The Most Overrated Sales Metric in Your CRM

Today’s Skill: Don’t Get Caught Up In The Data

Data is fun to talk about. It can be very beneficial for your business to make sure you are meeting or exceeding goals. It can help you visualize trends and improve focus. In future issues, I’m going to go deeper into metrics you absolutely should be tracking.

But, data can also be a time suck and useless. I want to call out one metric that I keep hearing over and over again. → Sales Cycle Length.

What is sales cycle length? It’s the average number of days it takes to close a deal from the first contact. You add up the days it took to close your deals and divide that by the number of deals.

You may have even been asked, “Hey, how long does it take you to close a deal.”

It sounds great and can give us the warm and fuzzies.

But…

I’m on a vendetta to rid this from everyone’s data metric spreadsheet.

Here’s why it means diddly squat

1. It hinders you more than it helps.

→ It’s “Parkinson’s Law” at work. (Parkinson’s law is the idea that work expands to fill the time needed for it’s completion) If you think it should take 6 months then it probably will.

What’s better: Ask, “What can I do to shorten the sales cycle. Why does it need to take 6 months when it can take 3?”

2. It’s an arbitrary number

→ Bigger businesses use it to forecast because they are trying to give projections to their Executive leadership or Board. However, it’s a useless number to use for early-stage Founders.

What’s Better: Know the specifics of the prospect needs and business drivers to get it done. That should set your next steps and close dates for your forecast.

Here’s an example to prove this out…

Example: Your average sales cycle is 42.4 days based on the deals below.

Your last 10 deals (in days): 30, 32, 45, 10, 27, 123, 37, 46, 35, 39

7 of the 10 were less than that average. There was one big outlier that threw it off. Now, we could remove the lowest and highest number and get a lot tighter. But, again, who cares?

It’s like playing roulette. There is a reason the casino shows you the last 20 numbers pulled on a board. You see 10 reds in a row and you’re like I’m going to bet all on black.

The problem? The probability is the same every time, no matter if 5 or 50 reds hit in a row.

My point: The data can fool you. Don’t get caught up in it.

Do this instead

1. Uncover the actual problems your prospect has

I’m talking deep problems. Don’t settle for “We are looking to be more efficient” type responses. Like for real real. Get into the weeds.

→ What specific results are they looking for?

2. Find out when they need to solve them by

If you’re not asking, “Have you thought about when you want to solve this problem by?” then you’re missing out on them owning a date instead of you proposing something random.

→ When they own it, it’s more real.

3. Help them choose the best route forward based on that criteria

You’ve been doing this long enough so when someone comes to you with a problem and has an urgency of getting it done, you can coach them on steps to get it done. There’s no “selling” per se.

→ It’s “Here’s what I’d suggest based on your situation.”

4. Be as transparent and direct as possible

The more you show your cards, the more they will. That’s why we have friends we can talk about deep, personal topics with and those we can’t. Some we have a stronger connection with. Same goes for your prospects.

→ If you’re willing to be fully open, there is a likely chance they will, too.

Action Item

I want you to document the sales cycle of each deal you’ve closed this year (or month if you have a large volume). That not only includes the length. Think of how many calls, follow-up emails, questions, etc.

I want you to start recognizing patterns.

I want you to ask yourself…

“Why did one close faster than another?”

“Is there anything I can replicate?”

“Did the product they buy determine a faster or slower sales cycle?”

“What could I have done to remove friction to make it smoother?”

Remember, the “length of time” data point isn’t as relevant as the trend lines you find between why/how people bought from you.

If you start digging, you’ll notice a lot of gold in those hills.