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The sales process involves a series of steps that move prospective customers through the process of becoming actual paying customers. This series is known as a sales pipeline, and it consists of different stages that a lead goes through to transition from being an unknown potential prospect to a paying customer.
What is a Sales Pipeline?
A sales pipeline is a visualization of the sales process from start to finish. It shows all the stages a customer goes through on their journey toward becoming an actual paying customer.
This includes everything from initial contact with a prospect, such as an email sent out or a cold call made, to sending out quotes and contracts, negotiating terms and conditions, collecting payment, and finally closing the deal.
From sales prospecting to post-purchase, each stage of the sales pipeline can be broken down into smaller steps and organized accordingly. This allows for better tracking, management, and optimization of the entire process from start to finish.
A pipeline is typically depicted as a bar, which can be divided into the different stages of an organization’s sales process. As prospects and leads go through this process (e.g., when reps get feedback from cold emails or qualify/disqualify potential leads), they move to successive steps in the pipeline.
- Sales Funnel: A visualization of the sales process similar to that of a sales pipeline, but with a slightly different focus. Instead of being an end-to-end representation of the sales process, a funnel is typically used to visualize conversion rates from one stage in the pipeline to another.
- Sales Cycle: A more general term for the entire process from start to finish, including not just the stages that involve actively engaging potential customers, but also other related activities such as marketing, onboarding, and after-sales support.
The Importance of Building a Sales Pipeline
The sales pipeline plays a critical role in any B2B organization, creating a visual representation of the entire sales process. Having a well-defined pipeline helps companies track and manage leads more efficiently, as well as identify areas where they can improve their processes or obtain better results.
Sales pipelines make quotas more attainable.
Pipelining stages adds a higher level of accountability and makes it easier to hit sales KPIs by segmenting the sales process into smaller, more manageable tasks.
With this approach, sellers can observe precisely where their potential deals, money, and other efforts reside at any given moment.
This is particularly important for those who need to manage multiple sales prospects simultaneously since they cannot risk missing out on any business opportunities.
With clear pipeline stages, fewer deals fall through.
According to LinkedIn research, around 24% of forecasted deals never see the light of day. Two of the main reasons for this include:
- Account Churn: Company decision-makers change positions at an annual rate of 20%.
- Internal Churn: Sales reps change roles even more quickly—at a rate of 25% per year.
And neither of these stats cover factors like employee turnover and job-switching, company mergers, or organizational changes within the company—all additional factors that can lead to deals falling through the cracks.
With a well-managed sales pipeline, all the data related to the customer journey is centrally located in one place.
This makes it easier to track leads and understand their current status, regardless of whether the sales rep is new or has been on the job for years.
Plus, having a comprehensive overview of stages and activities keeps reps informed of their prospects’ interests, needs, and goals—all essential factors when it comes to closing deals successfully.
Sales management benefits from clear sales data.
A pipeline is a powerful instrument for sales managers who want to compile and assess data on how efficiently their sales process is running (or not).
The visibility it offers into activities providing the highest returns makes it even more valuable.
With its ability to track each step of a salesperson’s journey, this solution enables companies to fine-tune their approach and maximize productivity.
Forecasting future revenue becomes easier.
Having a well-defined sales pipeline is invaluable for forecasting potential revenue, budgeting, and planning.
By tracking sales pipeline metrics, it’s much simpler to determine how many deals can be closed based on the number of prospects in the funnel.
This gives organizations an idea of when the team can expect to meet its quota and sets tangible targets for revenue. Evaluating this data helps businesses identify upcoming slumps and potential areas that could generate more leads or drive revenue growth.
Businesses use pipelining to recognize aggregate sales velocity.
The aggregate sales velocity is the average duration from lead to customer. Sales pipeline management reveals how quickly a rep turns interest into deals, which helps companies create sales forecasts and readying campaigns that are likely to yield favorable results.
Understanding customer conversion time helps companies evaluate whether or not their teams are effective at converting potential customers into paying ones.
Resource allocation improves.
Sales pipeline management allows organizations to allocate resources more efficiently. By having a visible view of the flow of deals, sales leaders can determine which reps need additional support or resources and adjust accordingly.
