If you are in the business of selling to B2B enterprises you must often get frustrated by one aspect of your sales funnel. You would have expressed or thought about it in one of the following ways:
- B2B buyers are extremely slow in decision making. We spend weeks and months just going back and forth before the deal materialises.
- We get good leads. We also have good meetings & demos. But our sales team is not able to push the deal through quickly. We need better closing skills.
If this sounds familiar, read on.
We recently completed two years of starting our B2B lead generation vertical. Having worked with multiple B2B Saas based companies before that, we had realised that these organizations often struggle to get time with key decision makers in the right organization. We felt this was a legitimate unaddressed need and something we could help with and thus started our journey of doing B2B saas lead generation for modern products. Since then we’ve done lead generation for over 100 clients.
Recently we went back to our first four clients with an unusual request. We wanted them to help us make our value proposition better. Surprisingly all of them agreed and what resulted were very very long brainstorming sessions with each of them. Here’s largely what we ended up discussing in freewheeling chats:
- Have the leads from the campaign helped them increase sales?
- How have these leads been different than the ones that they get from other sources?
- What value have they seen in our engagement?
- Why haven’t they switched to someone else?
- What could we do differently?
PS: This exercise led to the most insightful discussions we’ve had about our business and we’ve learnt more from these than anything else we’ve done in the past two years. If you haven’t done it with your clients, we strongly recommend doing so.
While there was a treasure trove of learnings from this, there were a couple of observations that got us all intrigued. Here’s what we heard from them in a nutshell:
- We have got quality conversations with prospects from the engagement; we speak to decision makers in exactly the kind of organisations that we want to target.
- We are satisfied with the speed and volume of conversations.
- Leads that we get from you take more time to convert than from inbounds/referrals.
- Leads that we get from you take more effort: they ask more questions, we often have more discussions & have to make more presentations.
- Only our top performing sales people are able to nurture and convert these leads.
These were fascinating insights for us! We asked them if we could deep dive into these more. They readily agreed and thus started our exercise on understanding sales cycles.
We faced all the problems that one faces while analysing sales data: Missing data, incorrect entries, open deals in CRM. We tried to clean it up as much as we could. We were also looking at different sales funnels. We’ve normalised the data for ease of understanding.
We started off by validating what they had said about leads taking longer to convert. We looked at three sets: Inbound leads, SDI leads( Leads we passed on) and other leads.
|Lead source||Avg time for won deal (days)|
Alright. It was fairly obvious that leads we passed on were taking more time to close than inbound leads. Our hunch was that since these were outbound leads it was probably natural for them to take longer to close. But we wanted to deep dive further. We decided to look at the average close time by salespeople based on their performance for all leads.
|Sales team by performance||Avg. time for won deal (Days)|
Well well! This was surprising. Why should my best sales people take more time to close? The assumption was that top performing salespeople are better at moving the deal ahead faster. We decided to go a step further and look at closure times based on the source of leads for top performing salespeople.
|Lead source for Top performing sales||Avg. time for won deal (Days)|
It looked like inbound leads did close faster. The top performing salespeople just had a larger proportion of outbound leads in their funnel. Top performing salespeople were prospecting more; this wasn’t so surprising in hindsight. We also looked at the number of deals worked on by each salesperson and that validated our assumptions.
To summarise what we’d found so far: Top performing sales people were prospecting more whereas the others stuck more to inbound enquiries. Inbound enquiries had a shorter sales cycle. In an ideal scenario, one would want to increase inbound enquiries so that all your sales people work on inbounds and close faster. While we know this isn’t always possible, we wanted to know if that should even be the approach.
Just to confirm we decided to look at conversion rates & deal values. To make it a fair comparison, we looked at conversion rates after the stage where the commercial proposal is sent.
|Source of leads||Conversion post proposal||Deal value|
And here is where we were in for a surprise. The conversion rate in outbound leads was actually marginally higher than those in inbound leads. If you exclude referrals, the difference was even starker in favour of outbound leads. More importantly, the deal values were much higher in outbound leads for comparable client segments.
Having come so far, we felt we had to explore this further. We went ahead and deep dived into every single of those deals- looked back at when we reached out to the client, went over all the initial & subsequent conversations, what our sales person had responded, the questions they had asked etc.
After over two weeks of studying and analysing these sales conversations here’s a quick gist of what we found:
- Sales cycle is a misnomer- what we were looking at was the customer’s buying cycle. Our sales team had little or no control over the length of the buying cycle- it depended more on internal events.
- The length of our ‘sales cycle’ was just a measure of how early in the buying cycle did the customer involve us.
- Good sales people got in early, they were consulting clients on every step in the buying process. They got the opportunity to understand the full scale of the customer’s problem and were able to effectively demonstrate the value proposition
- In inbound leads, the customer had already traversed a part of this journey, at times on their own and often with a competitor. We had little opportunity to present anything else apart from what the customer had explicitly mentioned.
- Longer sales cycles did not mean salespeople closed less; in fact quite the opposite. People with longer sales cycles had more deals in their pipeline and closed more.
- People with longer sales cycles also had better predictability in their sales.
Sales cycle (or the customer buying cycle as we’ve seen) is a misunderstood metric. Sales people have little control over it. Changes in your product, payment options, pricing might change the buying cycle, but not individual salespeople.
Longer sales cycles are a sign that your sales team is getting in touch with buyers early in the purchasing cycle. If this is in fact the case, you should be encouraging your sales team to do it more often. Early entry into the buying process often leads to better acquisitions; at better prices and higher lifetime values.
Outbound sales might take more time, but can have higher conversion rates and deal values.
If you find this interesting, do check out our website and youtube channel or hit us up on LinkedIn. If you feel we can help you with your sales development, please reach out to us here and we’d be happy to share our approach.