What is a sales cycle? Definition, stages, and importance

Posted December 3, 2021

headshot of blog author, woman smiling

By Serena Miller

Editor, Sales Best Practices at Outreach

A well-established sales cycle is the cornerstone of a successful sales practice. For sales reps, it provides a strong framework for next steps, lead prioritization, and a more cohesive deal-closing process. At the same time, sales leaders and managers use sales cycles to evaluate their teams efforts and modify the sales process for better performance.

However, creating and managing a successful sales cycle can be difficult for already-busy sales teams - especially if they aren't leveraging the right tools.

Here, well take a deep dive into the common stages of a sales cycle, why its essential, and how proper sales cycle management backed by powerful software can drive effectiveness and profitability.

What is a sales cycle?

A sales cycle is a clearly-defined set of steps that sales reps use to close deals. Sales cycle management, then, refers to the processes and tools that sales leaders, managers, and reps use to track each stage within the sales cycle. When managed correctly, this helps teams uncover deep insights into both positive trends and opportunities for improvement.

The term sales cycle is sometimes confused with the sales process. Though the two are closely related, each concept is distinct. The sales cycle consists of the specific, predefined steps or stages a team uses to execute a deal, while the sales process refers to how those steps are carried out (i.e. the methodology or approach a team follows).

An organizations sales cycle informs their sales velocity, which can tell them how much revenue they can expect to bring in over a given period of time. Sales velocity is a metric that's crucial for measuring how quickly deals are moving through the sales pipeline and generating revenue.

Why is the sales cycle important?

The sales cycle is vital to individual reps, sales departments, and the teams with which they interact, and the broader business as a whole. Developing a clear sales cycle is an essential job of a sales manager. By setting expectations around deal stages, they can more easily assess the health of the deals in their teams pipeline and step in to help deals move forward, as needed. This makes the sales process and their entire team more efficient.

Without a well-defined sales cycle, each individual rep must rely on their best judgment when deciding which activities to execute. That makes it difficult (if not impossible) for leaders to understand the efficacy of specific activities and the sales cycle as a whole. Without those insights, teams cannot make meaningful improvements to optimize the sales cycle or shorten the time it takes to close deals.

The 7 stages of the sales cycle

While each sales organization is unique and should tailor its sales cycle stages to its own specific needs and objectives, there are some common steps that most businesses follow:

Sales Cycle Graphic

1. Prospect for leads

Before your sales reps can begin selling your products or services, they must identify and reach out to potential leads who fit the profile of an ideal buyer. This is vital for two reasons: It gets your business in front of prospective buyers, and it demonstrates that your team is both proactive and engaging. Since 71% of buyers say they want to hear from sellers early in the buying process, prospecting is a necessary part of any successful sales cycle.

Prospecting (also referred to as lead generation) can include a variety of activities, depending on your business, the products or services you sell, and the industry in which your company operates. Research into your competitors techniques and the overall buyer landscape can help you determine if your team should prospect via cold calling, outbound emailing, LinkedIn messaging, or other promotional activities. As you get started, dont be afraid to try out a few different prospecting techniques to identify which ones yield the best results for your team.

2. Connect with leads

Once you've identified potential leads, you can start to make genuine connections using emails, phone calls, and even letters. Its best to personalize these interactions, as 31% of sellers say that sending one-to-one, customized messages is extremely effective. Whats more, sellers have an average of 14 days to engage a buyer before its too late, and the most successful reps reach out to buyers nine times across various channels within that window.

It should be mentioned, though, that this is not the stage at which salespeople should give a full sales pitch to their leads. This step is about creating a genuine connection with leads to open the door for a full pitch later on.

3. Qualify through research

Not every prospect is fully qualified to buy your product or service. They might not actually be ready to make a purchase, have the proper budget, or have the authority to make purchasing decisions within their organization. Your product or service might not even be the right fit for the problems they're looking to solve, in which case a purchase could negatively impact your customer service and attrition rates down the line.

Thats why its essential to qualify customers through specific criteria and research. This can be conducted during the lead connection stage or on its own, and should uncover details like:

  • Whether or not the prospect’s budget is aligned with the cost of your offerings
  • If your offering solves for the prospect’s pain point(s)
  • If the person you’re in contact with is authorized to make purchases, or if they’ll need additional stakeholder buy-in
  • Whether or not they are truly ready to buy

Without a qualification process, sellers risk wasting their time chasing buyers who won't - or shouldn't ever - end up making a purchase.

4. Present the sales pitch

Presenting an effective sales pitch requires a great deal of preparation, as each client might respond differently based on myriad factors. Many companies have a standard sales pitch that reps adapt for each individual client to properly address their unique questions and concerns. 