It’s also possible to identify where reps are spending too much time on unprofitable activities vs. prospects that will lead to closed deals.
Marketing teams can even use this data to create better campaigns and messaging that focus on the activities that are most likely to generate deals.
Leads at different stages of the pipeline can be nurtured accordingly.
By leveraging the data collected from a sales pipeline, reps can nurture potential customers and drive them smoothly through each stage of the process.
With insights on leads, reps have more scope for personalizing interactions based on individual needs, wants, and interests.
This builds rapport with prospective new and prospective clients and makes building customer relationships a more natural process.
Sales Pipeline Stages
All sales teams will have slightly different stages in their pipeline. Generally, there are eight key stages that should be included.
- Lead Generation (Prospecting): The process of collecting and storing contact details from various channels such as social media, email campaigns, etc., in a CRM system.
- Qualification: Determining sales qualified leads based on criteria like budget, purchase timeline, and decision-making process involves screening prospects based on pre-defined criteria.
- Needs Analysis: Understanding the customer’s needs and objectives to determine whether they fit with your product/service offering. Typically, this is done through a demo or meeting, where a sales rep or account executive assesses the customer’s pain points.
- Proposal/Quote: Presenting customers with a tailored and accurate proposal or quote that outlines all features and benefits related to the product or service. Proposal generation looks different for every organization, but should include an offer and timeline.
- Negotiation: Working with prospects to reach mutually agreeable terms around the proposal or quote presented. This may involve discussing pricing structures, payment plans, product features and more.
- Closure/Won: Securing a signed contract that officially seals the deal. A Closed Won opportunity is when a customer has accepted the offer and decided to purchase.
- Lost/Not Closed: When a customer decides not to move forward with a purchase after being presented with an offer or quote. The Closed Lost stage may include reasons why the deal was lost, such as budget constraints or lack of requirement fit, which helps inform future decisions.
- Delivery (Post-Purchase): Following up with customers after purchase to ensure they are satisfied with their product/service and use it properly.
By understanding the distinct stages of a sales process, organizations can develop better sales strategies, allocate resources in a smarter way and improve customer relationships for better close rates.
How to Build a Sales Pipeline
Building a sales pipeline is relatively straightforward, but building an effective one requires a well-defined process.
Here are seven steps to build and execute a successful sales pipeline:
1. Define sales stages and criteria.
Start by creating a list of the stages in your sales process, from lead generation to delivery. Make sure each stage is clearly defined with criteria for when a lead should move to the next stage.
2. Set up sales tools and processes.
From there, you’ll need to set up customer relationship management (CRM) processes. This will help ensure leads are tracked and managed effectively at every stage of the process.
3. Develop an effective onboarding program.
The average onboarding process for a new corporate client takes around 100 days—but it should be tailored to the individual customer and their needs. An effective onboarding program will help ensure customers get up and running quickly, while boosting customer satisfaction in the long run.
4. Create a follow-up system.
Research from Brevet shows that 80% of sales require at least five follow-ups to close a deal. A system for automating responses to inquiries and follow-up emails helps sales teams improve efficiency, close more deals, and save time.
5. Identify and segment your target buyers.
An organization may have on ideal customer profile (ICP) or several. In either case, it’s important to define an ICP for each segment and create a buyer persona for each one.
To do so, an organization can look at customer data, such as job title, industry, and geography. Understanding who is buying your product or service and what they buying process looks like will help you create targeted campaigns that drive more conversions.
6. Build a targeted list of potential contacts.
Using platforms like LinkedIn Sales Navigator, and lead generation tools like ZoomInfo and DiscoverOrg, you can create a list of potential contacts based on criteria like job title and industry.
Once you have a list of prospects, use marketing automation platforms to build customized campaigns tailored to each segment.
7. Organize resources and leverage data.
As leads move through the sales pipeline, they generate data points that can be used to measure performance, track trends, and adjust resources.
Organizations should leverage data to identify what’s working, what isn’t, where leads are getting stuck in the pipeline, and which tactics will yield the highest return on investment (ROI).
Evaluating a Sales Pipeline
Sales pipelining isn’t a one-and-done process, and it isn’t a guarantee of success. A sales pipeline is a living, breathing entity that must be adapted and updated over time to remain effective.
