Shorter Sales Cycles: Soft·letter

How to Shorten Sales Cycles

"Too many software developers assume that long, painful sales cycles are inevitable," says Jim Geisman, a veteran software pricing and negotiation expert. "In fact, most buyers make a basic buying decision fairly quickly. The rest of the time is spent on meetings, information gathering, negotiations, and pure procrastination--all of which could be handled much more efficiently."

Shortening the sales cycle brings money in more quickly, Geisman points out--but a less obvious benefit is that shorter cycles improve sales productivity. "If you can close a sale in three months instead of six, you've just doubled the number of deals the sales force can bring in." Geisman recently offered some guidelines for taking the slack out of big-ticket sales cycles:

Use the Web to pre-qualify prospects: "Sales people shouldn't be wasting time qualifying leads and answering basic customer questions," Geisman argues. "Put enough real information--white papers, demos, application stories, price lists--on your Web site so that prospects can self-qualify. I've even seen sites that offer an interactive requirements analysis form that helps buyers figure out if they'll get enough payback for their investment."

Make your prospect arrange the first meeting: "If the person you're talking to can't put together the appropriate decision-makers, it's a warning that you're going to spend a lot of time working your way up the ladder. If you do have to deal with gatekeepers, stick to presentations over a speaker phone with a remote demo rather than making a live appearance."

Lower the buyer's perceived risk: "You'll close sales much faster if the buyer has some protection against implementation failures," Geisman points out. "One of my favorite approaches is to sell 'license months' for the first year of deployment--that is, let customers pro-rate their license fees based on actual installation. You can't book the whole sale right away, but cash starts flowing much sooner."

Offer multiple product configurations: Geisman points out that buyers often delay decisions because they feel constrained by a lack of choices. "If you can offer several price points or let them assemble modules to their specifications, you'll provide buyers with more psychological maneuvering room." And if a prospect is still reluctant to decide, he adds, "you'll know immediately that you're not even in the ballpark."

Put the paperwork on a parallel track: "Lawyers, bless their little hearts, always seem to need at least a month to review a contract," says Geisman. "If you're reasonably close to a deal, ask the buyer's lawyers to check out your standard license terms in advance--or else get a copy of their contract and have your own legal department review it for last-minute surprises."

Develop a standard strategy for price negotiations: "Price is always an issue that stretches out a deal," says Geisman. "Most good salespeople know dozens of tactics for negotiating prices--but that's not the same as having a big-picture strategy. Rather than making simple price concessions, for example, you might want to adopt a standard approach of offering an even bigger credit against future purchases. That way, you reward customers for loyalty and have a foot in the door for additional deals."

Know when to walk: "Bad deals, like bad wine, don't improve with age," Geisman notes. "You should always set limits to how much time you'll invest in the sales cycle--and stick to it. Your sales people will manage their own time better, and sometimes difficult customers will realize they're wasting their own time, too."

This article appeared in Soft•letter (Volume 16, Number 2). Reprinted with permission of the Publisher. Any other reproduction by any means, without permission of the publisher, is prohibited.