Whether they know it or not, every single business uses a sales cycle. It’s the process of making a sale, from finding leads to closing a deal. Whether you’re selling shoes or houses, learning the ins and outs of each step is vital to mastering the sales process.
Although the exact steps will vary depending on your business, the following 7 stages of the sales cycle will apply to all businesses:
The first step is to search for potential customers. Now, the term “search” can be a bit misleading, since depending on your particular marketing strategy, leads might be coming to you instead of you coming to them. They might come across your website and fill out a contact form, for example, or find your business through a friend. On the other hand, many salespeople rely on good old fashioned cold-calling or networking events to find their leads.
Here’s a short list of prospecting methods for small businesses:
- Purchase a list of business leads from a database (for B2B businesses only). On database websites like Data.com or Zoominfo, you can buy a very specific list of leads, narrowing them down based on location, industry, # employees, revenue and much more. Learn more about these services in our B2B Leads Buyer’s Guide.
- Capture leads from a contact form on your website. Setting up your website to capture leads opens up many more possibilities for prospecting. You can begin attracting leads, for example, through online ads. If you use a web-based CRM, you should also be able to import leads directly into your system. (See our guides to Facebook and Google advertising)
- Use Local SEO to appear on the map. Retailers, suppliers, cleaners, etc. anyone with a local storefront or office can drive a lot of new leads by appearing in local results. Read our full guide to local SEO here.
- Prospect on Social Media. People post on Facebook all the time looking for referrals – whether it’s a contractor to fix their roof, a photographer for their event, a graphic designer designer to create a flyer for their business, etc. If you’ve had success prospecting on Facebook before, consider ramping it up by using a social CRM like Nimble.
- Collect leads at a tradeshow or networking event. Although trade shows have been on the decline since the rise of digital marketing, such events are still an essential way to showcase new products and meet industry professionals.
For more prospecting ideas, check out our 25 Lead Generation Ideas From the Pros.
2. Initial Contact / Research
The 2nd stage of sales cycle is to make initial contact with the lead. This can be a call, email or even a Facebook message. The purpose of this first call or message is only to introduce your business and learn more about the client. Based on the initial contact, you’ll decide whether or not to “qualify” the lead in the next step.
If you’re making cold calls (or contacting leads who aren’t familiar with your business), this step is a bit trickier. You need to make a convincing sales pitch in 30 seconds or less. Before making the call you should be sure to research the client on their business website and LinkedIn – then write a brief script.
If your business has a heavy influx of leads – so much that you can’t reach out to each of them individually – you may want to use automated email software instead. While such messages do not convert as well as personalized emails or phone calls, they do enable you to reach a lot of people in a short period of time. Email marketing systems can send pre-written messages automatically as soon as a lead is added to your system. They can also be setup to send messages periodically throughout the year, which is great for incubating dormant leads.
A “qualified” lead is one that has both expressed interest in your product and showed that they have the means to purchase it. Qualifying leads is a vital step in the sales process since it tells you which leads are worth pursuing and which are not. If you gave your full sales pitch to each lead in step 2, you’d get exhausted pretty quickly.
To qualify a lead, here are the key questions to ask:
- Do they have a need for my product?
- Do they have the budget for my product?
- Do they have the authority to make a purchase?
- Do they have a realistic timeline?
Qualifying leads is a skill that grows with time. At first, you may need to speak with clients multiple times to gather all this information. With experience, however, you should know within minutes if a lead is qualified or not.
4. The Sales Presentation
Once a lead is qualified, the next step is to give them your full, personalized presentation. This may happen in person, over the phone, or via email by sending them a written proposal. Here’s a few tips from Sales Expert Mark Wayshak on on how to nail the sales presentation:
For phone and in-person presentations:
- Let the client speak first. Before you jump into the presentation, ask any remaining questions about your client’s challenges and needs. Then, tailor your presentation towards these issues.
- Keep it short & engaging. A common mistake salespeople make is to cover every single feature. Sure, it makes your product or service sound immense, but you risk losing your client’s attention. Stick to the features that address their specific concerns and the presentation will be much more engaging.
- Let them interrupt you. Whether you’re meeting in person or speaking on the phone, leave space for your client to jump in with a comment or question. Letting yourself get interrupted may sound counterintuitive, but it helps to keep your client more engaged.
For written proposals:
- Write from their perspective. Just like in-person meetings, one of the most common mistakes salespeople make when writing a proposal is they try to cover too much. Rather than detail every deliverable you can offer, focus specifically on the ones that your client needs. Whenever possible, give them actual numbers on how it can improve their business.
- Give three options. Take your standard product, then write a lower-priced option and a high-end option. If they go with the cheaper route, you saved a deal that may have otherwise fallen through. If they go with the high-end route, then you just made more money.
