Sales Cycle Stages: A Detailed Breakdown
Companies with a dedicated, well-defined sales process experience 18% more revenue growth than companies without one. Understanding how customers move through your sales cycle makes it much easier to spot where your strategy falls short.
You’ll know if a prospect is hitting all of the expected marks on the way to closing a sale, or is missing your defined targets and expectations. You have something to benchmark against.
That said, most modern sales teams spend most of their effort focussing on the first parts of the sales cycle: researching, qualifying, and prospecting. The thinking is that if you nail these first few, you’ll have tons of customers coming through your door for your sales team to work with.
That's true, but if you spend effort and resources perfecting the end of your sales cycle, you may end up creating an even more robust pipeline for your team to work with. It's beneficial to spend time and energy focusing on all parts of your cycle, not just those that start the process off.
We're putting the cart before the horse, though. Let's talk a bit more about what a traditional sales cycle looks like.
What are the stages of a sales cycle?
A traditional sales cycle looks something like this:
Depending on how technical your product is, how large your contracts are, and whether you are B2B (more complexity) or B2C (less complexity), your cycle may look different. For a straightforward B2C product, the sales cycle may be three steps or even less, for instance. For a B2B product with large contract amounts, there will likely be significantly more steps to make the sale.
No matter what type of sales team you have, your process will likely be made up of the following:
- Prospecting for leads
- Qualifying leads to see if they are viable as prospects
- Researching the company and finding out who the decision-makers and stakeholders are
- Reaching out to the contacts that you found during research
- Setting up appointments
- Pitching your product to your prospects
- Addressing objections that your decision-makers bring up during the pitch
- Following up with your prospects
- Closing the deal
- Asking for referrals from your customers!
While a lot of effort and energy goes into finding and pitching to prospects, your team should also give energy to everything afterward. Here's why:
Focus on addressing objections
Sales objections are just like feature requests: hearing about what your customer doesn't like is a huge opportunity to learn where you could be better. It allows you to know where your product's actual value is and which customer pain points you aren't yet solving.
Those types of insights are enormous when designing your product roadmap—you'll retain and gain more customers if your prospects have fewer things to object to.
Often, companies assume that addressing objections just falls in the same part of the cycle as pitching. But when you differentiate it as a separate step, you let your reps know that there is real value to it. The objection period is where your team can step up and create value and meaning during the sales cycle.
There are four key things to do in this phase:
- Listen to what your customer is saying. Rather than assuming that you know where they're going, listen to their whole statement with active ears. Let them finish before you cut in.
- Understand what they are asking about. Ask qualifying questions if you aren't sure that you understand where the issue is or what they object to. For instance, if they are pushing back on the timeline, ask more in-depth questions about their internal budget process.
- Respond to their objection in a way that assuages their concern and lets them know you heard them.
- Confirm that you understand their objection, and provide them with the information they need to resolve it.
If you do this every time, you'll find your sales cycle and product getting tighter from constructive insights. Beyond that, you'll build customer trust and loyalty before they've even signed the contract.
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Closing the deal
Closing the deal kind of feels like something that can be a second thought. After all, your team has done the work of getting your customer ready and willing to close, do they need to put that much thought into it the actual experience of the closing? It’s just signing a contract, right?
Wrong! Closing the deal is a big deal and should be delightful for your customers. Beyond that, you want it to be easy. While it’s the last step of your sales process, it’s only the beginning of their journey as a customer.
Make the process as simple and straightforward as possible, so your customer doesn't have to worry about anything extraneous. No more old-school PDFs that require extra tools to open up and sign. Don't make your customers fill out any messy, hard-to-use forms. Use the resources at your team's fingertips to make the closing process as easy as possible, both internally and for your customer.
Asking for referrals
Across all industries, the average referral rate is about 2.3%. But why? Referral sales are the best. You get to skip over all of the process steps and get right to having real conversations. Getting referrals saves tons of time for your team and is likely a better experience for a customer than getting cold-emailed about your product. The problem is to get referrals, your sales team usually has to ask for them.
The best time to ask for referrals is right after the sale. The customer is riding the high of finally closing on a product that they've wanted to use and has (hopefully) had an excellent experience leading up to it. But why add an extra step?
The customer has just given you their money, and that should be enough, right? Some salespeople might feel sheepish about asking for more. That’s precisely why this needs to be operationalized and normalized as part of the cycle.
B2B companies that ask their customers for referrals end up achieving 70% higher conversion rates than those that don't. Your customers are excited about what they just bought. Use that energy to gain potential additional future, happy customers.
Pro tip: set-up automatic reminders in your CRM for your Customer Success or Sales team to ask for additional referrals at three, six, and nine months.
Make every step of the process work
The best way to make a short, productive sales cycle is to focus your energy on making each step about maximized efficiency and repeatability. Instead of cutting down on your actions, try to make them meaningful in some way.
Whether that meaningfulness manifests in customer loyalty, additional referrals, or just boosted satisfaction at the end of the sales process, your team has it in their power to make every step of the cycle work towards an end goal.
Spend time understanding what your customers want, and then use it to develop meaning and excitement as your sales process comes to a close. Send energy-giving meaningful responses to customer objections, rather than just shooting down their concerns.
Make your deal closing a special event, rather than just another form to sign. Lastly, ask your customers for other potentially happy customers to keep your sales flywheel going.
It shouldn't feel like you're slowing down or lowering enthusiasm just because you know the customer is hooked. Your customers can tell when your team's engagement starts to wane, and it affects their willingness to buy. Keep your reps excited and engaged, and your customer will be excited and engaged in kind.