Organizations should review their pipelines quarterly (or more often if needed) to ensure they’re operating at peak efficiency. This includes evaluating the following key metrics:
- Conversion Rate: The number of leads in each stage that eventually move to the next stage.
- Close Rate: The number of leads that became paying customers.
- Time-to-Close: The amount of time it takes for a lead to become a paying customer.
- Average Deal Size: The average value of each sale.
Lackluster performance in any or all of these areas could indicate a need for changes in the sales process, and pipeline data is usually a key indicator of where those changes need to be made.
Sales Pipeline Management
Sales pipeline management is the process of overseeing and optimizing a sales pipeline for increased sales efficiency and better customer experience. This includes:
- Defining the stages in the sales process
- Setting up customer relationship management (CRM) processes to track leads effectively
- Developing follow-up systems to increase conversions
- Segmenting potential buyers into different buyer personas
- Building targeted lists of potential contacts through lead generation tools and marketing automation platforms
- Organizing resources with data analysis from leads moving through the pipeline
- Evaluating performance metrics like conversion rate and close rate regularly
- Making necessary changes or adjustments to optimize results
Sales managers need to stay on top of all these elements to ensure proper execution of the sales pipeline process.
Common Sales Pipeline Mistakes
Sales pipelining is a process that takes time, effort, and discipline. Here are some common missteps to avoid:
- Focusing too much on short-term results. It’s important to have realistic expectations when managing a sales pipeline. As long as your team is hitting their targets and making the necessary adjustments, any short-term losses should be seen in the context of the bigger picture.
- Forgetting about customer orientation. 85% of B2B buyers agree that the buying experience matters just as much as the product or service itself. A good sales process involves more than just hitting targets—it should also focus on delivering an outstanding experience to the customers.
- Ignoring qualitative data. Performance metrics are important, but they don’t tell the whole story. If a pipeline isn’t performing as expected, organizations should look beyond the numbers and consider qualitative measures such as customer feedback.
- Setting unattainable quotas. Sales goals should reflect business goals, but they should also be set with realistic expectations in mind. Setting unattainable goals can lead to burnout, poor performance, and employee turnover, so it’s important to find a balance between ambition and reality.
- Neglecting post-purchase activities. After the sale is made, businesses should remain engaged with customers to facilitate a positive customer experience. This may include customer onboarding, continued support, and loyalty programs.
Sales Pipeline Best Practices
Research conducted by Vantage Point demonstrated that while 72% of sales managers hold regular pipeline reviews with their reps, 63% consider their companies unsuccessful at managing this process. This gap demonstrates immense potential for improvement. Here are some best practices to keep in mind:
- Learn to identify leads that won’t convert. If they haven’t been active for longer than your typical sales cycle, properly managing these leads is essential. In the case of uncertainty, reach out and communicate with prospective customers. Some prospects may move onto the following stage while others may disqualify themselves (or never respond, another clear indicator).
- Set sales targets that match your team’s capacity. By specifying what an improved close rate is, how many leads are in the pipeline, and how many deals need to be closed, businesses can set realistic expectations and develop plans to better manage sales efforts.
- Don’t waste good prospects. When a pipeline performs optimally, businesses can capitalize on the opportunity by trying out new sales methodologies, doing more market research, or adding new products and services to their portfolio.
- Implement feedback loops. Ongoing testing and measurement should be part of sales pipeline management, so organizations can identify what works best and make changes when needed.
- Create an environment of accountability. Everyone should be clear on their responsibilities and held accountable for their performance. This helps teams stay focused and motivated while keeping the pipeline running smoothly.
- Keep the sales cycle short. Improving the value proposition, building the right sales tech stack, and properly onboarding sales reps can all help shorten the sales cycle. The shorter the process, the more effective it will be for both customer and business needs.
- Standardize the sales process. Creating a sales playbook and integrating it into the team can help ensure everyone is on the same page and working efficiently. Standardizing processes also makes training new reps easier, so businesses can scale quickly.
