Sales math is easy and provides a big-picture view needed to make business decisions regarding selling efforts. No accounting degree, debit, or credit is required.
As we approach mid-year, the Sales Math for your organization’s average sales cycle length is worth paying attention to.
Understanding your organization’s sales cycle is essential to sales and marketing success. Every product or service sold goes through a process by which a lead or initial customer interaction becomes a sale. This process is the sales cycle, and it’s how businesses acquire and keep customers.
For some organizations, the sales cycle takes days. For some, weeks, for others months, or even a year or more. It depends on the industry, how many people are involved in the buying process, the complexity of the sale, market conditions, and the efficiency of your sales process.
If your typical sales cycle is six to nine months, statistically, ninety percent of the sales booked in 2023 will either a) close by the end of June or b) be in the sales pipeline by the end of June.
The remaining ten percent of sales will likely comprise small, non-strategic deals, typically from current customers. If your organization does not have a calendar year-end, substitute June for the last month of your second quarter.
The sales cycle sales math is straightforward.
If you are a salesperson that creates an opportunity in July with a ~6–9 month sales cycle, the earliest you could expect to close it would be December or January of the following year (~6 months). Still, more than likely, it would be Q1 of the following year.
If you are a marketer investing in lead generation, most of your Q3 and Q4 marketing efforts won’t deliver results until late Q4 and early Q1 2024.
If you are a sales leader attempting to maximize 2023 results, identifying and shepherding the top deals in the June pipeline with a reasonable 2023 close date will deliver the highest return. Everything added to the Pipeline from July onward will impact Q1 and Q2 2024 but will have a limited impact on 2023.
You can apply my example if your sales cycle is longer or shorter than 6–9 months. If you have a one-month sales cycle, substitute my June example for November 2023. If you have a twelve-month sales cycle, replace my June example with January 2024.