Average Sales Cycle Length

What is Average Sales Cycle Length?

The Average Sales Cycle Length is the mean length of time it takes your sales agents to successfully close deals with your leads. In the same way products have a life cycle, so too does the sales process.

The sales cycle consists of the following stages:

Finding leads

Know your ICP and where to locate it.

Responding to leads

This is where your Lead Response Time comes in. While it’s likely you’ll need to rank priorities, be sure to respond to all interested parties as soon as possible.

Qualifying leads

How suitable are your current leads to continue in the sales process? This is the time to evaluate potential clients’ suitability.

Presenting your product

Give an in-depth introduction to your product, and be prepared to respond to any questions or objections from your prospect that may arise.

Negotiation and closing

Once you and your lead have reached a mutually beneficial arrangement, you can sign the deal. It’s at this point that your “lead” becomes “customer.”

Maintaining the relationship

Maximizing your customers’ LTV (lifetime value) by keeping them happy is not only good for them, but for you – it allows your ARR, MRR, and other metrics to increase with time.

Average Sales Cycle Length is a relevant KPI for your sales team to monitor.

Why is your Average Sales Cycle Length important?

Average Sales Cycle Length is a complex metric influenced by numerous factors. For this reason, it also has a variety of uses and applications. Knowing your Average Sales Cycle Length allows you to turn a critical eye on your sales processes, your customer profiles, and external (market-based) factors that influence your sales and sales cycle. With this in mind, Average Sales Cycle Length allows you to assess and project high-revenue periods, revenue growth over a set period, and how to allocate resources to cover more intense sales cycles.

How to calculate Average Sales Cycle Length

Take the number of deals you’ve won within a selected period. You’ll then take the total number of days it took to win these deals, and divide this by the number of deals you've won.

Bear in mind your Average Sales Cycle Length will evolve as your business grows and evolves, as you perfect your sales process and better qualify your ICP and leads.

Best practices for Average Sales Cycle Length

Knowing your Average Sales Cycle Length will allow you to project future sales cycles, and in turn, can influence your other business decisions. For example, if you have an Average Sales Cycle Length of 45 days, you can factor this value as a constant into your decision-making.

Ultimately, the best practice for your Average Sales Cycle Length is to decrease it. However, this reduction should never be accomplished at the price of thoroughness or responsibility. If all else remains the same – you haven’t just expanded into a new market, for example – but your sales cycle lengths are increasing, it could mean your product is…

• ill-suited to the market,
• your customers are dissatisfied, either with the product price or quality,
• your sales team’s performance isn’t up to par.

That said, the sales cycle is often outside your company’s control, with variability depending on location and industry. Large companies with many stakeholders will almost invariably take longer to close deals than smaller ones with fewer stakeholders. Similarly, if your product is on the expensive side and intended for long-term use, the cycle is likely to be longer.

Because it reveals so much about your business and the market in general, Average Sales Cycle Length, despite its complexity, remains a vital KPI to monitor.

Other KPIs similar to Average Sales Cycle Length include:

• Weighted Pipeline Value
• Sales Conversion Rate
• Revenue Growth Rate