The Bad News About Shorter Sales Cycles
In this post, we examine the causes and implications (both negative and positive) of shorter sales cycles and identify opportunities for b-to-b organizations to capitalize on this potential shift.
Nearly two-thirds (64%) of the respondents to our ongoing sales forecast and pipeline survey stated that their companies’ sales cycle length is either stable or decreasing. This data suggests that the long documented trend of steadily increasing sales cycle length is finally coming to an end. While this change may be driven in part by the gradual improvement in the economy, our research indicates a fundamental shift in buying behavior is also occurring.
Many buyers are now better at self-educating, having learned how to search, source and filter the information available on the Internet. Consequently, sales is engaging with more informed and proficient buyers who already understand core features and comparisons of alternatives; what they want to know is how a product/service being evaluated will perform in their unique environment. They engage sales reps much later in their active buying process, which leads to shorter sales cycles.
Buyers are also becoming more efficient at managing the collaboration of multiple internal buying roles. While the finance team may dictate the process for requesting and allocating funds, business units drive the needs assessment and justification to support the investment. Processes for establishing priorities, gaining necessary approvals and meeting requirements for return on investment (ROI) and total cost of ownership (TCO) are unique to every organization and initiative. As buyers engage in a purchase decision every couple of years or so, depending on the product or service, they slowly but steadily improve their ability to execute the buying process efficiently.
While shorter sales cycles are good news when they are driven by better sales processes and favorable economic trends, they can backfire when they are driven by more mature buyers who are less dependent on sales reps for knowledge and guidance. If sales reps have a narrower timeframe and fewer interactions to influence buying decisions, the selling organization’s leverage over these outcomes will be reduced unless it takes effective countermeasures.
Bad News Equals Opportunity
y adapting aggressively to the requirements of mature buyers, b-to-b organizations can turn the potential bad news of shorter sales cycles into competitive opportunity. Below are three strategies that organizations should consider:
1. Bad news: Buyers are able to source information freely from multiple independent sources before engaging with sales. Opportunity: Progressive marketing teams must construct dynamic web experiences to guide and inform the buyer, stimulate inquiries and identify buyers entering into an active buying cycle. Marketing should inform sales about the buyer’s previous behaviors and activities when passing marketing qualified leads to sales, analyze and educate reps about competitors’ and third-party Web resources, and share what sales should expect the buyer to know. Sales and marketing should build and link common value messages based on a buyer’s online experience, giving the salesperson an advantage over poorly integrated competitive sales and marketing functions.
2. Bad news: Shorter sales cycles result in fewer interactions for the sales rep to influence the decision. Opportunity: Sales organizations should track sales cycle length by sales stage to identify when, where and how buyers engage with sales. It should then refine sales processes to ensure the right set of selling activities are in place to synchronize with buyers’ needs and increase the impact of the reduced number of interactions. Messaging or targeted playbooks based on buyer profiles should be developed to provide the sales rep with the information needed to maintain his or her knowledge advantage when selling to a more mature buyer.
3. Bad news: While sales cycles are shorter, sales capacity (the number of deals that the sales force actively manages) hasn’t increased. Opportunity: As informed buyers engage with sales later in the buying process, sales can defer to marketing to take more responsibility for educating future prospects and passing the results to sales when these prospects enter into an active buying phase. Sales can then fine-tune its qualification criteria to focus on deals that are already active and more likely to close, reducing the amount of time spent chasing “no decisions” and increasing the number of active deals in the pipeline.
Due to today’s increasingly knowledgeable and prepared buyer, the long-established trend of expanding sales cycles may be stabilizing or reversing. Shorter sales cycles for mature buying organizations are in fact the result of these companies’ effective use of technology and consistent buying processes to drive better, more efficient decisionmaking. B-to-b organizations must likewise exploit technology and optimize their sales and marketing processes to meet the needs of empowered buyers and increase rather than decrease their leverage over buying decisions.
Ally Motz
1 Comment
Eric Goldman said
Great article with some very relevant research. But I come from a place that sees only Good News in the trend towards shortening sales cycles.
Our own research shows that more than 90% of today's b2b buyers begin their search for a solution online and thus the opportunity to engage them early is not only available (i.e. the Internet and websites), but the mechanisms to do so avoid every one of your "bad news" issues, too. I'm referring to the powerful duo of Inbound Marketing and Marketing Automation which we call Inbound Marketing Automation, or IMA.
IMA uses Search Engine Optimization and Social Media Marketing to attract people to your site when they begin their search. Then it uses your own thought-leading content like white papers, videos and tools (like calculators) to engage their interest and persuade them that they should register on the site to get more of this educational and informative content. They register by giving your their name and email address (and thereby give you permission to market to them). And by so doing, your company gets that chance you were lamenting over, to interact with them early in this cycle, educating them about your company and its services and products.
The IMA system sends highly personalized emails (drip email nurturing campaigns), which thank the person for visiting the site and suggest the next item of information they should read, to further their education (and thus to nudge them to the next stage of their buying cycle).
Each time these people return to the website for more information, they are tracked by the IMA system, scored on their activities on the site (pages read, frequency and duration of visits, etc.) and graded on their answers to questions posed when they wish to download more content.
And when the prospect reaches a predetermined score and grade, they are fed into your CRM and the appropriate sales rep notified via an email which contains all the person's history (the pages of the site they read reveal their preferences and interests), and their social media profiles (revealing still more about the person). Thus sales reps now place informed calls rather than cold ones.
All told, companies who design and implement an IMA system experience lower costs. A Hubspot survey shows IMA systems produce leads for 60% of the cost of more traditional systems. And better results - the same study showed as much as a 250% increase in conversions and shorter sales cycles.
For those who would like to learn more about IMA systems, our website has white papers, videos, and an extensive glossary on the subject. There's also a Return on Marketing Investment calculator which shows you how to calculate ROMI for IMA systems or just about any marketing campaign.