Course 6. Sales Cycle Build

The build is the process of growing your sales funnel to a maximum number of sales cycles. Companies start with no sales cycles. Revenues grow as the sales funnel grows because sales cycles are created. Each sales person will go through a building period where sales cycles are added until a peak balance between lead generation, selling, closing and attrition is achieved.

In this course, you'll learn about:

1. Introduction to the Build

2. Examples of sales funnel builds

3. How many sales cycles do you need?

Introduction to the Build

In previous courses we've introduced sales cycles and the sales funnel. It should be clear by now that sales cycles are dynamic relationships that develop over time. The sales funnel grows as new sales cycles are added. Building a sales funnel is hard work, and every sales funnel has a peak level where lead generation, sales and service are performed efficiently and effectively while generating maximum revenue.

It generally takes one year to mature a sales funnel given the effort of one personal sales person. The goal is to get through the buildup of active companies in your sales funnel to get to the point where economies of scale drive your revenue. At the peak of the sales funnel you are efficient and effective and working the least while getting the most. This is good for you and the company that pays you.

The peak of the build is where customers call you. Enough sales cycles are maturing at any given time that prospects have needs to be met. Instead of waiting for you, they start calling.

David is an outside sales representative. He's been hired to sell construction equipment. Like most sales people he relies on referrals and prospecting. He makes five cold calls a day as a token effort. Making 25 cold calls a week isn't building his funnel. On his first reporting day for his sales funnel he has 27 sales cycles. He's not bringing in enough revenue to cover the cost of employing him. He suffers from the lead generation constraint. There's not enough lead generation activity to drive new sales cycles into the funnel. Of 65 sales people, Todd is near the bottom in performance.

After some consulting effort and sales funnel training, Todd is hard at work building his funnel. In just over six months time he builds a funnel of over 500 sales cycles under management. His revenues place him as the number two salesperson in the company. His funnel builds at a rate of 5% growth a week. For every sales cycle lost through transactions or attrition he's adding three new cycles. At 700 cycles he can still make cold calls and do his follow-up calls. He meets clients and does sales presentations. He prepares quotes and closes deals. He also makes service calls. He's busy but he's productive. His sales funnel produces enough revenue every month to exceed his quota.

Example of a Build

This sales person used telemarketing and personal selling to build a sales funnel over a 26-week period. This table shows the week and the total number of sales cycles generated. You can see by the numbers that it varies on a week-by-week basis. It shows the sales person building a funnel and working to maintain the dynamic balance of quantity versus quality.

Funnel 1. 1800% Growth.

This sales person's funnel starts at the bottom and peaks at about 500 sales cycles in just over six months.

Funnel 2. 300% Growth.

This company's sales funnel grows over 300% in seven months.

Funnel 3. 330% Growth.

This company's sales funnel has grown 330% in four months.

Funnel 4. Just Starting.

Here's a funnel for a company who's just completed its first month of sales cycle management. This funnel needs 400 more sales cycles.

Funnel 5. Struggling Company.

Here's a funnel for a company with five salespeople. While the sales funnel has more than doubled in five months, the organization still needs to double the sales funnel again. Lead generation efforts are small as you can see in the numbers.

How Many Sales Cycles Do You Need?

Due to the quantity versus quality relationship of a sales cycle, you'll always have a higher quantity of leads than prospects and prospects than customers. The quantity of sales cycles a company needs depends on its growth goals and the pace of its sales cycle closings.

Quantity. Are there a lot of sales cycles? Does the business carry thousands of sales cycles under management or are there only a hundred or so?

Quality. Does the sales cycle require a high-quality approach? Do sales people need a couple of years of training to become proficient in selling or can a sales person get the hang of it in a few weeks?

Frequency. How frequent do the sales cycles occur? Does one customer tend to engage in sales cycles frequently?

Duration. How long is the average length of the sales cycle? Some sales cycles are short, only minutes in length. Others can last three years or more.

Intensity. What is the dollar volume of the sales cycle? The higher the value of the product or service the greater the intensity of the sales cycle.

Size. How many people are involved in a sales cycle? How many departments, business units or businesses? What is the size of the buying center?

Investment. Is there a significant investment in the sales cycle? Does the sales cycle have a high acquisition cost?

As a rule of thumb, a personal sales person carrying 500 sales cycles will hit quota. This assumes he is doing his own lead generation through personal methods such as cold calling, prospecting, networking and referrals. About 85% of the funnel will be leads.

About 12% of the funnel will be prospects. The remaining 3% are hot prospects who have received a proposal.

Summary

First, we introduced the concept of the build. The build is the process of growing your sales funnel to a maximum number of sales cycles. Companies start with no sales cycles. Revenues grow as the sales funnel grows because sales cycles are created. Each sales person will go through a building period where sales cycles are added until a peak balance between lead generation, selling, closing and attrition is achieved.

Next we provided five examples of sales funnels from individuals and companies in various stages of growth. Lastly, we discussed how many sales cycles you may need. A table was presented with different channels being compared by sales cycle characteristics. As a rule of thumb, a personal sales person carrying 500 sales cycles will hit quota.