Now that half of the fiscal year is over, you’re probably in the stage of reviewing, maybe even updating the pipeline development methodology for your business. You probably already have a defined sales pipeline you use, but there’s always room for improvement. This is especially true if you’re not seeing the kinds of sales, lead conversions, or revenue growth your company was expecting thus far in 2019.
What are the most essential sales pipeline stages? Are some of the ones you’re using superfluous? In this article, we’ve identified seven sales opportunity stages we think are mandatory to sales success. If you’re missing some of these stages or you’re condensing a few, you might want to think about expanding your sales pipeline approach.
Image courtesy of Datahug
The first of these stages is prospecting. At this point, you’re searching for leads to determine how eligible they are to make a purchase. Next, you move onto qualifying the leads or prospects. This goes hand in hand with prospecting. During this stage, you will disqualify a lead as necessary via lead scoring.
By the third stage, consideration, you’ve reached out to the lead or prospect. Now, it’s the lead who’s got the decision-making power. You’re trying to market and sell your product as best you can. You might even make a definitive offer.
The decision-making stage, or the fourth stage, is when the lead chooses whether to take advantage of your deal. Finally, you wrap things up by closing on the deal. You’d draw up contracts, go over pricing, and maybe even do some negotiating if there’s wiggle room for that.
What’s the Difference Between a Sales Pipeline and a Sales Funnel?
Here’s an image directly contrasting sales funnel and sales pipelines.
Image courtesy of Epsilon Theory
The main difference between the two? The sales funnel is more about converting leads to customers. With the sales pipeline, you’re more interested in selling to prospects or customers. Both play a major role in sales, but they’re not the same thing.
How to Manage a Sales Pipeline
Do you want to manage your sales pipeline for optimal success? Be sure to follow these tips:
- Rely on customer management software or CRM to track new leads or prospects, active sales campaigns, closed deals, and more.
- Continuously improve your pipeline as more leads enter, you introduce new products/services, and you refine your sales processes.
- Track metrics via analytics and reporting, including sales velocity or a deal’s lifetime, your close ratio, and how many deals are in the pipeline at any one time.
- Cut unresponsive leads or those who don’t fit your criteria.
How to Build a Sales Pipeline: Seven Essential Stages
1. The Lead Generation/Prospecting Stage
Whether you call it the prospecting stage, the lead generation stage, or even the new opportunities stage, this is the beginning of your sales pipeline. During this stage, you’re eager to get new leads or opportunities. Hopefully, you can convert these leads into loyal, buying customers.
These leads enter your sales funnel at the very top. They don’t know a lot, if anything, about your company. Their level of interest may be low, and they would be extremely reluctant to put down their hard-earned money on your products/services this early.
You don’t know a lot about the leads at this stage yet either, and that’s okay. For the first stage, it’s more about gathering leads than it is learning about them. That’s for the second stage of your sales pipeline. For now, lead generation is your main goal.
To begin this first stage, you’ll need to use lead generation tactics. There are countless methods you can try, but here are some of our top suggestions:
- Attend trade shows and meet your potential prospects in person
- Create winning content every week or so and then promote it; this is known as content marketing
- Pay for advertisements on websites and social media
- Cold calls or warm calls with leads
- Meet with prospects and network
You want to gather as many leads as possible during this stage. While the leads flowing in can seem overwhelming, don’t let yourself get stressed out. You will not keep every single lead you have. They will all be filtered and scored in the next stage, and not every single one will make it through. Other leads will decide they’re not interested and move on. Keeping that steady stream of leads coming can make up for those opportunities that don’t work out.
2. The Lead Qualification Stage
By this point, you should have a healthy stream of leads based on what you did in the first stage of your sales pipeline. Now it’s time to do something with the leads, namely qualification.
The second stage is all about determining if you and the lead are a good fit for one another. You want them to blend in with your target audience as closely as possible. How do you do that? There are several ways you can go about it.
The first is by creating buyer personas. Each persona has personality traits that differentiate one from another. Your buyer personas should run the gamut from stay-at-home parents, freelancers, small business owners, to employees of Fortune 500 companies. This way, you can have a full spectrum of leads at all financial points.
When you make buyer personas, you’re not just worried about how much money the lead makes. That’s good info to have, but it’s not everything. You also want to know their gender, their location, their job title (if available), their interests, and their pain points. If you can get other information, such as their goals and challenges or what influences them, that’s great. However, you probably won’t be privy to this information this early on.
Another option you have during the second stage of your sales pipeline is lead scoring. This is where you assign a lead a score based on certain criteria you choose. The criteria will vary from company to company and should be values you deem most necessary in a good lead. Some criteria you might use include:
- Email activity
- Interaction frequency
- Download frequency
- Pages clicked
- Events they went to
- Job type
You give the lead either a positive or negative score based on how well they do on the criteria of your choosing. If they open emails quickly, you might add five points. If they unsubscribe from your email newsletter, you could deduct five points.
The points should be tiered. For instance, if a lead attends an event, that shows a reasonable level of interest in your company. That should count for more than it does a lead opening an email.
Once you’re done scoring your leads, you hold onto the ones who score the highest and set aside the ones who score lowest. Maybe you work with them later or just disregard them entirely.
3. The First Contact Stage
Now that you’ve qualified your leads, you know which ones are worth reaching out to. Through your calculated research, these leads are more likely to open your emails, click links, and even respond. They may also be more receptive to offers.
