Do marketing budget cuts make B2B sales cycles grow longer?

When stories about budget cuts start trending, it’s only a matter of time before the stories about B2B sales cycles growing longer also emerge

Do you know what happens when the B2B marketing budget gets cut?

Expectations for results go up.

It’s like a bad dad joke – except the punchline is real. And the board of directors has already clawed-back B2B marketing’s allotment of humor for the year.

Such budget cuts are being increasingly met with responses from CMOs, like this one:

“I’m not a miracle worker.”

Moreover, it’s unrealistic and borders on fantasy.

Jason Lemkin aptly summed up what really happens following budget cuts this way:

Some B2B sales cycles are 408 days long

(click image for higher resolution)

A recent survey of “500 respondents from across GTM positions” by Outreach got me thinking: What really happens when B2B marketing budget cuts put the overall spend below the industry benchmarks for marketing budgets?

While there were a lot of interesting findings from the survey…

• Just 15% anticipate growth will come from net new logos (mirrors other recent surveys);
• 61% said the top barrier to growth is economic uncertainty; and
• Only about 5% of account executives (AEs) met their sales quota last year.

…the finding that really jumped out at me was this one:

“Sales cycles are long – really long.”

The report elaborates:

“Overall, global respondents reported a median sales cycle of 120 days.

But amongst Mid-Market and Commercial accounts, the median sales cycle is 150 days.

Even more frightening, when we further focus on $250M-$1B companies who target Mid-Market and Commercial accounts, they report a median sales cycle of 408 days.”

It’s almost unthinkable. Four hundred and eight days! Makes you wonder how they get anything done.

That means it takes a little more than 13 months from the point a suspected customer raises their hand and enters the pipeline to the time a deal closes.

There’s a long (and growing) list of surveys over the years showing that B2B sales has increasingly required more work. More calls. More decision-makers. More touches. And yes, more time.

Correlation is not causation – but that correlation sure looks pretty strong to me: Every time we see trending stories about B2B marketing budget cuts a few months later, the stories about sales cycles getting longer also go to print.

There are a lot of contributing factors, which makes this hypothesis like a lot of marketing: hard to prove. Yet, the logic is straightforward. It’s a whole lot easier for the sales team to close deals when customers and prospects are familiar with your company.

Put simply, the less a company spends on marketing, the less familiar those potential customers will be with your value proposition. Ergo, sales cycles grow longer.

Even worse, marketing is a game of momentum, which disappears after significant cuts and dwindling go-to-market (GTM) efforts. To that end, the laws of physics also apply to marketing; it takes a higher spending level to overcome the inertia and regain the lost momentum.

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The full report is freely available (and is ungated) on the Outreach website: Sales 2024: A revenue data analysis. I first learned of the survey in a piece by the DemandGen Report titled, 95% of sales reps missing quotas; despite leaders’ confidence in coaching: new research.

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Image credit: Pexels and respective study