Shortening the Sales Cycle

By Daniel Shefer
August 10, 2007

Techniques for PMs to impact the sales cycle. By implementing them, they can show strong ROI for the PM role.

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A shorter sales cycle has a direct impact on the bottom line. Shortening the sales cycle can help grow revenue because sales reps will be able to reach more prospects. An additional advantage to a shorter sales cycle is the reduced chances of things going awry during the process.

This article discusses techniques for PMs to impact the sales cycle. By implementing them, they can show strong ROI for the PM role.

Where do you start?

  • Make an effort to understand the intricacies of your sales cycle. Interview the VP of sales as well as the reps in the field. Participate in as many sales meetings as possible and sample multiple sales cycles.
  • Map out your company's sales cycle. Describe each stage of the process and identify all the actions that were taken by each side and find the areas that your help will have the most impact and start there. Make sure to measure the current sales cycle so you have a reference point.

Positioning

Positioning is too large a subject for a single article (or book for that matter). This article will simply describe a tactical step that can be taken within the company's positioning framework to shorten the sales cycle.

How the Prospect's Mindset Impacts the Sales Cycle

Noting where the prospect places your product within their mindset is critical. That location will determine the lens through which the prospect will examine your product. If the product is positioned as different than anything they are familiar with, the prospect will struggle to place it in the right position and will default for one they are familiar and comfortable with. This place may not be conducive to the sale.

Each of the personas in the purchasing process has different expectations and needs. The budget person needs to see ROI and a low price, the IT manager needs to feel comfortable that he will stay in control of his domain etc. In a complex sale, it will be beneficial to position the product slightly differently for the various personas in the sales process. Therefore consider providing the sales reps with a set of sales materials for each of the stakeholders in the buying process.

Pricing

How Pricing Affects the Sales Cycle

Pricing affects the length of the sales cycle in several ways. Prospects facing a high price tag may be forced to refer the buying decision to a committee (or up to the next purchasing power level). This will inherently complicate and lengthen the sales cycle. The ideal price point is just below the ?committee requirement? threshold.

A lower price usually means a quicker sell. Lower prices fit into existing budgets and buyers do not have to seek out additional approvals. There is an exception to this rule. If the price point is too low, it may adversely position your product and raise questions as to why it is so cheap. In addition to the product's positioning, a low price point cannot sustain complex sales cycles.

PMs should be involved in the decision processes that lead to pricing decisions--participate in the pricing committee, conduct market research, perform cost/benefits analysis and help position the product (which includes pricing). All this needs to be down as a prelude before the pricing decisions are made.

For a broader view of pricing, see my article Product and Pricing Strategies

Pricing Models

If your pricing model is complex, the sales reps will have to spend a lot of time explaining it to the prospect. The rep will need to explain it to the prospect and also to educate them well enough for her to sell the pricing model internally. The lack of understanding of the pricing model can cause discomfort within the prospect's mind and educating her can take time. This problem can be avoided with a simple pricing model. Pricing model flexibility is a plus when it comes to the speed of the sales cycle as the rep can change it to respond to the prospect's needs. On the other hand, pricing model flexibility is a drawback from a management and consistency point of view.

Tip
If the pricing cannot be presented on a single slide, it is too complex.

 

Sales Tools

General

The purpose of sales tools from the point of view of shortening the sales cycle is to:

  • Enhance the prospect's confidence in the company.
  • Position the product for an easier sell.
  • Explain the product's benefits.
  • Prevent and minimize objections.
  • Standardize the sales force on a behind a consistent, tested message.

Competitive Reviews

Many times prospects will ask the sales rep for a document comparing your product to that of your competitors. When there is rapport between the prospect and the sales rep, many times, whatever the rep provides the prospect will be the majority of the comparison work she will do. This requires that the document be an even-handed comparison devoid of marketing fluff. Also, make sure all of your claims can be substantiated.

For each competitor, I recommend creating 4 documents :

  • A Competitive Matrix. A feature-by-feature comparison. It is to be used after a prospect has been introduced to the specific competitor and would like to understand the differences between the product offerings
  • Differentiator Document. This document starts with an elevator pitch on why you are better, usually 2--3 points and then details the most important differentiators.
  • Questions to Ask. This is the FUD document (Fear Uncertainty and Doubt). It is a list of questions that prospects should ask your competitor so they can get an accurate picture of what your competitors are really offering and, more importantly, what you want them to know about how the competitor's product really works.
  • Facing Off. This document addresses competitor's claims. It should cover each claim they make with an appropriate response in a simple straightforward manner.

For more details on competitor review documents, see my article Creating Effective Competitive Sales Tools For Your Sales Reps

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