Since 58% of sales meetings are not valuable to buyers, nailing down the pitch stage can become a key differentiator for your sales team. Make sure you implement a customer-centric approach for this critical stage, which will help you:

  • Communicate exactly how your product or service will provide value to the customer
  • Better collaborate with the buyer (hint: mutual action plans are a must for demonstrating your willingness to take customer considerations into account)
  • Deeply educate the prospect, using robust resources that boost their confidence in your offerings
  • Demonstrate your expertise in the buyer’s market and industry challenges

5. Manage objections

More often than not, potential clients will raise objections, which your reps will need to answer effectively in order to positively influence buyer decisions. This stage is sometimes frustrating, challenging, and overwhelming for salespeople, who must promptly convince the buyer that their doubts are unwarranted. Its especially tricky for teams that still rely on a desk full of sticky notes or battle cards (e.g. a list of prompts or talking points to reference), as they're often messy, disorganized, and dont offer the in-depth support they need to power through objections.

Modern teams instead use virtual assistant tools that listen to rep conversations and intelligently suggest content like competitive differentiators, product features, pricing, integration, and more in real-time, so reps can knowledgeably answer prospect questions during live meetings.

6. Close the sale

The amount of time between the sales pitch and closing can take months, depending on the customers company size, industry, and decision makers. Reps often host multiple meetings after the initial demo to review product capabilities in further detail, discuss expected outcomes/ROI, or present to a larger buying committee. Theres also generally a lot of followup over phone and email to answer questions and keep buyers engaged.

Its important to remember that there are a couple of different outcomes that can occur in this stage: the customer can negotiate your proposed terms (including price, scope of work, expectations, delivery timeline, etc.) multiple times until they either sign a contract or push back on closing the sale. Your sales reps must know how to confidently negotiate with customers or risk losing the deal in the eleventh hour. Its also essential that your team knows when to call it quits so they dont waste precious time negotiating with a client who will never actually buy.

Once an agreement between your seller and the customer has been made, the deal is ready for closing. At this point, depending on your business, both parties will either sign a contract or facilitate a simple transaction.

7. Follow up and referrals

So you've closed the deal and signed the contract but your efforts shouldn't stop there! Its crucial to follow up with your established customers in order to retain their business. And since increasing customer retention rates by just 5% increases profits by 25% to 95%, you likely can't afford to ignore this stage.

Create a sales cycle that includes a thorough followup process, where reps consistently and proactively check in with existing customers to answer questions, reevaluate their needs, and educate them on new or updated products. That way, your customers will know your business is a trusted partner on which they can rely for valuable solutions. A proper account planning strategy can you better understand how well your offerings are meeting their needs and make any necessary adjustments.

Its also a great idea to include referral requests in your followup process, which will help generate more business from your existing satisfied customers. In fact, word-of-mouth recommendations are powerful drivers of new business. To help boost the odds of getting these types of referrals, make sure youre always providing excellent customer service and encouraging your clients to be vocal about their experiences with their peers. Even better? Try implementing a referral program where existing customers receive discounts on future purchases when they successfully recommend your business to a new client.

Sales cycle management

Improving your sales cycle requires a strong sales cycle management process that helps you measure the efficacy of each stage. This is vital for shortening the deal cycle, understanding what comes next, determining who is responsible for what, and locating the necessary resources to keep making progress. In short, sales cycle management is how sales reps, managers, and leaders optimize each step of the sales process for improved efficiency and ultimately a better bottom line.

Evaluating sales cycle performance means tracking some key performance indicators (KPIs) that provide insights into the health of your process. Some common KPIs include:

  • Total number of monthly sales
  • Number of new leads per month
  • Sales cycle length

Proper sales cycle management can be difficult to achieve, though, if you dont have the right tools for support. Traditional methods like manually updating fields in your CRM system or outdated tools like spreadsheets just won't offer the transparency and collaboration required for success. They're time-consuming, burdensome, error-prone, inflexible, and cant scale alongside a growing organization.

Competitive sales teams use modern software to help them better manage their sales cycle. Some tools offer features that enable sellers to create mutual action plans (MAPs) to help shorten the deal cycle. They also give sales managers total visibility into what comes next in the deal cycle, who's responsible for each step, and where to find the resources they need to move forward. 

The right solution should give reps a clear process for collaboratively planning their deal cycle with clients as well as a solid framework for navigating the many stakeholders, processes, and tools required to build a strong business relationship.

Ready to improve your sales cycle?

Your sales cycle is a valuable component of a successful sales process, and one that should be used to maximize your teams potential. But getting it right requires a strong management process and powerful tools for support.

The Outreach Sales Execution Platform is the single platform for all selling activities, unlocking rep productivity across the entire sales cycle. Outreach delivers all of the workflows and insights that sellers need to prospect and build pipeline, run effective sales meetings, navigate buying committees, and manage deals to close. Learn how Outreach can help your team improve win rates or request a demo today.


Read more

Discover the Sales Execution Platform
See how Outreach helps sellers close over 2 million opportunities every month.