Speaking of the difficulties involved in selling ideas, consulting sales cycles are long.
I know… NEWS FLASH!
But this was a question I wanted to put some numbers to.
Here’s how the CLG Study participants answered:
Almost all of the firms surveyed (85%) experience a sales cycle length of at least 1 month, while a quarter (23%) experience a sales cycle length of greater than 6 months.
And this is what the full breakdown looked like:
Further, given that most of the client acquisition methods employed require some significant amount of lead time to start generating opportunities, the combined time from marketing kickoff to closed sale can often exceed 12 months.
So what implications might this have for acquiring clients?
Two issues we see right off the bat.
Issue #1: Cash flow
You need either (a) enough existing work to hold the firm over, or (b) cash reserves, or (c) both.
When we went off on our own, we both had in excess of a year runway. And then we also both had one single large whale client that we were working with, and that allowed us to have a little bit more confidence that cash was not just going to suddenly stop. But, we then had to put all of our effort right away into getting more clients, knowing that those clients were going to take a very long time to close.
Most people don’t plan for this ahead of time, so it’s a constant fight against the “now” schedule to figure out how to get the time in there for the next engagement to develop while the current one is happening.
And then if the current engagement does end, then we’re stuck because it does take so long for the next one to develop you’re going to be drawing down your reserves during this time period.
Issue #2: Feedback loop
The second is a feedback loop (or lack thereof) issue.
As fellow feedback loop enthusiast and consultant Stephen Kuenzli details:
The feedback process works by:
1. executing the process
2. gathering data from the execution of the process
3. proposing and applying a process adjustment that should improve the process
And it’s one thing if you’ve spoken at a specific conference each year and can pretty reliably expect that there will be 3-5 prospects that turn into clients that come out of that sometime in the next six months.
You may be nervous during that six month time period, wondering if this time is different than the last. But at least you’ll know that something isn’t wrong if the leads don’t come pouring in and that you just need to bide your time, work the relationships, and the business will come.
But what if this was entirely new to you? You hadn’t spoken before. All of your leads had come from previously existing relationships. And now you’re trying to evaluate:
- Are we doing this right?
- Is this the right conference?
- Are these serious buyers?
- Is this silent period a sign that this was a dud?
- Or do we just have to wait as they get organized enough internally to reach out to discuss an engagement?
This is the difficulty with developing a new lead generation channel in the midst of such a long marketing and sales cycle… which is why one of the things we identified in The Consulting Lead Gen Study findings is that this is a key risk factor that needs to be mitigated.
(Hint: One way to do that is through a portfolio strategy.)
One final thought on this.
These are the sales cycle times that firms report…
But keep in mind that (a) these are averages that don’t represent the extremes, and (b) they’re not likely to account for much of the early lead generation activities required to get those prospects to the point where they’ve entered the sales process in the first place.
Moral of the story?
The best time to have developed your marketing program was a year ago.
The second best time is now.