Definition

A sales cycle is a strategically planned and repeatable sales process that allows sales teams to convert leads into customers. With a sales cycle in place, a company can be better placed for future decisions and easily trace where each lead is within the cycle. It can also help companies in adopting best practices to repeat their success or determine how to improve.

Example

If a customer was initially contacted in January 2022 (a lead was generated) and the customer has signed a contract in August 2022 (they converted to a customer), the company's sales cycle will be 8 months.

Why it matters

Companies must focus on the length of their sales cycle since it highlights how quickly a sales pipeline can be converted into bookings and therefore revenue and ARR. The sales cycle varies across companies, with certain industries having shorter or longer sales cycles, typically due to the type of services they sell or the type of customers they sell to.

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