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Why tech sales cycles take so long for service providers

Why tech sales cycles take so long for service providers

Many service providers are experiencing ‘long sales cycles’. But how long is long?

A recent Gartner study of 506 technology buyers indicated that buying teams spend 16.3 months on average to complete a new IT purchase. You might find this fact surprising.

Interestingly, buyers find this surprising as well. Seventy-eight percent of respondents said their last technology purchase, from initial idea to contract signing, took longer than they expected it would.

Technology service providers, on the other hand, report an average sales cycle of 7.4 months for IT purchases – which suggests that they’re only participating in less than half of the buying cycle.

Consistent with this finding, B2B customers in general have completed 57 per cent of the purchase process before they interact with a supplier.

What are the buyers doing with all this time?

Buyers spend a lot of time developing a common point of view and driving consensus across a diverse team of IT and business participants – buying teams typically comprise of 14 individuals on average.

Stakeholders can reside within any function at any level of authority across multiple locations. They bring competing priorities, new perspectives and different criteria for purchasing to a buying decision.

Buying teams also perform extensive research across a wide spectrum of sources: colleagues, partners, analysts, external peers and online information from vendors and independent parties.

As a result, sales and marketing have a very small time window to influence buyers.

Recent Gartner research shows that almost all buying teams revise the project’s business case repeatedly in their buying process, which they may or may not inform service provider about. Repeating tasks delays the buying process further.

Business cases are most likely revised repeatedly because of unacceptable cost and risk; the two most frequent objections internally to purchase decisions.

These are also the two most time consuming objections to resolve, taking two to three months on average to do so.

So, what can you do to increase your sales effectiveness given today’s buying behaviour?

Avoid using outdated sales expectations and customer communicated intentions to estimate when a deal will close.

Instead, evaluate the length of a sales cycle using historical internal data, as well as data from independent research.

Lead with business outcome messaging at all stages of the sales cycle. Make sure you articulate what impact your solution will have on the business, beyond a list of features or benefits.

Establish a strong business case early. This reduces the need for clients to revise it throughout the sales cycle.

It also proactively prepares a defence against the common objections of cost and risk and facilitates the many approvals required by stakeholders the salesperson isn’t exposed to.

Focus sales and marketing efforts at the stakeholders that can drive consensus within a large buying team.

The Challenger Sales Model provides specific guidance on how to identify the individuals that will truly help move your deal forward and those that won’t.

Use content and sales actions to prevent further delays and help buyers be more efficient. Assist decision making by providing "prescriptive" content and guidance with clear recommendations for all stages in the buying cycle.

After all, you have a lot more experience with successful purchases of your solution than your prospects do.

Michele Buckley is a research director at Gartner


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