The Seven Sales Cycle Stages
Whether you’ve just become an account executive or you’re a seasoned sales professional, understanding the sales cycle is crucial. In this comprehensive guide, we’ll explore the seven key stages of the sales cycle, providing valuable insights into modern sales strategy.
What is the Sales Cycle?
The sales cycle is the series of stages that sales professionals follow to convert leads into satisfied customers. While the specific tactics and timeline may vary, the sales cycle provides a universal roadmap for sales success. Its purpose is to ensure each customer interaction is approached strategically to maximize conversion rates and drive growth.
The Seven Stages of the Sales Cycle
- Sales Prospecting
- Contacting Leads
- Qualifying Potential Customers
- Presenting Your Solution
- Overcoming Objections
- Closing the Sale
- Asking for Referrals
Stage 1: Sales Prospecting
The first stage of the sales cycle involves identifying potential customers or leads. This step lays the foundation for the rest of the sales cycle.
Sales prospecting stage can be broken down into two parts: Who will want the product or service you are selling (i.e., the total addressable market)? And who do you want to sell it to (i.e., an ideal customer profile)?
Total Addressable Market vs. Ideal Customer Profile
The total addressable market (TAM) for the product or service you’re selling includes everyone who would want to buy it. These are potential customers who stand to benefit from what you have to offer.
Example: Let’s say you’re selling a software platform that helps companies manage their trucking fleets. The product helps track the location of each truck, and also helps plan the optimal routes, cargo loads, and driver schedules. What’s the TAM for this company?
But are you going to sell to everyone in the total addressable market? Nope. That’s where defining your ideal customer comes in.
Your ideal customer is one who can benefit from what you have to offer and is one who you want to sell to.
What size and type of customer are you best suited to serve? Where are they located? What’s their budget, and what do they expect to get for that budget?
One way to think about your ideal customer profile (ICP) is that if they meet all of your criteria perfectly, then they will be very likely to buy from you. Some businesses expect to win ICP prospects 80%+ of the time.
If that sounds unattainable, that may mean you need to sharpen your definition of your ICP. You can do this by adding in other criteria such as the buyer persona, market position, or other factors. Look back at the customers who you have already sold to. Focus especially on those who had the fastest sales cycles. What did they have in common?
There are a number of great resources for defining your ICP. But questions like these can help you get the general idea and can help you pinpoint prospects with the highest potential.
Sometimes prospects will self-identify, metaphorically raising their hand to say, “I’m interested!” How they do this can take a number of forms, such as providing their email addresses on your website or calling your sales line.
Inbound leads typically have a high buyer intent — levels of interest and motivation — which can make them very enticing. You’ll still need to think about whether these inbound leads fit your ideal customer profile.
Stage 2: Contacting Leads
Once you’ve identified your prospects, the next step is to initiate contact. The method you choose can vary depending on your business and the type of prospect. It might involve a phone call, an email, or even a traditional sales letter.
The goal here is not to make a full sales pitch but to establish initial contact with potential customers. Just get on their radar. Gauge their awareness of the problem. Provide some helpful resources. The time to make your big pitch will come later.
Stage 3: Qualifying Potential Customers
Qualifying potential customers is a critical step in the sales cycle. Qualification helps you save time and resources by focusing your efforts on the leads and contacts with the most potential.
Depending on where you look, this stage may be put before initial contact. However, while some qualification may occur during initial contact, the majority will happen during the first conversation.
How to Qualify Potential Customers
There are many ways to qualify potential customers. One common method of qualification is BANT: Budget, Authority, Need, and Timeline.
Is the prospect’s budget in line with the cost of your product or service? Is your contact the final decision-maker or will they need to get permission from someone else to make a purchase? How do they describe their needs, and does it match the benefits of your offering? When do they hope to make the purchase?
It’s important to be aligned with your prospect in most of these areas, if not all of them. If your offering is outside their price range or if they’re not looking to make any decisions for a while, chasing these prospects will be a waste of their time — and yours. The best salespeople are not afraid to disqualify potential prospects who don’t quite meet these requirements.
Stage 4: Presenting Your Product
With qualified leads in your pipeline, it’s time to present your product or service. This is the most pivotal stage in the sales cycle and requires thorough preparation. Your presentation should demonstrate how your offering addresses the customer’s pain points and improves their daily operations.
The best presentations follow a simple structure:
- Define the problem
- Share the solution
- Support with data
Present your offering with this in mind: your prospects don’t want your product, they need a solution to a problem. Focus on the benefits, not the features. And don’t go overboard here with slide decks that are too long or go into extreme technical details.
Also, remember that you’re not just selling a product; you’re also selling yourself. Your body language, demeanor, and appearance all influence the sale.
Stage 5: Overcoming Customer Objections
Even enthusiastic prospects may raise objections or have hesitations during the sales process. Common objections include pricing, specific contract terms, and even a fear of change.
Objections are not necessarily a bad thing! They show that the prospect is seriously considering your offering and that they’ve given some thought to whether it would meet their needs. Often, the prospect is interested in buying and their objections are meant to help them justify that decision.
Your role at this stage is to listen actively to their objections and offer solutions. Understand the root of their concerns, ask follow up questions, and try to make sure that you fully understand the objection. Then you can explore potential ways to address their concern and overcome the objection.
For instance, if price is the issue, reframe it by breaking it down into a per-day cost, making it more palatable. If a competing product is in the mix, be ready to show specifically how your product meets the prospects needs faster, cheaper, or better. Alternatively, you could explain that while your product might not be as inexpensive as a competitor’s, it’s because you offer superior quality — and you have lots of happy customers to prove it.
Stage 6: Closing the Sale
It’s the moment of truth: closing the sale. Your approach here depends on how the preceding stages have unfolded. Adapt your closing style to match the prospect’s attitude. For eager prospects, a direct close might be appropriate. For more hesitant ones, a softer, more nuanced approach is needed.
Successfully closing a deal can sometimes be a time-consuming process. Prospects may need to consult their teams for input and approval, especially if they are not the sole decision-maker. Don’t rush them here.
Maintain regular contact to show commitment and sustain interest. Share valuable content, like blog posts, case studies, or problem-solving product features. If met with silence, consider initiating a conversation via email or a quick call with follow-up questions to see if they need anything else.
Go Ahead and Close Lost Deals
Here’s a hard truth: you’re not going to win every deal. But the vast majority of sales pipelines have a fair number of deals that are held onto with blind hope but are long-lost. You know they won’t close. Maybe you’ve known for a while.
Spending time on them is a waste, and keeping them in your pipeline only creates more problems. Focus on those that have a chance. Put all your energy there.
(At the same time, don’t take a no from someone who can’t say yes.)
Stage 7: Generating Referrals
Right after successfully closing a sale is an ideal time to ask for referrals. Your new customer is satisfied and likely excited about their purchase, so they’ll be more likely to recommend your product or service to friends or colleagues.
Take advantage of this opportunity to feed more prospects into Stage 1: Sales Prospecting. You can also seek referrals that can be useful in Stage 5: Overcoming Objections as your business relationship with the client matures.
Don’t Skip Any Stages of the Sales Cycle!
Sales Prospecting, Contacting Leads, Qualifying Potential Customers, Presenting Your Solution, Overcoming Objections, Closing the Sale, and Asking for Referrals — every stage of the sales cycle is important. Don’t skip any of them!
Closing a sale doesn’t just happen, and it’s far more than prospecting and pitching. The sales cycle builds a relationship. By following all of the steps, you’ll be able to understand their wants and needs, build trust, and ultimately win deals.