- B2B Marketing Plan - Sales Cycle

Courses

Course 1. The Sales Cycle

A B2B market plan is based on the sales cycle of a product, service or company. Whether its lead generation, branding, promotion or any other kind of marketing effort, the sales cycle is the key. This course will discuss the basic concepts of the sales cycle.

In this course, you'll learn about:

1. Sales Cycle Definition

2. The Patterned Relationship between Buyer and Seller

3. The Sales Stage Process

4. Creating Sales Stages

Sales Cycle Definition

Companies interested in growing sales revenue eventually focus on building a sales funnel. A sales funnel is a company’s collection of sales cycles.

A sales cycle is a progressive relationship between a buyer and seller for the purpose of creating a transaction.

A sales cycle, in its easiest form, most often exists between a sales person and a decision maker from a prospective company. This is a primary sales relationship. It comes about when a sales person 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.

Any company who is creating customers has sales cycles. As companies become more sales savvy, they learn to manage their sales opportunities using software. The popularity of Customer Relationship Management (CRM) software has brought sales cycle management to the forefront.

The sales cycle relationship is a very 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:

1. Mr. Buyer has a problem and needs a solution.

2. Mr. Seller has a solution and is proactively looking for Mr. Buyer.

3. Mr. Seller solicits Mr. Buyer and a sales cycle is created.

4. Mr. Buyer asks Mr. Seller some qualifying questions. Mr. Buyer doesn't want to waste his time.

5. Mr. Seller asks Mr. Buyer some qualifying questions. Mr. Seller doesn't want to waste his time.

6. Mr. Seller tells Mr. Buyer about the features and benefits of his product.

7. Mr. Buyer works through his problem-solving steps to determine if Mr. Seller's product is the right solution.

8. If it's a fit, Mr. Buyer and Mr. Seller develop a strategy to complete a transaction.

9. Mr. Buyer purchases the product from Mr. Seller to solve problem.

The sales funnel is a collection of these types of sales opportunities. A sales person has a sales funnel consisting of all the individual sales opportunities. A company has a sales funnel consisting of all the sales people's sales funnels.

It's called a sales funnel because of the progressive relationship between the quantity and quality of sales opportunities in a funnel - the higher the quality the lower the quantity. There are more leads than qualified prospects. There are more qualified prospects than customers.

A sales funnel takes on its own unique characteristics because it's relationship driven. Like a family has character traits, so does a sales funnel.

A sales funnel will have traits also. It depends on the product or service being sold, the type of target market being approached, the price of the product or service and the competitive environment. Most importantly, the sales person who organizes and builds his or her own funnel will exert the most influence over its growth and development.

To get the most out of a sales funnel, identify the sales stages of the funnel such as lead, prospect and customer. Track the stages in a contact management software program so you can manage the details of the sales relationship.

A Patterned Relationship Between Buyer and Seller

Sales Cycles between buyers and sellers follows a general pattern that can be identified, monitored, tracked and, ultimately, managed.

Sellers place the labels of "lead" and "prospect" and "customer" on buyers in order to classify, organize and understand them. Buyers place the label of "lead" and "prospect" and "vendor" on sellers for the same reason.

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 all slightly unique. A retailer has a different style of sales cycle than a manufacturer or a distributor. Some businesses thrive on repeat customers and 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.

Here are the major characteristics of sales cycles:

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 does 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?

Sales cycles are cyclical relationships. A cycle is an interval of time in which a certain succession of events is completed, and then returns again and again, 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, prospect become customers. Again and again, even after a customer buys, the buying cycle can create repeat purchasing.

The key to sales cycling is to understand the nature of your cycle. Learn about your customer and the customer's buying habits. Learn about the characteristics of your product. Here's a list of product characteristics that affect your product. These characteristics alter the time frame, and can shorten or lengthen your sales cycles.

The Sales Stage Process

A sales cycle is a process as much as it is a relationship. It has a start and a finish. It has a beginning and an end. There are inputs and outputs. Value-added steps produce work. Sales cycles meet all the requirements of a process. It also has constraints - things that hinder its progress. Constraint management can be applied to sales cycles like it's applied to a manufacturing line.

Understanding the process of sales cycles is made easier through sales stages. A sales stage is the individual step of the sales cycle signified by a milestone. The simplest sales stage configuration is lead, prospect and customer.

Lead. A lead is a contact from a target market where the seller has a name, address and telephone number to initiate contact. Leads often have characteristics that lead the seller to believe a purchase is likely to happen.

Prospect. A Prospect is a lead who has product interest, has a defined need for the seller's product or service and is able to purchase.

Customer. A customer is a prospect who purchases the seller's product or service.

Below are some different sales stage configurations.

ACT Sales Stages

The following are the 11 sales stages identified by ACT! in its sales force automation software.

New opportunity. Potential sales opportunity.

Pre-Approach. Gather information on potential opportunity.

Initial Communication. First contact with the prospect.

First Interview. First discussion with the prospect.

Opportunity Analysis. Gather and analyze information in order to understand the opportunity.

Solution Development. Creating focused solution(s) to meet prospect's need(s).

Solution Presentation. Presentation of the proposed solution(s).

Customer Evaluation. Customer evaluation of the proposed solution(s).

Negotiation. Negotiate acceptable terms (price, delivery, quantity, etc.).

Commitment to Buy. Customer has agreed to move the sale to a level of closure.

Follow-up. Follow-up with customer. Opportunity to maintain a sales relationship.

Here's one version of a sales stage system developed by my consulting company DVRC.

Here's a complex sales stage structure:

Creating Sales Stages

Every business that embarks on Sales Funnel Management will create sales stages that work for them. One structure may be too simple or too complex for one company but right for another company. There isn't a one-size-fits-all approach that is going to work.

Most businesses in the start-up phase don't have sales cycle stages. It's common to use sales stages in the third or fourth year. It's about this time that a business wants to grow sales and is willing to increase its complexity to do so. Contact management software is usually used to manage the contacts and sales stages.

Start with Leads. What is a lead according to your organization? Create a milestone that succinctly identifies a contact record as a lead

What is a Prospect? Leads develop into prospects. Create a milestone that identifies the prospect as it evolves from a lead.

What is a Customer? Prospects become customers. The most common milestone describing a customer is a purchase is made. Create your milestone for a customer.

Review the major characteristics of a sales cycle as listed above. How do Quantity, Quality, Frequency, Duration, Intensity, Size and Investment affect your cycle? Do you need more complex stages because of the complexity of the sales cycle?

Summary

This course provides a definition and description of sales cycles. A sales cycle is a progressive relationship between a buyer and seller for the purpose of creating a transaction. Sales Cycles between buyers and sellers follows a general pattern that can be identified, monitored, tracked and, ultimately, managed. The major characteristics of sales cycles are:

Quantity
Quality
Frequency
Duration
Intensity
Size
Investment

Next, the Sales Stage Process was discussed. The most common pattern of sales stages is Lead, Prospect and Customer. A lead is a contact from a target market where the seller has a name, address and telephone number to initiate contact. A Prospect is a lead who has product interest, has a defined need for the seller's product or service and is able to purchase. A customer is a prospect who purchases the seller's product or service. Examples of more complex sales stage structures were provided. Lastly, a brief formula is provided to create your own sales stages.