The Simplicity of Sales: The New Business & Existing Business Sales Cycle.
Today, I want to talk about the simplicity of sales.
The Sales Cycle.
The sales cycle sits at the storefront of every sales team.
It answers one question: how do we bring somebody interested to buy our solution, upsell, and renew effectively?
Simple as that.
You don't need to overcomplicate things.
Prospects --> Lead –> Customers –>Happy Customers with increased Life Time Value (LTV).
Suppose your LTV is 3X your CAC (cost of acquisition), bingo! You are up for something fantastic!
99% of the CEOs and Founders I talk to have a sales cycle.
They have a CRM, and they are tracking their interactions with prospects.
But it is never perfect. It's messy.
It is never oiled and bullet-proof and is far from an established and recognised recurrent process. Their sales team don't understand each stage and welcomes confusion!
Some of the common mistakes I see:
They use only one pipeline, and often, they miss the sales cycle for existing clients;
They have death stages on their cycles (aka CRM pipelines) like 'on hold', 'contact later', and 'not ready'.
They don't track crucial stages like negotiations, contract exchange, or skipping critical dialogue with their prospects.
These are just some.
Unfortunately, sometimes they don't use CRM; they use Notion, for example, which is not a CRM.
You need a standardised, easy and successful process for your sales cycle.
Firstly, you must track new and existing businesses.
If you sell through channels or partners, I suggest having a sales cycle and pipeline for those, too.
Max three sales cycles and, therefore, max three pipelines.
Yes, pipelines.
As mentioned already, your sales cycle has to mirror your CRM pipeline.
Same names, same rules.
Consider your sales cycle as your customer journey, from the beginning to renewals.
For each stage, explain what's needed and what each step means. Add the probabilities of closing for each of those.
In addition, remember to teach your entire company about your sales cycle.
The sales cycle should be clear to everybody.
New Business
Alright, let's start.
New business is the motion you are in to acquire new logos and companies.
This is where prospects become customers.
Depending on the size of your ACV (average contract value), your new business sales cycle may span from one week to one year.
A range of duration & size of the sales cycle can be:
Deals <€5K: up to 30 working days
Deals <€25K: up to 60 working days
Deals <€50K: up to 90 days
Anything above that it may take from 6 to 12 months.
The first step is to identify how prospects arrive, inbound, outbound, and referral and then move them through each stage.
New deals go into New, then we contact them to arrange a call or reach out, and we hit Contacted, then Discovery, if qualified, moving to Demo/Proposal, Negotiation/Decision Maker Bought in, Contract Sent and finally won or lost.
The goal is to move deals only when the action happens.
For example, in the stage' Discovery Call', we place only deals where a discovery has happened.
Avoid having deals sitting on stages for too long, and add alert notifications to your Slack channels for the most critical steps. Closed Won, New deals in Pipeline, and Contract Sent should all be notified.
Remember to add probabilities of closing for each stage.
Existing Business
Now to the best part.
Yes, existing business is the best part. Indeed, in 2023, with budget shrinking, high-interests, lay-offs.
Companies globally are cautious about spending money, so your existing customers are more relevant than ever.
You must manage this part of the sales cycle, usually with CS, Account Manager, or even Account Executives handling upsells.
A growth goal for your baseline and a churn % goal would be best.
Remember, your LTV has to be 3X your CAC. Therefore, existing business becomes very, very important.
Once the deal is won, we move them, with a workflow, into New.
After we take over for Onboarding and when we have the first login or any relevant milestone, we move them into Live.
If our clients struggle with implementation, usage or anything else, we should consider Churn Mitigation.
This is when the red flags start waving at us; we should do something to recover them.
Instead, If we get signals for extra usage or great success during one of our QBRs (Quarterly Business Review), we want to move those deals into Upsell.
Summary
The simplicity of the sales cycle is the simplicity of your team going through each step.
What happens for each step, why, and what is the probability of closing?
Then, coach your team to maximise their efforts, improve conversions and speed up, again, each step.
This is sales.
People like us to think sales is complex, but it isn't.
It's simple.
Thank you all for reading this far; see you all next Saturday! Same time, same inbox. Ciao!
