What is average sales cycle length?
The average sales cycle length metric measures the average days it takes for your business to close a deal. This metric calculates the average time it takes from being a prospect to a lead and finally, to a paying customer.
How to calculate average sales cycle length?
To calculate the average sales cycle length, divide the ‘total number of days it took to close all deals’ by the ‘number of deals closed’. Take the figures for a set time period, say, for a month, quarter or year.
Formula for calculating average sales cycle length
Real-life example of average sales cycle length
Let’s look at an example of average sales cycle length:
You own a SaaS business and your closed deals in the previous month looked like this:
1st deal: 10 days
2nd deal: 5 days
3rd deal: 20 days
4th deal: 35 days
5th deal: 15 days
So now, your total number of closed deals in a quarter is 5. And it took you 85 days in total to close all the deals. Then, your average sales cycle length will look like: 85/5 = 17
This means, it takes you 17 days on average to close a deal.
What’s an average sales cycle length? (benchmark)
The average Lead to Close sales cycle length is 102 days. As, the average length from Lead to Opportunity is 84 days and the average length from Opportunity to Close is 18 days. You should aim to keep your sales cycle time under 3 months.
According to Marketing Charts, 74.6% of B2B deals take at least 4 months to close and the average SaaS B2B sales cycle length is 83 days. Outsourcing data science for analyzing sales trends and customer behavior can streamline this process further.
On average, it takes only 40 days to convert a lead coming from social to a deal. Website leads take around 75 days, and referrals take 97 days to convert.
You should focus on cutting down your sales cycle length as, short sales cycles allow companies to reach more customers and win more sales, resulting in higher revenues.
Ways to reduce your average sales cycle length
- Make the process easier for prospects: Focus on making the whole sales process easier for the prospect so they don’t delay and procrastinate on tasks. One way can be, to allow prospects to sign contracts from any device. Check out the best e-signature apps
- Leverage social proof: 92% of B2B buyers are more likely to purchase after reading a trusted testimonial. Your prospects might dither before buying from you and your duty is to lower their objections. The best way is by leveraging social proof and user-generated content.
- Focus on qualified leads: Rather than trying to win unqualified leads, it is recommended to focus your efforts on qualified leads. It’ll ensure that sales reps spend time with higher buyer intent prospects. Know about some sales qualification methodologies.