Do you remember the 3% rule?
Only 3% of your prospects are ready to buy at any given moment. Jeremy Miller, author of Sticky Branding, says 90% of your customers are not ready to buy.
- 30% have a need, but they’re not ready to buy
- 30% don’t have a need
- 30% will never buy from your company (even if they have a need)
At first glance, this sounds discouraging.
The majority of your prospects aren’t ready to buy from you. Even worse, your sales team is forced to compete with other salespeople inside and outside your company. Selling is no longer a numbers game; those days are over.
How are you supposed to compete in that kind of environment?
It’s simple.
You use sales forecasting to increase your pool of active buyers from 3% to 70%.
Why sales forecasting is essential for sales teams
Sales forecasting shows your team where they are in relation to your organization’s goals.
Let’s say you’re 65% below your quarterly targets. Something is wrong, your sales team isn’t performing as well as they should be. Sales forecasting shows you where you stand ahead of time while you still have a chance to course-correct.
You hit your sales targets, and you avoid an uncomfortable conversation with management.
What if things are going well?
As the sales manager, you see that you’re on track to exceed quarterly goals by a whopping 43%.
This is great news, right?
It would be if you had enough salespeople to capitalize on the growth and opportunity you’re experiencing. Your sales forecast gives you the data you need to justify new hires.
Your forecasts are versatile.
You can use your sales forecasts to accomplish quite a bit.
- Project revenue over a specific period of time
- Identify whether your team is on track to meet quotas/goals
- Discover challenges, bottlenecks, and stall points for your sales team
- Identify areas where your sales team needs additional training
- Identify important buying trends (e.g., booms and slumps)
- Discover seasonality, habits, trends, and triggering events
- Spot areas where you can improve your sales process and shorten your sales cycles
Today we’re going to focus our attention on shortening your sales cycles.
Many salespeople are focused on what they think customers want rather than the things that actually matter to them. This changes a customer’s perception of your salespeople, shifting from a trusted advisor to a pest whose only focus is separating them from their money.
Naturally, customers refuse to buy from these salespeople.
So what’s the solution?
What you need to shorten your sales cycles
There’s a mix of tasks you can do to shorten your sales cycles considerably. These tasks can be broken down into two broad categories:
- Internal tasks: These tasks are things your sales team can do to shorten your sales cycles. These tasks are focused inward, on optimizing your company’s people, processes, and products.
- External tasks: These tasks focus on external factors — qualifying and disqualifying customers, uncovering expectations and objections, etc.
Here’s a shortlist of tasks you can perform in each category to shorten your sales cycles.
Internal tasks
- Automating deal flow —automating and semi-automating as many steps in your sales process as necessary
- Rejecting unqualified leads — this could be as simple as sending cold leads back to marketing to be nurtured
- Pruning CRM leads, removing unresponsive, disqualified, or poor quality leads
- Creating a helpful and practical follow-up campaign to warm up prospects who intend to buy
- Identifying the desires, goals, fears, expectations, and risks of your active customers
- Make it easy for prospects to contact, answer, or buy from you
- Creating a framework of if/then responses salespeople can follow to build rapport, follow-up, and close deals quickly
- Focus 80% of your time on your best performing sales channels, 20% on new or unproven sales channels
External tasks
- Disqualifying prospects quickly (e.g., using pricing, terms, objections, guidelines, demographics, etc.)
- Identifying prospects who do not have a need; identifying triggering events that create a want/need to buy
- Identifying and rejecting prospects who will never buy from your company (e.g., past customers, blacklisted, etc.)
- Creating a list of requirements individual salespeople must meet before starting a proposal or quote
- Spending more time with qualified prospects
- Require firm commitments before agreeing to commitments (i.e., if I write this proposal, will you agree to a 15 min call to discuss on Zoom?)
- Create incentives to motivate customers to move quickly (e.g., order by [#date], and you’ll receive [#incentive])
- Share social proof with prospects (e.g., case studies, reviews, testimonials, references, etc.)
This isn’t intended to be a comprehensive list.
It’s about exposure.
It’s my attempt to get you to think about the factors that slow down the sales process, extending your sales cycles.
Which factors?
These are the external factors that extend sales cycles.
- Pricing mismatch: The price is more than I want to spend
- Distrust: Your offer is good, but I don’t trust you (your company)
- Politics: I’m using you as leverage to get a better deal with the company I want
- Poor timing: I’m not ready to make a deal right now, but I may be in 6 months, contact me then
- Complacency: I wanted to see what my options are, but I’m actually good with what I have right now
- No interest: I don’t know how you got my information, but I’m not interested in buying this product right now
- Vampires: Predators masquerading as customers; they want to squeeze as much out of you as they can while giving as little as possible in return
These are the internal factors that extend sales cycles.
