Yes! Defining and paying attention to prospects at each stage helps you stay organized and direct the right team members, content, and effort at the time where they have the most impact. And if you have tough competition (who doesn’t?) or want to break into a new market, you want to make a big impact.
Implementing sales stages also helps with your marketing and sales operations because they let you:
Set priorities based on how opportunities are distributed among stages at any given time
Keep an eye on how prospects are progressing (or where they got stuck) and plan next steps
Find patterns and trends to correct
Forecast more accurately because you have a defined stage where they are, not just, “gee, that really felt like a sale.”
Each company will develop its own stages that work for them, and it’s best not to treat sales cycle stages as one-size-fits-all. Usually there are five to seven distinct stages in the sales process, but again, it depends on many things: the type of product you manufacture and it’s lead time, the industry you sell to, how far in advance your customers plan their projects, and even how many people are making the buying decision.
Even if you decide to copy and paste this list into your marketing and sales structure, take some time to define exactly what each of these means for your company. Then determine what must happen in order to advance a prospect to the next stage. For example, perhaps you want them to open at least two emails before you call them, or maybe they need to agree to a face to fact (or virtual) meeting before you prepare an offer to present. Defined advancement criteria means you have an actionable guide and are categorizing prospects accurately.
Common sales cycle stages
These are the seven most common stages that many businesses find effective – they may not be that original but they’re common because they tend to work! Remember, you can customize and define each to suit your needs.
Prospecting. In this stage you’re finding potential customers to engage with. In our current digital age, some people may even know your company before you know who they are, but thanks to website analytics tools and services like Hubspot and Thomasnet.com, you can identify who’s visiting your site and downloading your content and engage with them.
Prospecting involves both inbound and outbound lead generation techniques, from email and content marketing to trade shows, webinars, and cold calling. Prospecting also includes market research through directories like Thomasnet.com, trade associations, LinkedIn, and others. As you look for potential customers, remember to segment your findings and develop personas that target your ideal customers.
Connecting with prospects. Once you identify them, it’s time to reach out. This might take the form of a cold or “warm” call, a personalized email with a link to your new blog or ebook, or an invitation to a webinar or to book an appointment. At this stage you’ve determined they have the potential to be a customer and are probably willing to engage with you, at least briefly. What if it turns out to be a poor fit? Before you let them go, ask for a referral to a more appropriate contact who might have a need for your product. For example, if the project engineer you talk to doesn’t make buying decisions, can she put you in touch with a purchasing agent?
Research and qualification. If you’ve researched your ideal customer personas with care you already have an idea of what their major pain points are. But you’ll still want to talk with them and ask probing questions about their specific goals, product needs, and ongoing challenges. For example, is production up to speed or do they struggle to meet quotas? Do they have a need involving a new product line? Not only will you get the details you need to create a tailored pitch and handle any objections, you’re building rapport and showing your interest in them.
Present or pitch. In this stage you’ll share what you have to offer and their various options. As much as possible you should tailor your presentation to what they need and their pain points. This doesn’t mean you have to create a custom product or offer just for them (unless of course that’s what your business does!), but you should adjust your basic pitch to resonate with them: reference their specific issues and how you can address them effectively. By not relying on a canned or scripted presentation shows you were listening and builds the relationship.
Handle objections. This stage is also known as doing your homework! Objection handling can come up during any of the previous stages, but becomes especially important once you’ve made a proposal or offer. Anticipate what they might question, be hesitant about, or reject outright and have meaningful answers ready, before you contact them or make your presentation if possible. Keys to effective rejection handling include:
Familiarity with competitors’ products, pricing, and packages
Close knowledge of the specs on your own products
Typical applications and problems for their industry
How to work with the different personalities and schedules of buying committees
Close the deal/obtain a commitment. Your prospect officially becomes a customer in this stage. Ideally this is the point at which they have signed a contract or otherwise indicated their formal commitment and available funds. It’s also a good time to make sure there are no lingering questions and everyone is clear on the terms of the agreement.
Follow up and seek referrals. You’ve spent considerable time and effort getting to this stage and you want to retain this customer. Now’s the time to follow up on any lingering issues, check in to see how it’s going, and make sure you’re providing what you promised in terms of service or other needs. It’s all about keeping a good relationship going and making it better. With luck, they’ll be so pleased with your product and customer service they will spread the word about your company and become a source of referrals of future customers (sometimes called evangelizers). But, remember you can also proactively ask them for referrals or for permission to use them as a reference for other prospects.
One last thing…you might have noticed nurturing isn’t on this list. That’s because nurturing is not a separate stage - you should be doing this all the time at every stage! Sales is about building a relationship and part of that is responding to inquiries or being the first among your competitors to check in. Build nurturing in at every stage by deciding on a schedule for follow up and then stick to it (sales and marketing automation software can help keep this on track). For example, when will you call or email a prospect personally after they download an asset? Or, how long will you wait to call back after leaving a voicemail message?
How do your sales cycle stages stack up against this list? Do you use your stages as a tool to keep marketing and sales operations on track? We’d love to talk with you about optimizing your sales process – please connect with us today!