A SaaS entrepreneur asked me, “Enterprise sales cycles are sooooo looooong.  How can I get customers to buy faster?”

You probably can’t change the way large companies buy, but you can do things to sell faster.

1. Lower Prices

If your Annual Contract Value (ACV) is lower, your sales cycle can be shorter. For example, $5K ACV products sell faster than $50K ACV products.  Here’s a Quora post with some benchmarks.

But lower prices aren’t always good.  A few caveats:

  • Balance speed against total revenue.  Let’s assume you can only do 1 deal at a time.
    • Case 1: You charge $5K and the sales cycle is 60 days. You will have $30K at the end of 12 months.
    • Case 2: The customer will pay $10K but the sales cycle is 90 days.   You will have $40K at the end of 12 months.  This is better.
  • Balance speed against margins.  Using the same example above…
    • Case 1: Your cost of sales is $1K.  $30K – $1K x 6 deals = $24K
    • Case 2: Your cost of sales is $1.5K.  $45K – $1.5 x 4 deals = $39K.  This is better.
  • Sometimes prospects perceive a low-priced product as inferior in quality.  Let’s say you solve a $1M problem.  If you charge $1K a month and your competitors charge $25K-$50K per month, your prices might be too low.

2. Less Change Management

Is your product easier to install? Does it integrate easily into your customers’ operations?   Does it need less behavior change from employees?  If so, it will sell faster.

One caveat: Balance change management against customer success and churn.

Many SaaS entrepreneurs and investors believe that services are undesirable.  After all, software margins are higher than services margins.  And higher margins = higher multiples.  In general, this is true.

But maybe your software isn’t enough.  Maybe your customers need services from you.  Why?  To get the promised benefits.  To have a successful implementation.  To integrate your new software into their operations and tech ecosystem.

Yes, the projects may take longer.  But if you have successful reference customers, your sales cycle should decrease over time.

Plus, services revenue can be profitable for you.

Mark Suster and Jason Lemkin wrote good articles on why enterprise customers need services.

3. Smaller Customers

$500M companies can sometimes move faster than $5B companies.  Try selling to mid-size enterprises and see if your cycle is shorter.

Or, consider a “land and expand” strategy.  Instead of trying to get all 10 divisions to buy your software as part of a mega-enterprise deal, start by making the sale to one division.  Make it successful.  When it comes time to sell to the other divisions you’ll have a contract and a happy reference customer.  Reminds me of Robert Duvall’s (NSFW) joke in Colors.

4. No Contracts

Contract types and prices typically go hand-in-hand.

If people can pay with credit card, expense it and cancel anytime, your sales cycle will be shorter.

Do you have a big contract and a big price?  Your customer will need more time to approve the budget, look at other options and negotiate terms.  Your sales cycle will be longer.  In one of my last companies, we had an $1M+ average deal size and 20-page contract.  Negotiation could take 3-4 months – doubling the sales cycle!

Consider a hybrid approach.  Put your terms online and then have a simple 1-page order form with any special terms.  Are your online terms professional, fair and accepted by your customers?  If so, your prospect may feel less compelled to re-negotiate these terms.

At Kindoo, I looked at the terms of top companies like Salesforce.com, Mailchimp and Hubspot.  I then constructed a fair agreement and posted it online.  Then I used a simple one page order form and referenced the agreement.  My contract cycles were short.

5. E-Signature Software

Use Echosign or Docusign instead of emailing and faxing Word docs and PDFs.

6. Compelling Event

Find customers with a reason why they need to buy your product right now.  That is, if they wait, something bad will happen.  Sometimes it’s a fine from regulators, a critical sales target, potential bad press, etc.  Find the reasons why they must take action now and remind them.

7. Solid Sales Process

Do you have a written sales process?  Do you follow it?  Or do you just wing it?

Does your process foster fast decisions?  Or do you complicate things with unnecessary steps?

Does your process mirror the way your prospects buy?  Or are you asking them to do something unnatural?

Do you have a process and criteria for qualifying deals?  Or do you just spend your time and resources on any ol’ deal?

I think I’ll do a separate blog post just on sales process and qualification.

8. Cost of Inaction

Have you quantified the danger/cost of not having your product?  For example, “every month you delay costs you $100K.”  If your product is nice-to-have or there is no consequence to waiting, it will take you longer to sell.

9. More Options

Grow a bigger pipeline of deals and then focus on qualifying to work with the ones that will move the fastest. If you only have a few options and hang on too tight to slow movers or unqualified deals, it will take longer.

10. Close Plans

Have you ever wondered when a deal will close despite assurances by your prospect?  Do you find yourself “just checking in to see what’s going on?”

To qualify and close faster, put a close plan in place with the prospect.  A close plan (or “success plan”) details who will do what by when to buy and install your product.  Prospects that own these close plans with you and adhere to them are more qualified than those that don’t – and they will move faster.

In Conclusion

Even though you can’t change the way some large customers buy, you can make and actions you can take to shorten your sales cycle.

What else?  Did I miss anything?  Do you have ideas on how to shorten sales cycles?  Share your thoughts in the comments.

Happy Selling!

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