Simply put, cashflow is king – so cutting down on the length of sales cycles has become increasingly important, especially in light of the recent struggling retail sector and credit markets.
For many larger B2B sales this is especially important where the sales cycle or the length of time from the first point of contact to the final closing of the sale can be quite drawn out, with some sales cycles taking several years to complete.
Sign up for SmartCompany newsletter.
Free to your inbox every weekday
Companies that sell products to the larger hotel chains around the world for example have been known to have sales cycles of up to two years, just to place products like soap throughout the chains!
So strategies need to be employed to shorten the sales cycle to ensure a healthy cashflow at all times.
To start with, instead of trying to hit the ball out of the park and close the sale on the very first sales call, use that first point of contact as primarily an information gathering exercise.
Work out what the buyer’s objectives are and what problem they are trying to solve.
A system of rigorous qualifying questions should be used, to ensure that no time is wasted when pitching your product to the buyer.
By asking detailed questions up front, you not only save time in coming up with solutions that meet the specific requirements of the buyer, but you can also save time in making a sales pitch to under-qualified leads.
Otherwise, the obvious way to protect cashflow is to require significant upfront deposits for any orders that are subject to a lengthy lead-time to completion.
Of course, if you operate in a predominately B2C market, you are unlikely to have long sales cycles. At Milan Direct we operate in an online retail environment where we keep it very simple.
Products are paid for in full and up front with no credit terms, and then the goods get immediately dispatched. No credit department, no bad debts, just good business.