- Document all sales activities. To ensure accuracy and consistency across sales operations, all activities should be tracked and documented. Without granular insight, businesses won’t know exactly why they aren’t reaching revenue goals, and sales quota attainment will be reduced.
Sales Pipeline Technology
Digital sales transformation is the process of leveraging technology to modernize and streamline a business’s sales processes. While manual processes may have been adequate in the past, businesses that want to stay competitive must leverage these tools.
Here are some core technologies used to optimize pipelines:
Customer relationship management (CRM) is a business strategy designed to optimize customer engagement and build strong relationships with customers.
CRM software is used to automate and streamline a business’s sales, marketing, and account management processes in order to maximize efficiency.
It helps businesses manage customer relationships by tracking all customer interactions, including emails, phone calls, meetings, and other activities. It also helps to organize customer data, allowing companies to identify trends and target the right customers at the right times.
Key CRM features include:
- Lead tracking
- Automation processes
- Reporting and analytics
- Contact management
- Sales opportunity management
91% of companies with over 11 employees use CRM becuase of the multiple benefits it brings to their sales pipeline.
Above all, CRM helps companies get to know their customers and prospects better, enabling them to personalize their marketing messages and build relationships.
Marketing automation is the use of technology to automate marketing tasks like lead generation, customer segmentation, and campaign management.
With marketing automation, businesses can create automated campaigns that are tailored to individual customers’ needs and preferences.
Types of marketing automation include:
- Email marketing
- Analytics and reporting
- Social media management
- Lead scoring and nurturing
These features allow for more efficient use of resources by streamlining manual processes like data entry and contact list management. Marketing automation also enables businesses to track results in real-time so they can measure their ROI and optimize their campaigns accordingly.
Sales enablement is the process of providing sales teams with the resources, training, and information they need to be successful.
It requires an integrated approach to helping sales teams understand their customers’ needs, develop tailored solutions, and close deals more quickly.
Sales enablement tools span a wide range of software products:
- Content management systems
- Knowledge bases
- Data analytics tools
- Collaboration software
The end goal of sales enablement is to help reps engage with prospects at various touchpoints to increase conversions and close more deals.
By creating the right mix of valuable content (e.g., eBooks, white papers, blog posts, case studies) and software tools (e.g., AI-powered sales engagement platforms) to help reps deliver it efficiently, businesses can ensure they are able to maximize the success of their sales team.
CPQ (Configure, Price, Quote)
Configure, price, quote software is designed to help businesses streamline their sales processes by automating the pricing and quoting process.
From configuring complex products to quoting and invoicing, CPQ technology helps businesses increase efficiency, accuracy, and speed.
CPQ software can be used for product bundling, pricing rules, order management, dynamic document generation, and more.
Not only does this shorten the sales cycle, but it also helps companies ensure accuracy in their quotes, reduce manual errors, and make the sales process more efficient.
People Also Ask
What’s the difference between sales pipeline and sales funnel?
The terms “sales pipeline” and “sales funnel” are often used interchangeably. Both refer to the same concept—a visualization of the different sales stages from beginning to end. The main difference is that a sales pipeline typically depicts a linear view, while a sales funnel can be used to visualize the dropoff rate at each stage.
What should be included in a sales pipeline dashboard?
A sales pipeline dashboard should include metrics such as:
1. Total pipeline value
2. Number of deals in each stage
3. Average deal size
4. Win/loss rate
5. Conversion rates
It should also include a visual representation of the different sales stages so managers can quickly identify where deals are getting stuck.
How do you plan a sales pipeline?
To plan an effective sales pipeline, follow these steps:
Step 1: Map out the different sales stages.
Step 2: Include metrics for each stage, as well as goals and targets.
Step 3: Determine your ideal customer profile and establish a process for qualifying leads.
Step 4: Set up automation workflows to nurture leads through each pipeline stage.
Step 5: Monitor the performance of the pipeline on an ongoing basis.
What makes a healthy sales pipeline?
A healthy sales pipeline is built through a robust process for marketing, qualification, and lead nurturing. It should include metrics that demonstrate the success of each pipeline stage and ensure that leads are being progressed effectively. A healthy sales pipeline should also have sufficient resources to close deals quickly, as well as an understanding of customer needs and preferences.