The word “sales pipeline” gets thrown around a lot in sales and marketing. You’ve probably seen Google ads from marketers promising to fill your pipeline with hot leads or qualified prospects.
But the sales pipeline is not a catchy buzzword. It’s a visual representation of your sales prospects and their current position in your sales cycle.
A sales pipeline is where leads turn into customers, and businesses generate revenue that ensures long-term growth.
Understanding your sales pipeline is key to increasing sales. More in-depth knowledge of your ideal customer leads to improved targeting that eliminates leaks in your pipeline.
A sales pipeline covers every stage of the sales process and helps you track leads as they travel along a set path from initial contact with your sales team to closing a deal.
What Is a Sales Pipeline?
A sales pipeline is an organized way of tracking prospects as they move through the stages of the buyer’s journey. The goal of a sales pipeline is to move a prospect to the next stage of the sales funnel or to “lost.”
Sometimes, a sales pipeline is visualized as a funnel that is divided into stages of your company’s sales process. It combines each customer sales funnel into a holistic picture that measures the health of your sales prospects.
Think of a sales pipeline as a visual representation in your CRM, showing where your prospects are in the sales funnel. Your sales manager can see exactly where prospects are and at which stage sales deals are made.
It’s an essential tool for sales managers and sales teams that want more in-depth data on how your sales process performs.
What is the Difference Between a Sales Pipeline and a Sales Funnel?
While the term sales funnel and sales pipeline are used interchangeably, they don’t mean the same thing.
Some sales reps use “pipeline” to describe the dollar value of sales deals in their pipeline, not the series of sales stages themselves. They’re referring to the pipeline value measured by a pipeline report.
A sales funnel is the visual representation of the customer’s journey and the steps that move a prospect towards the purchase of your product or service.
The name “sales funnel” derives from the funnel-like shape of the process. As the prospect goes through the qualification steps, the funnel narrows until the lead becomes a customer.
The major difference between a sales funnel and a sales pipeline is in the representation. A sales pipeline communicates the stage, value, and quantity of various open deals.
On the other hand, a sales funnel helps your sales team understand the percentage of deals that passed through each stage of the sales process.
The sales pipeline shows the action that happens during the sales process, while the sales funnel shows conversion rates through the sales process.
For instance, if you want to track the status of all your current sales efforts, you can find that data in your sales pipeline.
But If you want to identify where deals fall off over a defined period, your sales funnel visualizes drop-off points and possible solutions.
What Are the Sales Pipeline Stages?
Lead Generation and Prospecting
Keep in mind that leads in the awareness stage are not ready to convert. Prospective buyers don’t know your product and are reluctant to spend money until they engage with your brand.
Perhaps the most nerve-wracking part of the sales process, the first contact is where you get in touch with the lead.
After making contact, you qualify a lead as a sales opportunity you can win. The basis for lead qualification usually depends on if:
- They need your product.
- They have the budget to buy your product.
- You’re speaking to an authority who can make buying decisions.
Lead Offer or Proposal
The offer you make to your prospect depends on a specific need. If you have a buyer persona, this part is easier. You understand their pain points and can tailor a proposal that solves a specific problem.
Alternatively, use a sales CRM software to keep track of your prospect’s needs and pain points. Your offer could be a free trial or schedule in-person meetings with a prospect. Whatever method you choose, the goal is to move the potential customer closer to a sale.
Win or Loss
Did you close the deal? Congrats! That’s a win, and you can build on it. If not, mark it as a lost opportunity, learn from the experience and move on.
How to Build a Sales Pipeline
Now that you know the definition and stages, it’s time to build a sales pipeline. Here are three steps to guide you.
Who Is Your Ideal Customer?
Before the pipeline, you probably have a list of prospects you think would like your product or services. You need something to manage your contacts and interactions with them.
Rather than using an excel spreadsheet, a dedicated CRM is an efficient way to manage leads collectively and move them from one stage of the pipeline to the next.
Set Up Your Pipeline Stages
Breakdown each sale deal into daily activities your sales reps need to do. By focusing on daily sales activities instead of quarterly or annual numbers, your team is more likely to meet their sales goals.
Be careful not to add too many steps before a prospect becomes a customer. Try limiting the number of sales pipeline stages to seven.
Refine Your stages and Keep Your Pipeline Updated
As you go along, tweak the stages of your sales pipeline and keep it updated. The easiest way is to think of your sales pipeline like a to-do list. Once a sales lead completes an activity, move them to the next stage.
5 Sales Pipeline Management Tips to Close More Sales Deals
It’s easy to assume that your work is done after building a sales pipeline. But do all your leads become customers, or do you have leaks and cracks in your pipeline?
Here are five tips to help you manage your sales pipeline and close a deal.
1. Use a Sales CRM Software to Automate Actions
You need a sales CRM to unlock the full power of your sales pipeline. With CRM, you can automate your pipeline and gain better visibility into your sales process.
A few ways to manage and automate your sales pipeline with a CRM include:
- Use cold lead notifications to trigger automation based on when a lead moves from one stage to the next.
- Use automated email sequences to remind prospects to review offers and answer questions.
- Evaluate sales performance and predict future sales with the reporting feature in your sales CRM.
2. Align Your Pipeline with the Buyer’s Journey
Create content for every stage of the buyer’s journey from awareness to consideration and decision. Avoid the temptation only to see things from your company’s view.
Adopt a 360 viewpoint that places the customer in the center. This enables you to close the loop with marketing and anticipate potential objections that may arise.
3. Use a Task System
Each prospect wants to feel special and wanted. They have specific needs that you must solve. Giving them all your attention seems daunting when you have hundreds of sales opportunities in your pipeline.
A defined task system ensures that you’re thinking about the next step and staying organized. It should be easy to use and send you notifications for when you need to do something.
4. Prioritize Leads
Which leads should you focus more time on? Managing your pipeline requires managing time as well. Prioritize leads that have a high value and are sales-ready. Monitor interactions to determine who is most engaged and requires more attention.
5. Follow up
It took 3.68 sales calls to close a deal in 2010. Today, it takes over eight calls to close a deal. So, why do many sales reps give up on a lead after two calls?
I’ll be honest, following up is not easy. It’s a massive challenge for the sales team. But it pays off in sales.
Set reminders to get notified when you need to follow up with a prospect. You can automate this process with a sales email template.
Which Sales Pipeline Metrics Should You Track?
These are the leads who demonstrate an interest in buying your product. Indicators include scheduling a demo, email signup and requesting a custom quote. More qualified leads equal more closed sales for your business.
Sales Cycle Length
This is the length of time it takes the lead to move from the point of the first contact to a sale. You risk losing valuable opportunities if a lead takes too long to move through your sales pipeline stages.
Deal Size is the average value of each sales deal. Naturally, smaller deals move quickly and more significant transactions take more time to progress through the sales pipeline.
You can quickly determine the average deal size by analyzing past deals your sales team has won. The data helps you target opportunities more likely to increase your average win rate and close more deals.
Close Ratio is the number of total sales presentations compared to the number of closed sales. It helps you evaluate industry trends, sales performance, value proposition, and pricing.
For instance, if you notice that leads drop off at the tail end, there may be a problem with your product or pricing.
This is the percentage of leads that convert to sales. Monitor the win rate at each stage of the sales pipeline to give your sales team a better chance to close more deals.
Congrats! You’ve built your first sales pipeline for your organization. When used properly, a sales pipeline helps you track team activities, automate repetitive tasks, measure results, and refine your sales process.
Tweak stages that do not work to make it more efficient and help you meet your sales target.