Sales Cycle Length: How It’s Calculated And Why It’s Important

You may agree with the notion that “life is a marathon, not a sprint,” but sometimes selling can feel like a particularly long race to the finish line.

Unlike a sprint or a marathon, of course, the journey from opportunity to a closed deal doesn’t usually begin with the excitement of a “3-2-1 go!”

Instead, salespeople often start slowly, approaching prospects with an idea or proposal that relates to a product or service. Over time, and with considerable followup from a rep, the prospect may convert into a paying customer.

This can happen in as little as a week. Or a couple of months. In business-to-business (B2B) environments, the purchase of a product worth thousands or even millions of dollars could take more than a year.

When companies first launch, they don’t always know what their average sales cycle length is going to be. A lot of it depends on what you’re selling, who your typical buyer will be and all the information you’ll have to provide before you can get to a “yes.”

The first couple of customers might require a lot of hand-holding, especially if your firm is not yet well-known and trusted by the wider market. As your firm grows, each sale might look a little bit different because you’re bringing on more sales people at the same time, and your processes might not be very standardized.

Even once they’re more established, however, companies might still neglect to calculate their sales cycle length. The primary reason? All the information they would need about their reps’ sales pipeline is spread out among employees and their files.

When you adopt a CRM, this could actually be one of the first places you start seeing return on investment (ROI), because the data is finally in a single place where sales cycle length can be determined. This is a critical sales metric.

The match behind sales cycle length

At a basic level, sales cycle length is simply the total number of days it takes for a deal to close, divided by the total number of closed deals.

The time period you use to assess sales cycle length may need to align with the way you track revenue. For example, if you close the books on a quarterly basis, that may be the best parameter to measure sales cycle length. For others, looking at it from a monthly perspective will probably make the most sense.

The number you get won’t necessarily tell you the full picture — there will always be some deals that happen sooner, and some that will be prolonged due to unforeseen events.

What this really gives you is a baseline to try and improve your sales processes or coach your reps to get the cycle length as low as possible.

Some of the best practices include:

1. Double-check your lead scoring or qualification process

No one likes to be sent out on a wild goose chase, or on a journey that leads to a series of dead ends. That’s what it’s like, though, when sales reps are handed leads that don’t match your ideal customer profile.

Lead scoring or qualification should happen the moment they’re captured. The marketing team could make an initial pass at this before reps are even involved.

It should be clear the lead has the right contact info, is in a relevant customer segment, and that there’s some indication of intent or interest in your firm’s products and services.

Perfecting lead scoring will let reps get off to the best possible start, and possibly lead to a shorter cycle time.

2. Only approach customers through their preferred channels

Nothing lengthens a sales cycle like calling prospects who would rather be sent an email. Or vice-versa.

In fact, there are some prospects who would be more responsive to a followup after they’ve attended your company’s webinar. They might want reps to wait until they’ve downloaded your white paper rather than receive “cold” outreach from a rep.

Understanding how to meet customers where they are will save hours or even days that will otherwise get wasted.

3. Make sure the right people are involved at the outset

Selling in B2B rarely involves talking to a single person. There are often entire committees who need to be consulted about a purchase, and if one member is left out for any reason it will affect your sales cycle.

Talk to your reps to see if there’s a typical role within their target customer base who acts as their initial point of contact. Ask who that person’s boss might be, or the relevant peers in other departments who should be invited to calls or CC’d on emails.

4. Equip reps with the right content at the right time

Maybe you created a sales playbook or battlecards that train reps about your products and help with the initial outreach they do to prospects. That’s great, but it’s probably not enough to get your sales cycle length to move in the right direction.

Consider what sales enablement assets could be added to their arsenal based on the common objections you hear them talk about in coaching sessions.

Maybe they would benefit from some more case studies, white papers or even some explainer videos.

Conclusion

There might be other steps you could take that are more specific to your firm and its target market. You might want to change up the way you present a final offer to a customer, such as the items included, the price or even the payment terms.

You should also think about experimenting with how you handle the later stages of a deal. Maybe you need to take into account the time a proposed deal needs to get approved by someone in another department. Perhaps you should lean more on referrals to drive better leads, or simplify the process on your end in placing an order.

This only happens when you have a good sense of what your average sales cycle length is right now. You don’t necessarily win more races by moving faster. It might be tweaking the way you run.