Andrea Johnson

B2B Sales Cycle: 4 steps to avoid the wasteful ‘no decision’

CSO Insights, which interviews thousands of chief sales officers to benchmark B2B sales best practices, has tracked an alarming trend. Over the past six years, forecast deals are closing at a lower and lower rate, and a dramatically higher percentage are ending up with the prospect making no decision at all.

In the technology industry, for example, “no decisions” have jumped from 17% in 2006 to a whopping 26% today. That’s more than one in every four deals!

Jim Dickie, CSO Insight’s managing partner, says this should make any sales leader cringe.

“It’s not a big deal to lose to a competitor; it happens to everyone,” he explains. “But, if I’m a VP of Sales, I’ll be really peeved if you lose to ‘no decision,’ because you probably wasted my time as well as a lot of resources around the company in terms of getting help from manufacturing, customer support and finance — all to get to the point where nothing happened.”

No deal = broken sales cycle

He says the escalating number of “no decisions” is a sure sign that sales cycles are broken.

A healthy sales cycle, one that is well aligned with prospects’ buying cycles, will enable sales professionals to find out very early if their solutions fit their customers’ needs, and if there’s a strong enough business case to get the purchase approved. If there isn’t, he advises walking from the deal as soon as you can.

“Let someone else waste their time to end up with no decision,” he advises.

Take these steps to ensure your sales cycle is set up so you can either win the deal or achieve the second-best option – getting to “no” fast.

1. Interview your customers

  • What are the business challenges that are driving them to put together teams to look for solutions?
  • Who is on those teams?
  • What are the steps they go through, with both you and your competitors, to make their buying decisions?

“Sales training used to advise finding that one critical decision maker who will make the final decision,” says Dickie. “That person doesn’t exist anymore.”

CSO Insight’s latest sales performance optimization study reveals that an average of 4.1 people are involved in the decision-making processes, and the influencers increase exponentially from there.

“There’s a whole lot of people, with different needs, with whom you have to build consensus or the deal won’t get done,” he continues. “And your sales cycle must take that into account.”

2. Examine your sales process

  • Find out every tactic Sales uses, and identify how those tactics align with customer perception

For instance, a sales professional may use a tactic they think educates a prospect when the prospect uses that tactic for mere column fodder. (Similar to cannon fodder, except the resource being sacrificed is the sales rep’s time, since organizations with a large procurement process often require a minimum amount of bids, and may have already made a decision but are simply looking to fill that mandate).

“If a sales professional says, ‘I submitted a proposal,’ and your customer says, ‘I got a price quote,’ that’s a sign of misaligned perceptions and selling-buying cycles,” says Dickie.

What can help: Stop sending prospects Word documents, PDFs and spreadsheets. Instead, create “virtual collaboration rooms” on your website. Here, customers can click to find more information, whether it’s pricing, research, terms and conditions, or competitive analyses. You will be able to track their every move and, consequently, gauge their interest and progress in the buying cycle, he notes.

  • Analyze wins and losses

Pay close attention to which tactics were consistently used with the wins and missed with the losses.

“When you get enough information, you can make observations like, ‘When we use demos, our win rate is really high, and when we don’t, it crashes,’” says Dickie.

  • Make sure your sales process meets at where prospects  are

  • Does your sales cycle take into account that buying cycles begin long before prospects need to speak with a sales representative?

Prospects are searching the Web intensely, and they’re well informed about what they want when they’re ready to speak to a sales representative.

“When prospects finally call, the sales rep better not say, ‘Do you want to talk about pricing? Do you want to talk about my product?’” warns Dickie. “All the prospect wants to know is how your product can solve their problem, and that’s a totally different dialogue.”

  • Does it continue long after the deal is done?

“The prospect has got to see they’re going to get a return on investment from your product, or you’re going to end up with the dreaded ‘no decision,’” says Dickie. “They’ve got to be convinced you can make it work.  Make sure your product is never delivered to their loading dock with the message, ‘Call us if you need any help.’

“If you want a powerful competitive advantage, you must be partners with your customers.”
When that partnership results in the success customers most want – a return on their investment – they will repeat the order, and will be much more likely to purchase new products.

3. Base sales cycles on metrics, not hunches

“For decades now, we’ve told sales representatives to put information in the CRM (customer relationship management), and they’ve obeyed,” says Dickie. “But, we were recently talking with a Sales VP from a database company, and I asked him to tell me about their CRM System.

“‘Oh, you mean our WORN system,’” laughed the VP.

“I’ve heard of a lot of acronyms, but I’d never heard of WORN. Turns out it means ‘Write Once. Read Never.’”

There’s a goldmine in your CRM

Dickie insists that when companies take the WORN approach, they are throwing away a goldmine. He relates the story of a medical device manufacturer. It perused its CRM and enterprise resource planning (ERP) data to analyze deals – which won, which lost — and realized that when Purchasing was the primary contact, the win rate was 20%. However, when Nursing was the primary contact, it was 75%.

The manufacturer dug deeper and discovered Purchasing thought the product was too expensive, whereas Nursing preferred it because it was easier to use.

“This analysis revealed that nurses needed to get involved very early in the sales cycle, long before Purchasing,” says Dickie.

4. Embrace a problem-solving sales culture

“One of my favorite sayings is ‘Culture eats strategy for breakfast,’” says Dickie. “The most toxic culture can make the best strategy fail, and the best culture can make even so-so strategies successful.”

