An efficient sales pipeline is the key to building a profitable business. Closing the deal and clinching a sale is the ultimate aim of all business process and a killer sales pipeline just helps to streamline the process.
According to a research by Harvard Business Review, companies which have established a formal sales process and follow robust sales pipeline management practices saw a 28 percent higher growth in revenue.
Building a sales pipeline needs to be a streamlined process. In this guide we have covered a range of information that should help you get started on effective sales pipeline management and should give you answers to most pertinent questions regarding sales pipeline:
- What is a sales pipeline?
- Why is sales pipeline critical for business needs?
- Sales pipeline vs Sales funnel: What’s the difference
- What are the stages in a sales pipeline?
- How to build an effective sales pipeline
- Tips for ensuring a robust sales pipeline
1. What is a sales pipeline?
A sales pipeline is a visual representation of the prospective buyer’s journey as they move along the different stages of your sales cycle. The sales pipeline gives an overview of your company’s sales process, broken down into actionable steps to track multiple potential buyers and convert leads into customers.
All the efforts in the sales process are directed at getting the customer to buy your product or service. While this may sound simple and straightforward, the actual sales process involves a number of touchpoints.
The prospects need to be guided through the various stages by providing relevant information and assistance and occasional follow-ups to aid the decision making process and nurture the leads. This is where the Sales pipeline become vital to your sales efforts.
2. Why is sales pipeline management crucial for business needs?
A sales pipeline lets you track all your leads at a single glance and gives a snapshot of opportunities at each stage of the buying process. It gives you crucial insights into the effectiveness of your sales team, helps in identification of bottlenecks in your sales funnel by keeping track of how the prospects move though the process.
It also helps you forecast the sales in a systematic manner which helps in accurately predicting the revenue generated. Knowledge of the sales pipeline helps you identify the areas in sales which can be improved upon while assisting prioritization of time and resources, resulting in an integrated and robust marketing strategy.
3. Sales pipeline vs sales funnel: What’s the difference?
Sales pipeline and sales funnel are two terms that are used to describe the prospect’s journey through the sales cycle but they both vary from one another. While the sales pipeline constitutes the actions or steps of the sales process that are required to convert a prospect into a customer, the sales funnel talks about the probability of conversion at each stage of the sales process.Sales pipeline stages are process oriented while the sales funnel is primarily number oriented in its approach.
If there are 100 prospects that turn up in the lead generation stage, not all would move forward to the next stage and become qualified leads. Due to a variety of reasons, a number of deals that would go through would likely drop off during the different stages of the sales pipeline. The probability of them converting goes on increasing as we move downwards through the sales funnel but the numbers keep decreasing.
A sales pipeline is horizontal and moves from left to right. The salesperson actively puts efforts to move the leads from the left end of the pipeline where they enter as prospects and tries to take them to the right end where they decide on making the purchase and the deal gets closed.
A sales funnel on the other hand is vertical in nature. A number of prospects end up falling out of it and only a limited number reach the bottom center end of the funnel and convert.
The knowledge of the sales funnel and the associated probability of converting can help sales reps better manage the sales pipeline. By using a sales CRM that lets them assign probabilities to each lead, they can make reliable sales forecasts and better manage the pipeline.
4. The 7 stages of a sales pipeline
The sales process typically goes through a number of stages which culminate with the buying decision. While the actions required for moving a prospect from one stage to another may vary, the sales pipeline stages remain fairly consistent throughout the sales cycle.
Whether you are using a basic excel sheet or have made the switch to a CRM software or pipeline management tool, you need to follow an ideal template that ensures that the efforts of your sales reps bring in the desired outcomes.
Here are the sales pipeline stages that you need to incorporate to build a killer sales pipeline.
- Lead generation
- Initial contact
- Lead qualification
- Fact finding
- Product pitch/Proposal
- Closing the deal/Won or lost
1. Lead generation: In simple terms, a lead is an individual or organization with an interest in your product or service. Lead generation is the initiation of consumer interest or inquiry into products or services of a business.
When the prospective buyers first interact with the company by sharing their contact information, they officially enter the sales pipeline as a lead. Your company can generate leads by following either of the two methods
- Inbound Marketing: The technique of drawing in potential customers via content marketing, social media marketing, SEO, branding and networking events. The company doesn’t directly approach the customer but rather the potential customer reaches out to the company because of an interest in the products or services.
