The most common question I hear in my “pundit-like” capacity is,
Why does my sales cycle take so long?
It’s really good question… Most of the time there is an obvious answer.
It’s because you decided it took that long!
It’s fun to be a pundit… as an outside observer, you frequently can see things that the management team often can’t see for themselves. Even really good sales managers sometimes overlook obvious opportunities for sales improvement.
Let’s talk about the “Maytag Effect”.
What’s the Maytag Effect? Look around your home, you’ll find there are few things that have been there longer than your clothes washer and dryer. At my house, after a lifetime of marriage and 3 kids that are now grown-ups, I have gone through exactly 2 washers and 2 dryers! They don’t break and you just don’t have to buy them that often.
Here’s the rub. If you are the business selling very reliable products like Maytag washers and dryers, you have to be there with your product exactly when the buyer needs it. Like when it gives up the ghost every 10 years – now you have a motivated buyer! When you need a new washer, by golly, you need it RIGHT NOW!
Retailers know this, and they also understand that they sell to a huge customer demographic. It’s no surprise that you see commercials on all the media every day selling the benefits of the latest home appliance. Maytag knows that there are millions of washers and dryers out there, and on any given day there is a bunch of customers who will buy them, so they rely on constant advertising along with their retailers to stay “top of mind” with potential customers.
Your demographic as a sales team may only consist of a few hundred potential customers. They may decide they need your product only once every year, two years, decade, etc.
So, how do you overcome the Maytag Effect?
First, when the customer decides they need to buy something, they must go through a process to buy your (or your competitor’s) product, and so must you – it’s called the Sales Cycle.
In the Sales Cycle, you must consider the steps both you and your customer will go through together so that they will buy your product and you will sell it to them. That’s right, you and your customer are a team! Or at least you should be, given the steps that are required to make the sale.
Second, it’s critical to understand the “Buying Cycle” as much as it is to understand the “Sales Cycle”. The Buying Cycle tells you how much demand (pipeline) you have to create based on the frequency of customer purchases. This means that you must decide if you have enough customers to make your revenue target based on how many you know are going to buy at any given time. This is almost always underestimated, and it is one of the reasons sales forecasts tend to have “fluff” in them (you know, that magical material that allows you to conjure up sales deals you are only hoping will close!).
Sales Managers overlook that they have not spent the time and effort to fully define each step in the sales cycle and what means in terms of reaching the ultimate objective of the customer buying and you delivering.
When you were a sales executive, did your Sales Manager mostly focus on your interaction with the customer and on obtaining the actual order? As a Sales Manager, are you having “he said, she said” discussions with your reps and worrying about the “close date”, or are you really trying to understand where your opportunities reside on the timeline and determining their viability on that basis?
Here are some tips for overcoming the Maytag Effect:
Tip #1: Make a concerted effort to define the specific steps in the sales cycle.
Don’t short cut this effort. Start with customer prospecting (or whatever lead generation process you use) and finish with revenue recognition. Don’t be surprised and/or disappointed to find that you have too many steps! That’s the first clue to help you understand why your sales cycle takes too long.
Tip #2: Determine the timeline for each step.
How long does it take? Why does it take this long? What “friction points” are in the process? Be honest about how long it really takes. Then think about how long this step should take. Are you seeing a gap?
Tip #3: Decide what sales deliverables are required for each step.
For example, does your sales process typically include a sales proposal? Poor sales deliverable preparation can often represent considerable wasted time in a sales cycle. (For more on this, see Marketing Guru John Fox’s mini-book on sales blunders.)
Tip #4: It’s time to cut.
Go through each step and ask yourself if this step is really necessary to sell and deliver product to the customer. Can some steps be eliminated? What can be done to automate or reduce time sinks in each step? Be a “consultant” to yourself and determine the business process drivers in your sales process.
Tip #5: Re-assess your pipeline based on your new timeline and steps.
This is the most important part. In order to determine how many deals you really need in your pipeline, you first must understand how many sales cycles must happen in order to meet your quota. The more sales cycles you can complete inside your revenue month, quarter, year period of measurement, the less opportunities you need in your pipeline. The longer the sales cycle, the more deals you typically need to make your quota.
By defining your sales cycle in this way, you will identify many opportunities that are simply “stuck” in the pipeline. That’s critical because you need to know where the real “fluff” is – otherwise you are fooling yourself into a forecast that’s not really accurate.
I bet from now on you’ll go home and look at your washer and dryer, and it’s going to make you think:
Am I a victim of the Maytag Effect?