Increases # of customers by speeding up the rate at which you close them. This is worthy of a subsection of its own because there’s a lot to explore on this topic.
Conversion Rate Optimization (CRO) is the practice of improving the conversion rate of a particular step or Call to Action (CTA) in your sales process. Doing so not only helps capture more customers but also potentially speeds up their conversion process. I won’t delve into CRO and optimizing CTAs in this section but will instead share ways to shorten the time it takes to convert a lead.
In my humble opinion, a sales cycle lasting more than three months is too long, even if you’re dealing with traditional, highly regulated, or bureaucratic organizations. So, how can you address this?
Reduce # of steps in your sales process.
The more steps or handoffs there are in your sales process, the longer it takes to convert a prospect. Consider which steps could be eliminated or shortened to reduce the time a prospect spends in each stage.
Also, remember that not every prospect needs to go through the same hoops before converting. Evaluate what’s truly necessary and design a sales process that adapts to your prospect.
Budgeting cycle/purchasing periods
When does their fiscal year end? Some organizations rush to deplete their budget at the end of their fiscal year.
When does their new budget get approved? At the start of a new budget cycle, they may also more readily spend or put out Requests For Proposals (RFPs).
If they’re not at the right stage in their buying process, or if their purchasing schedule doesn’t align, move them to “parking” as leads to be followed up with at a later time or move them back into the marketing funnel to be nurtured. Don’t forget to set up automation that will remind you to follow up with them when the time is right.
Reduce formalities
Contracts typically involve a lawyer and require more time for approval. I’m not suggesting you shouldn’t protect yourself, but consider exploring alternative approaches if possible. For instance, consider using proposals and memorandum of understandings (MOUs) instead of contracts. Proposals frame the interaction as a partnership: You’re proposing something, to which the other party may suggest amendments. This less prescriptive and more collaborative approach helps build a stronger relationship with your client.
Paul Brassard, a mentor of mine from Volition Advisors, employs a variation of this in what he calls “whiteboard sessions” with his prospects. During these sessions, he gathers decision-makers in a room, ideally with a large whiteboard, where they will outline the challenges, opportunities, and plan for moving forward. He then captures a picture of the whiteboard and uses it as a basis for drafting an MOU. Nothing in this MOU should come as a surprise as it’s already been thoroughly discussed, and all concerns and objections should have been addressed. In most cases, a formal contract isn’t necessary. However, when it is, if they’ve had a positive experience working with him, they’ll readily commit to signing one for a larger project.
Disclaimer: Contracts are still necessary; they’re important for aligning expectations and ensuring there’s something to fall back on in the event of disagreements. They help clarify goals, outcomes, and initiatives, thereby minimizing ambiguity to mitigate dissatisfaction. They’re important for larger projects and usually necessary for working with the government or larger organizations. The point here is to explore alternatives or smaller ways to work together in advance, if at all possible.
In another real-world example, I had the opportunity to work with a company that offered software designed to assist doctors in managing their student interns during residency training. Their target customers were hospitals and universities, both known for their complex regulatory requirements, bureaucratic decision-making processes, and stringent technical standards. Selling to these institutions was notoriously slow, resulting in an average sales cycle of about one year.
To explore what we could do about this, I suggested “mystery shopping”. We assumed the role of a hospital to investigate how our competitors finalized deals and onboarded their customers This undercover research revealed a significant difference: our competitors didn’t rely on contracts. Instead, they allowed hospitals and universities to test their platform for free and later upgraded them on a subscription model to access premium features. They safeguarded against liabilities through the platform’s Terms & Conditions, requiring only a simple proposal for hospitals to initiate a small pilot within a department. By adopting a similar approach, they managed to dramatically reduce their sales cycle to about a month.
Set clear next steps
Prospects don’t want to feel manipulated during the sales interaction, but this doesn’t mean you should relinquish the responsibility of guiding the interaction. You still need to lead them through to the next stage of their decision-making process.
Ensure you book follow-up meetings during a call or meeting instead of going back and forth via email to arrange a time afterward. Identify who needs to be present in the room and ideally have them all in the same meeting, rather than going from person to person to schedule individual meetings. Walk them through the transition and onboarding process. Being clear and removing ambiguity eliminates risks and uncertainties that might be holding them back.
Avoid Time-based Trials and Freemium
Offer a 14-day free trial? Congratulations, your sales cycle is now a minimum of 14 days. Avoid needlessly extending your sales cycle, as most prospects tend to use the entire trial period and often only convert after it concludes.
What about the popular Free vs. Pro or Tiered approach where users pay to unlock more features? I don’t encourage it for two main reasons. Firstly, it assumes you know what users are willing to pay for. Secondly, your power users may differ from your free users.
Consider a photo editing service. Your free users, typically average individuals, may need occasional touch-ups, while power users, like professional photographers, have different needs. These diverse user groups demand distinct marketing approaches. Professional photographers may also need unique features that the average individual wouldn’t consider. For instance, individuals might be willing to pay for printing and framing, whereas professional photographers may be more interested in bulk editing.
Even if you decide to focus solely on individuals and consider them your power users (i.e. power users being the same as free users, not a separate and different persona), you’re still assuming they’re willing to upgrade for features like prints and framing. However, this assumption may not align with their priorities, and they may settle for the free tier.
The freemium approach often results in feature bloat as you add various features to cater to different power users. Some of your added features may not align with your customer’s true needs. Each new feature is a test of a new value proposition, demanding trial and error to confirm the right power users and if those features are indeed what they’re willing to upgrade and pay for.
Instead, adopt:
ASSIGNMENT
Are there any ideas from the above that you can apply to shorten your sales cycle?