How Long is Your Sales Cycle? Ours is Four Years.

Well, UP to four years.

The best customers buy from us when the time is right for them, not when it’s right for us. Of course, that requires a healthy pipeline of new and established clients, some good planning and forecasting, and a solid and sustainable (aka “cost effective”) Phase Two in our marketing system.

The actual answer to the question, “how long is your sales cycle” would require an average. Our average is actually 7.3 months, which is close to average for business to business (B2B) service purchases in the aviation industry. But we had one person who first contacted us in April of 2011 just make a first purchase in January of 2015.

How do we know?  And why do we care?

To answer the second question first:

Why do we need to know the length of our sales cycle?

We need to know how long we expect to have to sustain a relationship with a prospect without realizing any revenue from that relationship.  This impacts several decisions:

• How much do we need to charge for our products and services to sustain our overhead during our sales cycle?
• How can we sustain our Phase Two marketing efforts to nurture a relationship effectively during that time without 1) spending too much money or 2) driving our prospects crazy?
• How do we know when to stop a Phase Two effort – i.e. when does a prospect disqualify himself because of the length of time he’s taking?
• How many prospects do we need to have in the pipeline to achieve our sales goals six, eight, twelve or more months from now?
• Is there anything we can do to shorten our sales cycle?

In February, we’re talking about Phase Two marketing activities – things that we should be doing between the first “handshake” or “call to action” by a prospect and the consummation of a sale. Phase Two is where that variation takes place, for lots of reasons.

Of course, many times the length of our sales cycle is a result of many factors beyond our control. 

• Regulatory issues (they won’t buy until an anticipated regulatory change takes place.)
• Budget issues (they won’t buy until they get their third quarter budget.)
• Personnel issues (they won’t buy until they hire someone to manage that department.)

But, many factors ARE within our control.  For example:

• The whole board needs to be in agreement. (We can help speed this along by providing information packages for board members, or making a presentation.)
• They need specific documentation to get the project approved by specific people. (We can help by providing the documentation they need.)
• They need to fit it within their current budget. (We may be able to help with a payment plan or other agreement that makes the financing work for them.)

The objective of a great Phase Two is to facilitate the sales process, while supporting prospects in different circumstances.  Keeping them engaged without chasing them away.

In the case of our new client that we first met in 2011, we haven’t heard the whole story, but it’s a testament to having a very low-cost, low-key, educational Phase Two sales process. In our cases, our Phase Two activities include weekly emails, social media and a printed newsletter in the snail mail.

It is also a good example of why it’s never a good idea to give up on a prospect who has expressed interest in your product or service unless they ask you to, or unless you make the conscious decision to disqualify them as a prospect.

How do we calculate the length of our sales cycle?

We subtract the date of first purchase from the date of first contact (or date of our “call to action”, in our case, the date the customer took their first action in our sales cycle, which is to download an ebook, indicating that they are interested in aviation marketing services.

Example table:

If you need the actual Excel formula, it’s =ROUND(SUM(C2-B2)/30,1) 
(Assuming Client A is on Line 2, then you can simply copy the formula down each row.)

And of course, as in any other statistical exercise, the more transactions in the table, the more accurate our predictions can be. Add in an outlier (like our 4-year late-bloomer) and you can really skew the numbers.

So, it’s important to keep track with a table like this, but it’s also important to use good judgment about how reliable the data is. It gets better with time!d.getElementsByTagName(‘head’)