Email is one of many ways you can contact these qualified leads. You can also pick up the phone and call them. If you’ve had no prior interaction with the lead, then a call of this nature is a cold call. If you’ve briefly emailed with the lead and then call them, this is a warm call.
You can also host an event, as we mentioned before. Likewise, you can invite the lead in for an in-person consultation at your sales office.
This is an important first meeting, and the way you prepare for it matters a lot. Before you have the meeting with the lead, you want to be sure of what the point of it is. What are your goals with this meeting? Are you trying to inform them more about your company’s products/services? Do you want to make the sale right then and there? Depending on what your goal is, your tactics during the meeting will differ.
No matter what your short-term goal is, you should always be moving the prospect along through the sales funnel. They’ve started at the top (most leads, anyway), but now you want to move them towards the bottom. If you’re not making progress with this call or meeting, then you’re wasting both your time and the prospect’s time.
That’s why it’s a good idea to plan ahead as much as possible. Keep all the information about the prospect in front of you. Write down questions and topics to discuss. These can also act as a reference point for getting the conversation back on track if it veers too far off-course.
4. Prospect Needs Stage
Through your lead scoring and initial meeting, you’ve learned a ton about your prospect. This benefits you for the next stage of your sales pipeline, which is identifying the needs of your prospects.
If you created a buyer persona for your leads, then you should have a decent idea of what your prospect’s needs could be. Now you want to fill in any missing info. This way, when you progress to the next stage, which is making your offer, you have a higher chance of the prospect saying yes.
If you don’t yet know all the pain points and needs of your prospect, you’ll have to spend some time obtaining them. This may mean back-and-forth emails and phone calls. In addition, you could email them surveys or do a comprehensive needs assessment. You could even introduce the prospect to some of your stakeholders.
Customer relationship management or CRM software can be a big help here in tracking all the needs and pain points of your respective prospects. Once you do finally have the information, it’s time for your sales team to do a self-assessment. Do your products and services align with the needs and pain points of most of your prospects? If your product can solve a particular problem or your services can make someone’s life easier, then the answer is yes.
However, you have to be honest with yourself during this time. Your products/services will not be a fit for everyone. Whether because they don’t have the same needs or because they went to the competition, not everyone will want what you’re selling. If some prospects just aren’t a fit, you have to let them go for now. You can always come back to them later, but it doesn’t do either of you any good to progress the business relationship any further than this point.
5. The Offer Stage
That’s because, as we mentioned, the fifth stage of your sales pipeline is the offer stage. By this point, you’ve done all the necessary homework on your prospect. You’ve given them a buyer persona, scored them, and interacted with them. You’ve created a certain level of engagement between the two of you. Through all this communication, you’ve also learned of their pain points and needs. Finally, you’ve assessed whether your products or services are the right fit for the lead.
Now, you can finally make your offer. Not every prospect should receive the same offer. For some prospects, you might try a freemium offer. This is like a free trial but there is a level of commitment. The user would have to put money towards an upgrade of the product or service.
You could also offer a free trial. This is free for the duration of use, but that duration is often limited. You could give prospects a week or even a month to use the product. Then, if they want to use it further, they’d have to buy it.
No matter which kind of offer most aligns with your prospects’ needs, this is the stage where your selling skills get to shine. You must acknowledge that you understand the needs and problems of your prospects. Then, you have to position your product or service as the solution to those problems.
You also must cover the benefits of your product, as well as the conditions, terms, and pricing. Yes, this is the case even if the prospect isn’t using the paid version of your product or service.
6. The Win/Loss Stage
One of two things will happen when you make your offer to the prospect. They will either say yes or they’ll say no, they’re not interested. This is known as the win/loss stage. This is a rather self-explanatory stage, but we figured we’d still briefly discuss it.
If the prospect said yes, then congrats! You can move on to stage seven, the final stage in the sales pipeline. If they said no, then this is the last stage, at least for now.
While you can always try to change the mind of a prospect, being forceful or pushy will never garner you repeat business. For now, as hard as it is, you have to accept the prospect’s decision. With time, you can reach out to them again and see if their needs have changed. For now, though, count this for what it is: a loss.
Don’t dwell on the sales loss for too long. It’s unfortunate to lose a prospect, especially after putting in all that hard work, but it happens. Luckily for you, you have tons of new prospects coming in through the sales pipeline. You want to focus your attention on them, starting from stage one and working your way down through the sales funnel.
7. The Closing Stage
If the prospect said yes, they want to try your product/service, then you move into the finalizing or closing stage. This is where terms may be negotiated and formal contracts are often drawn up.
Just because you’ve pretty much hooked in the prospect doesn’t mean they can’t wriggle free. If they have questions or concerns, you want to do your best to answer and address these right away. You’re trying to dissipate any lingering doubts on the part of the prospect so they feel confident striking a deal with you.
Next, you can cover the terms of your deal, then present a contract for them to sign (this can be done digitally too, if need be). The prospect will then pay for your service and begin using it. You can also refer to them as a customer at this phase.
The worst thing you can do is make it a hassle to fill out contracts or make a payment. You want this to be as quick and simple as possible so the customer is willing to complete these important tasks.
From there, you want to give them access to the product/service, send a welcome email (that thanks them for trying the product/service), and then sit back and let them enjoy. Be around to answer questions if they arise and be sure to send a follow-up after the free trial expires. You’d also want to reach out if the customer decides they want to pay for their freemium service.
These seven sales pipeline stages can help you identify where you own pipeline is lacking and then fill in the gaps. Your sales team can then work at its best, bringing in sales and converting prospects to customers. Good luck!