Companies with well-aligned sales cycles have cultures that are focused on solving problems to create partnerships with their customers.

About a third of B2B sales organizations have achieved that status. CSO calls it Level 3 Sales Performance. The chart above outlines where companies fall on the sales-relationship spectrum; it’s based on data from more than 1,500 companies worldwide.

Dickie believes the companies that thrive in this economy will be the ones who achieve this level of sales performance.

Something I read in a book entitled ‘Funky Business’ got my attention. The authors observed that there is a surplus of similar companies employing similar people with similar backgrounds, coming up with similar ideas, producing similar things, with similar quality and pricing. How you sell is how you’ll differentiate yourself,” Dickie notes.

The upshot: “When selling and buying cycles are aligned, it will not only help you use resources wisely, it will take your prospects from being blissfully ignorant that you exist to being a wild advocate for you in the marketplace,” says Dickie.

Related Resources:

Customer-centric Marketing: Tap into your culture to differentiate from the competition

8 Questions to Steer Your Marketing Priorities

BNET Interviews Brian Carroll: ‘Focus on Helping, Not Closing’

Webinar Replay: Six Funnel Focal Points to Finish 2011 Strong – Part I

Webinar Replay: Six Funnel Focal Points to Finish 2011 Strong – Part 2

Lead Nurturing: Old names yield 37% of customers

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Sales



  1. | #1

    Andrea,

    Really interesting post.One of the problems I constantly run into is that I am the one initiating the sales conversation 99% of the time. I am not responding to a lead, but rather am introducing an alternative approach. Something that is usually not on the prospects current agenda, so you can imagine how elongated that sales cycle can be.

    Right on in your analysis of offering a solution to the customers’ problems as the key dialogue in the process. Getting to that point in the dialogue can be a challenge.

  2. Andrea Johnson
    Andrea Johnson
    | #2

    Hi Phil,

    I’m glad you liked it; I was thrilled to be able to interview Jim Dickie.

    B2B sales cycles can be very long, that’s what makes a “no decision” that much more painful.

    That said, have you ever thought about lead nurturing? A tiny percentage of people are ready to buy immediately because, as you explained it, most are set in the status quo. They don’t see a reason to change. A lead nurturing campaign can build their awareness of what they’re missing and build trust – a properly executed campaign will give them information that will help them regardless of whether they’re ready to buy. Read more about lead nurturing here: http://b2bleadblog.com/2012/03/build-trust-with-lead-nurturing.html

  3. | #3

    Andrea,

    I wonder who is more frustrated about the no decision – the seller or the buyer. I believe buying organizations are also precious with their resources and time and do not want to start a process with an intention of not moving forward. So, we have to think about how we organize our content and resources o help them get to a yes in a much more complicated and team oriented decision process.

    While we have spent a lot of time on automating the marketing process and our internal tracking with our CRM’s, we have spent less time on how to organize the information we share to make it easy for our internal sales champions (in the prospect organization) to collaborate with us on convincing “the committee”. We spend a lot of time and money organizing our content on our websites. When we ask reps to share that information with prospects, in general we use links and attachments as part of a series of emails over weeks and months. Your and Jim’s suggestion for a virtual collaboration space is a good way to start addressing this problem.

  4. Andrea Johnson
    Andrea Johnson
    | #4

    Cliff, thank you for your insightful comment, and thank you for underscoring the critical importance of making sure content and sales strategy are fully aligned. Otherwise, what’s the point?

  5. Phil Griffin
    | #5

    Andrea,

    Great post especially the collaboration space recommendation. I have seen this used and it really is a competitive advantage. I find it astounding that we aren’t leveraging these techniques and technologies to increase sales effectiveness.

    I have a colleague who maintains the major reason why B2B sales organizations are floundering is because we are stuck in a time warp! In his view the organizational structures, techniques and methods have changed little over the last 40 years. The biggest advance has been SFA platforms which according to one study I saw were viewed as failures in almost 90% of companies using them.

    There are no magic bullets, but your advice to take the time to understand and align to the prospects business drivers is a close as it gets.

  6. Andrea Johnson
    Andrea Johnson
    | #6

    Phil, I’m glad you liked this post; your points are excellent. In fact, I think a blog post on the signs that your sales department is stuck in a time warp would be apropos.

  7. | #7

    Hmmm… let me offer an alternative view. Perhaps it is not so much the sales process that is broken but rather the lead qualification process. With the major push to inbound marketing we have found that sales organizations are relying on marketing to fill their funnels. That is a double edged sword for those organizations that don’t have a great lead scoring and/or lead qualification process in place.

    If you treat every lead as though it has the same value you are wasting a lot of sales resources on a group of people with a low propensity to buy. Just because someone raised their hand does not necessarily mean they have the means, authority or commitment to move forward in the sales process with you.

    Long story short… maybe the dramatic increase in the “no decision” category stems from the fact that an increasingly larger number of prospects are making it into our funnel that never should have been there in the first place.

  8. Andrea Johnson
    Andrea Johnson
    | #8

    Great insight, Trish! Thank you! I agree, the issue of increasing “no decisions” underscores the critical importance of having a universal lead definition and a strong lead-scoring system. Here are a couple of blogs that address both topics:

    http://b2bleadblog.com/2012/04/universal-lead-definition.html

    http://b2bleadblog.com/2012/04/lead-scoring-attributes.html

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