How to Shorten The Sales Cycle Using the Pareto PrincipleFebruary 13, 2019 | Posted by Amanda Ervin in Sales Cycle
There is a universal quest among sales professionals of how to shorten the sales cycle. Afterall, the faster we close the sale, the faster we get paid and the sooner we can move on to other promising leads in our sales funnel. This can also be one of the most frustrating of goals because it is ultimately the customer who sets the pace of the sales cycle, with little recourse on our part for speeding their pace of decision making or purchase commitment. But there is one way that sales professionals are empowered to dramatically shorten the sales cycle: sell more to existing customers.
Consider your sales cycle with new customers and how much time and energy are spent developing the relationship and establishing trust, credibility and rapport with decision makers. It is well documented that acquiring new business costs much more than retaining existing customers. According to statistics compiled by Invesp:
- The cost of acquiring a new customer is five times greater than the cost of keeping an existing customer.
- The success rate of selling to an existing customer is 60-70%, compared to 5-20% with new prospects.
- Increasing customer retention rates by 5% increases profits by 25-29%.
Use the Pareto Principle (80/20)
The Pareto principle, or more famously the 80/20 principle, holds true to the philosophy that roughly 80% of our results come from 20% of our efforts. This principle has found footing in many industries and fields, and can be equally helpful when considering how to shorten the sales cycle. Looking at the data from above, we should respond by spending about five times more energy on that 80% of tasks that provide the best results in terms of both sales and cost savings.
What if we responded proportionally and spent five times more effort on existing customers than we do selling to new prospects? What would that look like? Sales professionals would likely:
- Have a greater appreciation for customer satisfaction and the quality of our customer relationships
- Network across multiple layers and functional areas in client organizations
- Fully explore every opportunity to upsell and cross sell
- Articulate every support, service and reinforcement option for the products and services sold
If sales professionals want to figure out how to shorten the sales cycle, we need to make sure we are exploring every sales opportunity with existing customers and feeding the customer relationship with a steady diet of value contribution and exemplary service.
All content and training concepts are the intellectual property of Carew International, Inc., and any reference to these concepts must include a statement of express ownership by Carew International, Inc.