- Poor performers: A-player sales reps dramatically outperform B and C-player reps
- Insufficient coaching: B and C-player reps repel customers, are poorly motivated, defensive when criticized, negative, and difficult to work with
- No development plans: A development plan provides clarity for each sales rep — what they will do, when they’ll accomplish their goals, and how it will be measured
- Poorly defined sales process: You’ve just given your new sales rep 30 leads. What are the steps they’ll need to follow from beginning to close? Does your sales rep know these steps?
- Missing resources: When your sales reps have a question about a prospect’s complaint or objection, do they have a place to go to get the resources they need? What if they want to learn more about the product or service they’re selling? Who will help them with that?
- Poor time management: How do top-performing reps in your company spend their time? Which tasks should your sales reps accomplish each day, week, month, or quarter?
- Poor account management: Are sales reps unresponsive to your prospect’s needs? When prospects request information, do they receive answers in a timely fashion? Are prospects given the attention they need to make a decision one way or another?
These are the triggering factors/events you’ll want to monitor.
How to use sales forecasting software to shorten sales cycles
When it comes to forecasting, there are several methods you can use to get the valuable intel you need. The two most common methods are as follows:
- Historical forecasting: Using past sales data to make predictions about the future. The more (accurate) data you have, the more precise your forecast.
- Opportunity forecasting: You look at the deals in progress to forecast which deals are most likely to close. This requires a well-thought-out sales process and clearly defined stages you can use to gauge performance.
There are other more complex or informal methods (e.g., multivariate analysis, intuitive forecasting) can be used, but they require more quantitative prowess. The two methods I’ve listed above are the most common.
How do you use these two methods?
If you’re using CRM software, sales forecasting should be an integral part of your tool. The data provided will vary by provider, but you’re looking for data that shows you whether you’re on track (or not). You can use this to answer specific, forecast-related questions.
Questions like:
- Will we make more revenue from [Source A] or [Source B]?
- Which source or channel produces more revenue per customer [Source A] or [Source B]?
- Which source or channel costs the most/least?
- What’s the projected revenue for [Date Range]?
- Which customers take the longest amount of time to close?
- How long does it take to win/lose deals?
- Why are we winning/losing deals?
- Which sales reps close deals the fastest and why (e.g., discounts, connections, incentives, more nurturing, etc.)?
- Which sales reps get quotes or proposals out the fastest? Of these, who closes the most deals?
- Which sales reps are the slowest closers?
- Which sales reps lose the most deals? Why are they losing deals?
- Which products/services sell more quickly?
- Which products/services require more discounts to generate revenue?
- Which customer or type of customer spends the most time in a particular stage of the sales process?
- What kind of deals are frequently pushed or stalled, and why?
- How long does it take, on average, to win/lose deals?
Did you catch that?
These forecasting questions hold the secret to shorter sales cycles. If you’re able to find the answers to these questions (and questions like these), you’ll be able to consistently reduce your sales cycles.
How’s that?
You ask questions then, and then you do some digging to find the answers. The more in-depth your answer, the easier it is to identify a solution to the problem.
Here, let me show you a few examples of what I mean.
- Will we make more revenue from [channel partnerships] or [Google ads]?
“With channel partnerships, our conversion rate is 67%. The majority of prospects are actively engaged and interested in what we have to say. With Google ads, we only close about 23% of our leads.” - Which source or channel produces more revenue per customer [channel partnerships] or [Google ads]?
“Channel partnerships are 3x less expensive and produce 66% more revenue per customer, but fewer leads. This means we need more channel partners.” - Which source or channel costs the most/least?
“Google ads are 3x more expensive, but we receive 8x as many leads. We need marketing to lower lead costs and properly disqualify prospects on the front end. We need to disqualify customers on the back end, avoid discounts and sell at a markup.” - Which customers take the longest amount of time to close?
“Customers from LinkedIn take a considerable amount of time to close (63 days) compared to customers from channel partnerships (23 days). LinkedIn customers tend to be cheap, and they’re eager to force us into a bidding war with competitors.” - Why are we winning/losing deals?
“We win the majority of our channel partnership deals because our customers have received a significant amount of education from our marketing team. By the time we receive these marketing qualified leads, these prospects are ready to sign on the dotted line. Our Google customers have significantly more questions about our products and services, and they do more comparison shopping with our competitors.”
See what I mean?
Start with your CRM forecasting reports if you’d like to shorten your sales cycles. Use your opportunity and historical forecasts to flush out these questions, then search for answers to these questions. Doing this will provide you with the know-how you need to shorten your sales cycles, increase revenue, and boost your average order values.
Sales forecasting software is a must-have for your sales team
At any given moment, only 3% of your prospects are ready to buy; 30% have a need, but they’re not ready. Another 30% don’t have a need, and the last 30% will never buy from your company (even if they have a need).
This is very good news.
Sales forecasting gives you a systematic method you can use to grow your active buyers from 3% to 70%. Even better, sales forecasting shows you how your team performs in relation to your organization’s goals. It’s a simple strategy you can use to win more deals.
Identify and answer the right questions, and you’ll find your team has everything it needs to perform in a competitive market and win.
