Think of a date you went on where things went well. You hit all the right notes and you notice the sparks flying. After getting home you text each other frequently and immediately – this signals the start of a strong relationship. Conversely, on dates that didn’t go so well, you notice that they aren’t responding to messages as fast or as detailed because they are not engaged – this means you probably aren’t going on a second date.
This comparison is valid in B2B software sales. An engaged customer is more likely to buy, and buy fast. On the other hand, a losing deal will be long and drawn out where a customer slowly fades out or keeps you in a purgatory of maybes. Research from the TAS Group showed that, on average, it takes more than twice as long to lose a deal than it takes to win one. Something that helps reduce sales cycle is helping getting the customer truly engaged in the sale as soon as possible. That process starts at pricing. One of the most effective ways to shorten the sales cycle is by implementing a CPQ tool to increase customer engagement all the way from quoting to close.
The Importance of Deal Velocity:
Deal velocity is an important metric to measure because it helps calculate the level of engagement the customer has during the buying process but there are a few other things that it can help measure. Fundamentally, it helps satisfy a developing need for customers: getting a product as soon as possible. Amazon has spoiled modern buyers into believing that everything should be readily available. Faster closed deals means that the customer can launch faster, helping them realize a faster time-to-value on their purchase. Not only is it important for the customer, but it also is important for the seller. Faster sales means two things: first, it means that you are closing more deals; second, it means that you can spend more time on more complicated deals and prospecting due to the increase in time available.
Why Deal Velocity is Slowing Down:
Buyers have more information accessible than ever. This means that even before a customer engages a Sales rep, they have already conducted research and have created a short list of vendors they want to buy from. The modern B2B software buyer may take more time than ever to buy, but it is not 100% buyer-influenced. Cien.ai conducted research on a multi-channel customer service business with a huge sales team and found that there are 3 factors that slow down deal velocity:
- Reps don’t engage prospects effectively. Software is complex and everyone is busy. This means calls are rushed, incomplete, and require a backchannel with more information. Because calls are not inherently engaging, a customer who does not feel any tie to the purchase may not want to buy even if the product is exactly what they want.
- Reps don’t involve the right people soon enough. Tying back to the previous point about incomplete calls, a rep who does not effectively communicate the value the product brings to the customer may involve the wrong people from the buyers side or the right people when it is too late. A customer who has a precise idea of what the product is/does is able to rope in the correct decision makers to push a deal along faster.
- Some reps had poor closing skills due to a lack of coaching and practice. One of the areas where reps struggle the most is quoting and creating proposals. It is not uncommon for quotes to come up to a day after the phone call ended, which means the customer may have forgotten why the terms were expressed in a specific way or that they even were waiting on a proposal!
While this seems basic, every single one of these problems stems from a misalignment of expectations between the vendor and customer. This misalignment starts with a discrepancy between the price of the solution versus the value the solution provides. A modern CPQ tool would enable reps to better communicate the value of the solution while justifying its pricing.
How CPQ Shortens Sales Cycles:
CPQ drives customer engagement during the buying process which helps close deals faster and more often. Reps can discuss pricing as soon as the first call and can live-quote with the prospect, which means the customer now gets engaged during the pricing process. Especially with businesses with complex offerings, this enables the rep to better explain the value of the product or why certain features are priced a certain way. It transforms the way the negotiations process works: whereas before a customer and vendor may have been oppositional forces with no transparency on either end, now there is complete transparency between the customer and buyer all the way from pricing- this helps establish and grow trust.
Research from the Aberdeen Group shows that businesses with a CPQ shortens their sales cycle from 4.68 months to 3.42 months. It also shows that reps achieve quota 12% more often, deal sizes almost double, and the number of proposals delivered per rep increased due to how easy it is to build a proposal using CPQ. The most interesting statistic from the research brief is that the number of conversations per sales deal won actually decreased. This is because when a customer and vendor are aligned, the number of clarifying conversations go down.
The final, and most impactful, piece of data is that the number of “sure-thing” deals lost also goes down with CPQ. The most painful way to lose a deal is when you close the deal but the customer moves forward with a competitor because you took too long to finish closing the deal on your end. The research shows that CPQ users lose “sure thing” deals 19% of the time, compared to 30% for laggard businesses.
Sales cycles in B2B are lengthening due to miscommunication between vendors and customers and this miscommunication starts as soon as pricing. Miscommunication makes losing deals take longer to lose due to the rep forcing a deal to happen and the customer not knowing what value the solution provides for them. Something that helps align expectations and increase customer engagement is a modern CPQ tool because it helps transform pricing negotiations into a collaboration which builds trust. Sometimes, all you need is the right wingman. Equip your reps with a modern CPQ tool to enable them to close deals faster!
If you are interested in learning more about how CPQ can accelerate your sales and help you achieve those 2020 revenue goals, then you can read more about our offering at https://www.revops.io or you can reach me on LinkedIn at https://www.linkedin.com/in/ad1tya-sharma/!