At this point, your customer should be very familiar with your product or service. Even when your presentation goes perfectly, however, they will more than likely have some concerns. For longer sales, they may need to take some time to “evaluate” the proposal – thus the name of this step.
Here’s what you should do when a client brings up a potential issue. Before saying anything else, thank them for bringing it up. Empathize with them, “yes I can imagine that would be frustrating,” then ask them to elaborate. Why? Because the real source of the issue may not come to light until they start explaining.
For example, say a client is uneasy about switching from a landline phone to a VoIP phone because they had unreliable VoIP service in the past. Only after investigating do you learn that this was several years ago when they still had a DSL internet connection. You can then jump in and explain how their current internet connection will be much better suited for VoIP phone calls, and even analyze their connection with a VoIP speed test to prove it.
Here are some other common sales objections:
- “The price is too high.” If they can get a lower price from other providers, remind them what you offer that the others don’t. If your price tag is simply so large that it causes second doubts, break it down into smaller categories so it feels more manageable.
- “I don’t want to change how we’ve been doing things.” Empathize with the client, but point out other systems they’ve changed and how it’s improved their business. Chances are they’ve made some upgrades in the past several years.
- “How do I know you’ll be this attentive after we close the sale?” Trust is a difficult issue to overcome. At the end of the day, it’s something you have to earn through honesty and reliability. If lack of trust becomes a roadblock, show your potential client testimonials and/or get them in touch with current customers who can vouch on your behalf.
- “I’m too busy to consider this right now.” If a potential customer is too busy to consider your deal, they’ll probably still be too busy 6 months or a year later. Rather than re-work your timeline, emphasize how the product can save them time. Consider re-working your proposal so that implementation is easier for them.
6. Close the Deal
Once you hash out objections, it’s time to close the deal. This can be tricky for salespeople: If you try to close too soon, or if you use a harsh tactic (“we can take 10% off today only”) it’s easy for the customer to push back.
Instead, try slipping the deal more subtly into the conversation. Drop in lines like, “do you think 7 or 8 units will do?,” or “would you like our implementations team to come out thursday, or sometime next week?” If the customer is still uneasy, consider offering a freebie “If we throw in XX would you be convinced to buy today?” While this is essentially the same as offering “10% off today only” it sounds much more positive.
7. Ask for Referrals
At this point, the sale is either closed, lost, or sent-back to evaluation. Assuming you’ve won the deal, there’s one last step to the sales cycle: Asking your new client if they know of anybody else who could benefit from your service.
Yes, asking for referrals can be awkward at first. However, the more you practice it and learn to work the question naturally into your conversation, the easier and more effective it will be. This is why we treat referrals as the final step of the sales cycle: If you get in the habit of asking, you’ll improve and get a heck of a lot more leads as a result.
Here’s a few tips on how to ask for referrals:
- Mention it early on. When you first present your product/service to the client, mention referrals as the final step. “Once installation is complete and you’re completely satisfied with everything, you’ll have our phone number for ongoing support. Since referrals are essential to our business, we’ll also ask if you know anybody who could also benefit from our service!” This will make it easier to bring up after closing.
- Bring it up after a compliment. If a customer is particularly pleased about something, bring it up subtly “Thank you! Do you know anyone else that might benefit from our service?”
- Send a personalized email or letter. In some scenarios, it may be better until your client has used your product for a while and is happy with it. Write them a personalized follow-up “Hey XX, you’ve been using our system for six months now, how has everything been going?” If you get a positive response, follow it up with a request for referrals.
How Long Does the Sales Cycle Last?
The answer is that it varies tremendously by industry. A shoe sales clerk, for example, might go through the whole cycle in 20 minutes. For a realtor, it might take 3 months. For some B2B industries selling large software or service contracts, it can take up to a year.
It’s good practice to be aware of your average sales cycle length. Having a target goal in mind enables you to plan better, analyze the performance of your sales team and track how it changes over time.
In general, businesses want to have their sales cycle be as short as possible, since this enables them to close more deals in the same timeframe. If you find that a shorter cycle has a lower success rate, however, you’ll want to optimize it to get the most sales in the shortest amount of time.
For a rough idea of how long your sales cycle should last, check out these estimates from Entrepreneur Jason Lemkin.
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The Bottom Line
It may sound tedious, but getting to understand your sales cycle and each of the stages involved can help tremendously improve your conversion rate. Rather than start from scratch, you can locate trouble spots and find ways to improve them. For more information on each of the sales stages, check out the rest of our sales and marketing articles.
Navigating all seven stages can be a lot to manage. To ensure none of your leads fall through the cracks, we recommend using a CRM such as Insightly. You can read our full CRM recommendations in our Complete Buyer’s Guide to CRM.