Why Closing Deals in IT Can Take Up to a Year?

10.09.2024

The IT industry faces unique challenges in the B2B sales process, which significantly extends the time needed to finalize transactions. Companies that do not understand the complexity of the IT sales process often have unrealistic expectations, which can lead to frustration for both suppliers and clients. Often, clients expect that a dozen or more leads will quickly turn into contracts, but the reality is quite different. The sales process in the IT industry, especially in the B2B segment, can take up to a year before a deal is closed. Let's explain why this happens and how it can be shortened.

Lead ≠ Deal: What Does Reality Look Like?

In the IT industry, the concepts of lead and potential deal are often confused. A lead is merely a potential opportunity, and turning it into a finalized transaction requires much more than just an initial contact. Databox conducted detailed research on the actual B2B sales process, showing that only about 6% of leads convert into a final deal. This means that out of every 100 leads, only a few result in signed contracts. Furthermore, the median length of the B2B sales cycle is 2.1 months. This benchmark was calculated from anonymized data from over 300 companies, with 30% of responses indicating that closing a deal takes between one and three months. According to Yesware, as many as 74.6% of B2B deals with new clients take at least 4 months, and almost 46.4% of these deals exceed 7 months, often due to multiple rounds of negotiations and many decision-makers involved in the process. Additionally, Datanyze reports that B2B sales for larger contracts, where the value exceeds $100,000, can take an average of 170 days, or nearly 6 months. This shows that more complex and valuable transactions can take up to a year, especially in industries like IT or software.

Factors That Extend the Sales Cycle

Multi-stage decision-making process: In B2B companies, particularly in the IT industry, many decision-makers are involved, which significantly prolongs the sales cycle. Gartner reports that sellers have direct contact with the client for only about 5-6% of the entire purchasing process. Most of the remaining time is spent on internal analyses and client team consultations, which greatly delay decision-making. A typical B2B decision-making team can consist of 6 to 10 people, each with their own data and opinions to consider, further complicating and extending the process.
Transaction value and complexity: The larger the transaction value, the longer it takes to finalize. Datanyze's research shows that transactions worth over $100,000 take an average of 170 days, while for smaller amounts (below $5,000), this time is around 40 days.
Need for testing and implementing technology: IT clients need time to test new solutions and check their compatibility with existing systems. Many companies conduct trials before deciding on full implementation, which can significantly delay decisions.
Objections and negotiations: Often, at the advanced negotiation stage, objections arise regarding price, features, or long-term support, requiring additional rounds of negotiation. According to Outplay, 44% of sellers stop their efforts after the first objection, which can prolong the entire process if they don’t try to address them earlier.

How to Shorten the Sales Cycle

Automation of sales processes: According to a study conducted by McKinsey, companies that have successfully implemented sales automation have seen their sales cycle shortened by up to 30%. Automating follow-ups, email campaigns, and lead qualification allows for the quick conversion of interest into concrete actions, eliminating unnecessary delays in communication.
Better lead qualification: Data from HubSpot shows that companies using advanced lead qualification methods (e.g., lead scoring) can reduce their sales cycle by 22%. Precise qualification allows for the quick rejection of low-potential leads and focuses resources on more promising contacts.
Improved collaboration between marketing and sales teams: Research conducted by Adobe indicates that companies that successfully synchronized their marketing and sales efforts shortened their sales cycle by 12-15%. A key element is passing valuable marketing data to the sales department, which eliminates repetitive questions and accelerates decision-making.
Utilizing data analysis tools: Using tools like CRM or sales analytics, which provide precise data on customer behavior, can speed up the transaction closing process. According to Dock, companies that effectively use data to optimize sales see an average 17% faster deal closure time.
Optimizing communication and personalizing offers: Personalizing sales communication leads to better conversion rates. According to Gartner, sellers who offer personalized recommendations increase the "ease of purchase" by 86%, leading to faster and more valuable transactions.