Dear SaaStr: Did it ever take you a year to close a sale?

Absolutely.  This is pretty common in the enterprise.  

It took me about 18 months to close Google, for example.  And that was just for the initial group of users:

  • Need identification and discussions with project manager over several months
  • About 6 on-site meetings to review need identification and discussion with a broader group
  • RFP
  • Prototype of workflow
  • Ensure integrations could be connected to custom apps
  • Wait for new feature to ship
  • A 90-day unpaid pilot (sometimes, you gotta do one)
  • Get through security audit
  • Procurement cut deal size by 90%
  • Throw up hands
  • Sales saves the day, closes deal

That’s 18 months to first revenue. Then, another 18–24 months to scale up the number of seats, grow core deal size, etc.

You’ll get better at this over time, as your brand grows (=trust) and your sales team gets better at enterprise deals.

But there are limits to how much you can shrink sales cycles in six and seven-figure deals.  Especially in bigger deals that are budgeted. 

Understand that there are 2 types of purchases in bigger enterprises: budgeted, and non-budgeted / discretionary. 

  • Bigger deals are generally budgeted — on a yearly / annual basis.  And that means that are part of an annual planning process, often one that gets locked down in the fall, a few months before the close of the fiscal year.  In many cases, you can work on a deal before budget is approved, but you just can’t get the deal signed. 
  • Smaller deals can come out of an extra, discretionary budget all departments have — but that budget isn’t huge.  When I was a VP in the Fortune 500, mine was about $400k a year.  My boss’ was probably $2m all-in.  But that’s to cover 1,000+ employees in one department.  It’s not that much.  But, these deals can close anytime.

So expect big deals in some cases to take what feels like a loooong time.  Especially in Years 1 and 2.

And also note this is why it’s totally OK and in fact best practice to ask enterprise prospects on even the first call if the potential purchase is “budgeted”.  It tells you how they are thinking about the space — and also, both how big a deal you might get, and how long it might take. If it’s not budgeted, try to get a fast deal in just one group, get your foot in the door.  If it’s budgeted?  Aim for the prize, but understand it likely will take longer.  

You’ll get really frustrated with long sales cycles in the early days, when you are just trying to put points on the board quickly. But later, you’ll see once you have 5, 10, 20+ longer sales cycle deals in the pipeline … they’ll close with regularity, every quarter. Even if any individual deal is a bit … sloooow.

A bit more here:

How to Cope With Long Sales Cycles


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