What is a Sales Cycle?

A sales cycle is the progression of a relationship between a salesperson and a sales lead that culminates in a completed business transaction. Business theorists have parsed sales interactions into common components in an attempt to better anticipate and control successful outcomes. In some ways, any paradigm imposed on the consumer decision-making process is of limited use because every customer and every sale is different, and the number of variables that go into a decision to buy are too numerous to control. Thinking of the sales cycle as a series of steps, however, helps quantify the process for training and study purposes.

Businesses are primarily concerned with shortening the time it takes to realize a sale from identification of a customer to the point when the transaction is complete. To shorten the sales cycle, there must be a general consensus of what constitutes the cycle in the first place. Although the trend is to view the sales process in a scientific context to engender points of standardization for study, the reality is that there is no finite list of steps, which, if performed correctly and in the correct sequence, will result in a sale. Instead, there is a loose iteration around common actions that can play out in any number of steps, depending upon the uniqueness of the customer and the transaction.

A sales cycle typically includes a series of five steps. First, a salesperson must follow leads to identify potential customers. This step could have a series of sub-steps that move the salesperson from a cold prospect pool to a smaller list of customers with a high likelihood of needing the type of product or service that is for sale. Second, the salesperson must communicate effectively with the customer. This could entail setting up appointments, qualifying the customer, and identifying needs.

Once the salesperson has a qualified customer with an identified need, he will make the sales pitch. This third step could include a verbal solicitation or a formal presentation and addresses the customer’s objections as they arise. Most importantly, perhaps, is the salesperson’s ability to tie step three to step two, or to tailor the pitch to the identification of the customer’s specific needs. With luck, the interaction would move to the fourth step, closing the sale.

The fifth step in a sales cycle is reserved for actions that bring the process back around to the beginning. Following up with the new customer with an eye towards repeat business would be included under this step. Likewise, asking the customer for referrals to engage new customers is an effective method to shorten step one, the prospecting portion of the cycle.