time on building trust.

Breakdown In Logic

A perfect example of a sales task that has declined significantly in terms of effectiveness due to an unflinching reliance on the sales cycle is forecasting. A sales forecast seeks to predict which prospects are closest to purchase, when they will buy and how much they are likely to spend, usually by placing these prospects into the sales cycle and advancing them when a salesperson determines he or she has ticked off the “typical” tasks within a cycle phase.

There are any number of reasons why this approach is doomed to failure. Take the issuance of a proposal to a prospect, which using traditional means would seem to indicate a deal on the verge of occurring. In reality, it could be that the salesperson issued a proposal much too early, or did so merely as a way to get a reaction from a stalled prospect. The forecast indicates a buyer who is much more advanced in the process than he or she actually is, which opens the organization up to an enormous margin of error.

If we truly want to be able to create forecasts that predict prospect behavior, these forecasts must be based around a buying process, not a selling process. As an example, we have generalized this “customer buying cycle” into six stages (below). For each stage, there is a “checklist” of requirements that on the average, a prospect within a vertical must satisfy to move out of the stage. These requirements are incumbent on your sales force to agree on based on their experience (and potentially some help from a piece of prospect/customer research). Requirements will vary from vertical to vertical, and change over time; you should revisit them every 12 months at a minimum.

It is with this customer buying cycle in hand that effective forecasting can begin. A salesperson and his or her manager will have a much clearer picture of where an opportunity truly is based on the behaviors exhibited, or not yet exhibited as the case may be. As the prospect graduates from phase to phase, greater probability is placed on the opportunity, probability that is not based on opinion, but fact.

The ancillary benefits of this strategy are numerous. You will likely see fewer advanced opportunities wind up in non-decisions, as fewer prospects will leak into the later stages because they haven’t truly satisfied phases one and two (when they aren’t achieved, non-decision has a much higher chance of occurring). Your sales team will also spend less time in the wrong area of the cycle; for example, if a customer already has gone through the first two phases before running across your organization as a potential solution, sales won’t waste time trying to preach to the converted. Finally, making salespeople forecast based on deep knowledge of their prospects decision process is a tremendous impetus to keep in closer touch with their buying base.

Decide to Collaborate

We have used forecasting as an example of how looking at an aspect of sales through an entirely different lens can make a significant difference, but the story only begins here. Those who sell manage those who sell and design tools and training for both parties must change the way they do business based around a world where we no longer inflict a list of tasks on an opponent, but collaborate with an educated buyer who expects much more. This is no easy task to be certain, but one that will be demonstrated by the organizations that are considered true leaders and dominant forces in their field.

SiriusDecisions Customer Buying Cycle

• One: Loosening of the Status Quo. The prevailing emotion of a prospect – unless they are an early adopter – is to keep plodding on with things the way they are. To graduate from this phase, the prospect must have developed enough curiosity about a potential alternative; this begins with significant education on the part of the prospect who must be able to gain access to information.
• Two: Committing to Change. Deals stall all the time because while a prospect may like your idea in theory, he or she doesn’t have enough pain to believe that a solution is required. By the end of this phase, the prospect must be provided with enough evidence to believe that something needs to be done about the problem. It’s important to note that 75 percent or more of prospects who make it through this phase will buy some sort of solution; the question is what, and from whom.
• Three: Exploring Possible Solutions. The third phase is where active buying begins. Prospects will begin to scope out what they would like their solution to achieve, and then launch into a process of trying to become educated about different types of vendors who have their own ideas and methods about how to provide the solution.
• Four: Committing to a Solution. Here, the prospect and the rest of the team that will drive/influence the decision chooses the best general solution method; because of internal regulations that require multiple vendors to be considered, more players may get involved (this is where RFPs generally go out).
• Five: Justifying the Decision. Vendors are eliminated as this phase unfolds, with a “vendor of choice” emerging by the end. A variety of decision makers and influencers will enter and leave the stage in order to whittle down the players, each with their own requirements and needs.
• Six: Making the Selection. The buying cycle winds down with a final phase that includes term negotiation, program plan refinement and satisfaction of any final concerns or hesitations that may occur.

Albert Motz -
	Albert (Ally) Motz is CEO of SiriusDecisions Canada, the world’s first provider of executive management services focused exclusively on the chief executive officer, chief sales officer and chief marketing officer. Our focus is on the top line; we show companies how to create predictable, accelerating revenues. Read More >>
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