By Dr. Renae Sanders
What is my sales cycle? Understanding this simple concept is the critical step toward building sustainable revenue for your business. While customers represent organizational relationships, business is won or lost on the people who touch the prospect or client. Each relationship is established and built throughout the sales cycle. Keep in mind, however, that trust is not established until the final product is delivered to the client’s satisfaction.
The sales cycle is defined as the period from which the sales person makes the initial contact with a prospect to the point when the deal is finalized. Some businesses consider the deal finalized when the contract is signed, others when payment is made, still others when the product is delivered. I define the sales cycle as the time lapsed from the initial contact with the client or prospect to final delivery of the product. When you can determine the length of time between contact and the contract and the period from “yes” to YES, you can best forecast your sales projections.
An accurate sales forecast has numerous benefits. It is helpful when planning for future up/down turns in the market, decision to reinvest in your company, building the case for credit, or enlisting the support of investors for raising capital. Sales management is another important role related to the sales cycle. Leaders can better monitor the activity of the sales team and coach employees who need the attention.
Sales Cycle = Prospect > Suspect > Signed Contract > Implementation> Payment
As the old adage goes, you get what you measure and what better metric to measure than your sales. Whether a micro business or large corporate, the sales cycle is the respiratory system of the company. Start tracking the lapsed time from contact and final product/service delivery and watch your sales increase.
Dr. Renae Sanders is the Managing Director at KRS Consulting, LLC, a management consulting firm specializing in organizational relationships. Believing people are the link between strategy and success, Renae works with organizations, leaders, and managers to strengthen internal relationships. You can reach Dr. Sanders at email@example.com.