- Outbound Marketing: The technique when the sales team actively reach out to potential customers by means of emails or cold calling to inform them about the products and services offered by your company.
2. Initial contact : Once the prospects are generated, initial contact with them has to be made. The contact can be made via telephone calls, meetings or emails depending on the sales process of your business.
This next stage involves nurturing the lead. It is imperative that the focus of the contact isn’t simply making a sale and closing the deal. The focus needs to stay on communicating how your product or service offering would be beneficial to the prospects. The secret to conversion is having a product or service that would solve a problem for the leads generated.
During the lead nurturing stage, it is imperative to gather information about the existing problem and shedding light on how your product or service can effectively solve the problem for them. It also requires answering any questions and responding to any queried the lead generated may have.
3. Lead qualification: Not all the lead that express their interest end up buying the product. Lead qualification involves identifying which leads are worth pursuing based on the likelihood of them making a purchase. The leads with low probability of conversion eventually fail to go through the sales funnel and fall out.
Leads which express an interest in your product (maybe they enquired to know more about the product or spent considerable time going over the pricing page of your website) are called as qualified leads. Identify the trigger behaviours which move the lead through the next stage and eventually lead to conversion. Having a process in place for lead qualification and lead scoring allows the sales team to focus their efforts on leads that are more likely to convert.
4. Fact finding: The sales demo or the product pitch to the qualified leads is aimed at giving them an insight into how your product functions. At this stage, the leads are ready to hear the product or service specifications from your sales reps.
Fact finding or defining the prospects needs helps the sales reps to bridge the gap between the lead’s requirements and your product offerings. An in-depth knowledge of the precise requirements can be obtained by having one-on-one conversations with the leads or by sending out survey questions to be filled. It can help connect the ideal buyer personas with the existing customer profiles.
Your goal should be to sell the prospect on the benefits that your product or service offers them. Make your pitch all about the potential customer and tailor it to fit their needs and you have ensured that you have a perfect sales pitch that converts.
5. Product pitch: Decision making is a complex art. Pitching the product involves sending out the proposition that adds value to the leads while making significant sense for your business. The proposal you draft for the prospective buyers is tantalizing and proves to be difficult to resist.
Acknowledge the prospects needs and prioritize them when you make the pitch. Clearly outline the important aspects such as the pricing and any other terms and conditions applicable while sending out the proposal so that there is no room for ambiguity.
6. Negotiation: Despite how compelling your offer is, arriving at a consensus may require some negotiations. There may be some concerns that may need to be addressed or small tweaks may need to be made. The negotiation stage implies that both the leads as well as the sales reps engage in open communication to reach common ground.
Use of sales management software to keep track of all the conversations that take place during the negotiation phase so that you are constantly on top of all the deals that are in the sales pipeline.
7. Closing the deal: Closing is the last stage in the sales pipeline. If the customer ends up buying the product or service offering, it is closed won. In case the deal fails to go through, the lead becomes dead and ends up closed lost.
When the deal is won, it is essential to start immediate onboarding and delivery to ensure maximum customer satisfaction. A loyal customer base can be a great touchpoint for upselling or cross-selling your products and services.
Read our full guide on the fundamental sales pipeline stages every business needs.
5. How to build an effective sales pipeline
Here are the steps you need to follow to build and manage a killer sales pipeline that helps you close deals and generates more revenue.
Step 1. Preparatory Phase
The work for a robust sales process starts even before setting up the actual pipeline. Effective selling needs to have a sound foundation and in the preparatory phase, you need to do the following,
- Know the product: Intimate knowledge of the products ins and outs is essential for all salespeople. Only then will you be able to respond to the queries of the prospective buyers in a confident manner and be able to convince the leads to convert into customers.
- Define buyer personas: Knowing your ideal target customers and segmenting them into specific buyer personas helps you to know your prospects better and helps close more deals. Know the trigger and the problem your product would help the customers solve and this would help you categorize the customers into distinct buyer personas.
- Perfect the product pitch: Crafting a bid that the customers would find hard to resist is an integral part of the sales process. Make sure your pitch addresses the customer issues and highlights how your company’s product or service would be an ideal match for the customer and you are good to go.
Step 2. Setting up the sales pipeline
Every company’s sales process is unique and comprises of a number of different stages. There is no fixed blueprint for the stages in the sales pipeline as the requirements are business specific.
