‘Sales pipeline’ is one of those sales terms that gets thrown around a lot: if you spend any time in sales circles you’ll hear a lot about ‘getting prospects into the pipeline’, ‘increasing your pipeline’, and ‘filling your pipeline with hot leads’.
It can be easy to forget that ‘pipeline’ is more than just a buzzword. Instead, it’s an important sales tool for any sales management operations, and it can make a significant difference to your bottom line.
A sales pipeline can help you visualize your sales process. It will show you where in the sales funnel all your deals are, where deals are stalling and which sales activities are bringing in the most revenue. It adds a layer of accountability and makes goals easier to achieve by breaking the sales process down into small, trackable tasks.
Definition of Sales pipeline:
A sales pipeline is an organized, visual way of tracking multiple potential buyers as they progress through different stages in the purchasing process.
In that way, it’s very much like other pipelines in different sectors. The definition above, that pipelines are a way of tracking progress toward a goal through a series of specific stages, is what a pipeline is for businesses in every industry.
Often, pipelines are visualized as a horizontal bar, sometimes as a funnel, divided into the stages of a company’s sales process. Potential buyers are moved from one stage to the next as they move through the sales process: when contact is made, for example, or when a prospect is qualified.
It’s a way of illustrating where prospects are in their journey from lead to (hopefully) customer; with a pipeline, salespeople are able to see exactly where their money, deals, and other sales efforts are at all times. It’s a vital tool for salespeople, who are often juggling many sales prospects and deals and can’t afford to have one slip through the cracks.
It’s also an important tool for sales managers who want more data on how well their sales process is working; because a pipeline tracks a salesperson’s activities, it offers more visibility into which sales activities are giving a company the greatest return.
How to build a sales pipeline
Step 1: Take stock of your prospective buyers
In the beginning, before you even have a pipeline, all you’ll have is a list of the people you think would like to buy your product. If there are a lot of them, you will need something to help you manage not only those contacts but also your interactions with them.
One way to do this is to use a spreadsheet tool such as Google Sheets or Excel.
A CRM, however, is a more efficient tool if you’ve got more than a few deals, or more than a few salespeople. CRMs allow a team to manage deals collectively, easily move deals from one stage of a pipeline to another, let you link to contact information, and allow sales managers to keep an eye on an entire team’s progress toward revenue goals.
Step 2: Set up your stages
It’s easy for reps to get overwhelmed by their goals; sometimes a quarterly or annual number may seem too big to achieve. There’s a way to control this sort of overwhelm: by breaking down each deal into the daily activities a rep needs to do in order to close a sale. By managing and focusing on sales activities, your team is likely to be more successful at making their sales goals.
So that’s what your pipeline is measuring and managing: activities.
To set up the stages in your pipeline, think about the activities your team does most and the ones you think have the most impact on your sales. You can use the list of stages above to guide you or work out the steps in your own sales process.
Step 3: Refine your stages as you go along
Once you have things going, you may see that some conversation types happen consistently. You need to decide whether these regular occurrences lend themselves to being sales stages in your pipeline.
For example, if you are a real estate agent, you may want to add a “reassure buyer” column, if you face a lot of nervous buyers.
Sales stages, when clearly defined and planned, constitute your pipeline’s fundamental building blocks and set you on your way to predicting your sales revenue with decent accuracy.
Don’t worry about getting it right the first time. It may take numerous attempts to figure out what works for your business. You’ll find that some stages end up being unnecessary, and discover others that you actually need.
Step 4: Keep your pipeline up to date
You’ve built a pipeline. You’ve put your existing contacts and deals into it. Now, how can you make sure it stays updated?
This part can be tricky. Often, when a team hasn’t worked with a pipeline, they may have a hard time adjusting to the habit of entering contacts and deals into the pipeline and moving them through the stages. The key here is to develop a habit of moving deals through the pipeline.
The easiest way to do that is by thinking of the stages of your pipeline like a to-do list. Each stage correlates to the activity your team must complete. Once an activity is completed, your team will move a deal to the next stage. It may take a while for your team to get the hang of it, but after a while, the pipeline will be an invaluable tool for them because it shows them what they’ve done, what they need to do, and wherein the pipeline each deal is.
Sales Funnel Vs Sales Pipeline
Sales pipeline and sales funnel are often misunderstood to be the same thing.
They are often likened to the two sides of a coin carrying the same value but different designs, except they’re not. Sales pipeline and sales funnel are discrete, both in data and the representation of the data.
A sales pipeline is about deals, while a sales funnel is about leads.
A sales pipeline refers to every step in your sales process that a sales rep takes to move a deal from start to close.
On the other hand, a sales funnel comprises the stages in the buying process your leads go through before becoming customers.
The 6 stages of sales pipeline:
For a business that follows a typical B2B sales process, here’s how its sales pipeline stages might look like:
- Lead generation: There are various methods to generate leads for your business, including paid and non-paid campaigns, and to let your potential customers know that you exist. Typically, you create an ideal customer profile with certain set parameters—and try to reach prospects who fit this profile through various campaigns.
- Lead qualification: This is a crucial step in the sales pipeline stages. An opportunity is identified with a potential customer, and a record is created as the first step to closing a deal successfully.
- Initiate contact: In this pipeline stage, a sales rep attempts to contact the lead to understand their business and requirements. This stage helps you map your business services against the lead’s needs.
- Schedule meeting or demo: After your initial conversation, if the lead is convinced with your services, you may schedule a demo during this pipeline stage. You may also try to set up a meeting with the decision maker toward negotiating the deal.
- Negotiation: The lead has expressed interest to buy your services and now arrives at the negotiation stage. You negotiate on price, services, conditions, etc. to make a profitable sale, and submit your proposal.
- Closing the deal: The final stage in your sales process where you record the outcome of your deal. If it’s finalized between you and the prospect, you mark the deal as won or lost. There are times when the buyer is not ready to buy yet. In that case, you may mark them as ‘nurture’ to check back later.
What are the Benefits of a Sales Pipeline?
Insight into deals
A sales pipeline provides the much-needed insights into financial metrics that indicate which deals are most likely to close.
Measure team performance
A sales pipeline gives you visibility into the performance of different salespeople in your team and monitors how close they are to meeting sales targets.
A sales pipeline is also an indicator of the value of deals that are likely to convert, and thus it helps sales leaders predict revenue month-on-month.