Depending on the business needs, the number of actionable steps in the sale stages are determined. Clearly defined and planned sales stages constitute the fundamental building blocks of your sales pipeline.
The best way to set up the sales stages is to take a close look at your existing sales process. You would notice conversation and activity patterns start emerging as you examine the different deals that you have successfully closed in the past. Use these patterns as a cue to define the number of steps in your sales pipeline. It is important to think of the sales pipeline from the customer’s point of view. Every time a decision point comes into play, a corresponding step should be added to the pipeline.
Step 3. Mapping up the stages in the sales pipeline
Once you have outlined the stages in the sales pipeline, it is time to start mapping up the data. While people do make use of simple tools like an excel sheet to map the pipeline, using a sales CRM like an Insightly alternative or alternative to Zoho CRM, HubSpot CRM or Pipedrive is recommended for getting the complete view of the entire sales pipeline at a glance.
Keeping in mind the conversations the sales managers have with the leads, the stages can me mapped up within the sales pipeline. Events and appointments can also be added so the deal moves forward in the next stage effortlessly and no sales appointment ever gets missed.
Step 4. Identify the key metrics on the basis of the sales pipeline
Tracking the pipeline metrics not only help in better managing the sales pipeline, they also help in forecasting accurate sales revenue and give an accurate insight into the performance of your sales teams.
Some of the key metrics that should be tracked based on the pipeline data are,
- Lead conversion rate
- Customer lifetime value
- Lead response time
- Time spent selling
- Customer acquisition cost
Step 5. Refine the sales process based on the metrics
The metrics obtained can help in identification of the bottlenecks and areas of inefficiencies within the sales pipeline. Identify what works and what doesn’t so that the efforts of your sales reps can be directed in a more productive manner.
Use the pipeline data to inject new ideas and refine the existing processes. Sales metrics are an effective way to analyse, reflect upon and improve the existing sales process.
Step 6. Revive the dead leads
The prospects that don’t end up buying are a valuable resource to your company as well. Identify the stages where the leads fell off and find out the improvements that can be made in those areas that would be of interest. If you have future offerings that might be of value to them, reach out and inform them.
Keep them engaged with content that they might find relevant. Subtly keep reminding them that your products or services would be available to them whenever they need it and are ready to make the purchase.
Step 7. Constantly update the sales pipeline
The stages in the sales pipeline need to match with your typical sales scenarios to be truly effective. Review the stages in your sales pipeline on a periodic basis. Delete a stage if you find it to be redundant, add missing steps to the pipeline,and rename the pipeline stages to provide more clarity.
The sales pipeline should provide an exact snapshot of whatever is happening in your sales process at a glance. Backtrack and take a look at your sales pipeline from your customer’s point of view. Reflect on the buyer persona and visualize the steps your customers would take leading up to the purchase decision and make the necessary updations to your pipeline.
Step 8. Generate referrals
Word of mouth referrals are the best way to ensure product success and generate higher revenue. Ask the leads that you have successfully converted for contacts that might find your products and services valuable. Incentivize your referral program for your customers and generate more sales.
6. Best practices: Tips for ensuring a robust sales pipeline
1. Define the target audience: Successful sales aren’t about the seller, they are always focused on the consumer. Define the target audience
2. Target the decision maker: The closing of deals depends on a number of factors and often involves people at higher level of hierarchy. Ensure that the person that you target as lead has holds sufficient decision making power to make the purchase decision.
3. Constant updation in the pipeline: Setting up a sales pipeline is the easy part. Updating and maintaining regularly is a task that takes a toll on the sales team and negatively affects the close ratio. Train the team to update the pipeline on the go so that they don’t end up with a bloated sales pipeline.
4. Follow ups: It is possible that the leads do not immediately sign up after you send them a proposal. Scheduling follow ups at regular intervals gives a gentle reminder as well as gives an opportunity to clear any doubts or hindrances the lead might have. You need to remove any doubt from the buyer’s mind and convince them that doing business with your company is the right decision.
Maintaining an effective sales pipeline requires discipline and regular updation. The pipeline needs to be filled on a regular basis to help you stay on top of your sales process and help you achieve your sales goals. Devote a certain time of the day to log the daily updates within the pipeline and train your sales reps to do the same. The deals need to be moved through the various sales stages as they progress in order for them to be relevant. Make pipeline management an integral habit and the rewards generated would speak for themselves.