What is a Sales Pipeline?
A Pipeline is way of tracking prospects during the sales process. In Sales Pipeline Management improving the efficiency is a priority for any sales team.
Each stage brings sales opportunities (deals) to the next phase, keeping in the previous stage those who have not passed the process.
- Decide how many stages
- Name stages as you prefer
- Create as many pipelines as you wish
- Assign / reserve a pipeline for a specific sales team
Pipelines are often visualized as a bar, divided into stages of a company’s sales process. Sales reps move leads and prospects through the sales process as they progress (e.g. when they receive a response to a cold email or when a potential customer is marked as a qualified lead).
Build one that works
Given that a sales pipeline is such a vital sales tool, you should take care to build it properly. Before starting to build one, make sure you have detailed information about your company, sales team, clients, target market, and pricing.
If you are just starting out and are looking to organize your sales, a spreadsheet template can be a great way to start. It provides a simple, straightforward way to track your sales activities and progress. However, if you need to manage more than five deals at the same time, a spreadsheet may not be the most efficient solution.
Instead, you should consider investing in a specialized sales pipeline management tool that can handle more complex data, better track the progress of multiple deals, and provide more detailed analytics. Such a tool will not only help you keep track of your deals, but also help you better manage your sales pipeline and optimize your sales process for better results.
A Sales CRM is more efficient if you have more deals or more salespeople. CRM software helps team members manage deals collaboratively, move deals through a sales process easily, and link to prospects’ contact information effortlessly. They also allow sales managers (sales leaders) to track an entire team’s progress toward revenue goals.
Funnel Vs. Sales Pipeline
Sales pipeline and sales funnel are often confused for being the same thing. Sales pipeline and sales funnel are often compared to the two sides of a coin, but they are actually quite different. Sales pipeline data is represented differently than sales funnel data.
A pipeline is a representation of the deals in the sales process, from initial contact with a prospect to the closing of a sale. It identifies each step in the process, from lead generation to negotiation and closure.
A funnel, on the other hand, is focused on the prospective customers. It is a visual representation of the potential customers that are moving, from awareness to purchase.
Benefits of a Sales Pipeline
Visualize your sales process
A pipeline in a CRM will help you visualize your sales process. It will show the number of deals and where your deals are. A visual pipeline makes revenue goals easier to achieve by breaking any process down into trackable tasks. It can make the difference for your conversion rates.
The stages you should have
The number and type of your sales pipeline stages depend on both how you obtain leads and your typical sales. The stages through which a new lead must always pass are:
New Contact > Qualification > Proposal > Negotiation > Sale
Sales process phases
If you already have a defined sales process, you already know the steps of your pipeline. If not, this will help you build out your sales process. Each company has its own way of managing the sales process and customer contact points. We can distinguish them in minimum three phases. Link the stages of your sales pipeline around these stages.
Awareness:
In this stage, potential customers who have shown interest in your product or service have become Leads. At this point, it is important for your sales representative to ask questions that are relevant to the situation, in order to determine if the lead is a viable one.
Questions may include the lead’s budget, timeline, and intended purpose of the product or service. By asking these questions, your representative can gauge the lead’s interest in your product or service, and determine if they are a good fit for your company. If the lead passes the qualification process, they can then be moved to the next stage of the sales process.
Consideration:
Your leads are now qualified after you had a conversation with your prospects and asked them questions to determine whether your product or service could meet their needs.
Meanwhile, you analyzed their responses to determine if it was a viable solution for them and if they were interested in learning more. By doing this, you have gained a better understanding of their needs and can accurately assess whether your product or service can help them.
Decision:
It is when your qualified leads, who have expressed an interest in your product or service, go through the process of having a Proposal presented to them and then engaging in a Negotiation to come to an agreement.
Find insights
Pipelines help you find important insights like:
Anticipated revenue: Only a percentage of your leads will convert into deals won. Knowing this, you can forecast sales to help plan budgets and adjust sales goals.
Overallocation: You may notice that some salespeople are focused on deals that will never convert.
Sales cycle: For some businesses negotiations can last months. Use your pipeline to understand how long it typically takes your sales team to close a deal.
Bottlenecks: You might find that a stage regularly delays the sales process.
Sales rep success: A sales pipeline also provides insight into which of your salespeople closes the most sales.
How to build a Pipeline in 3 steps
1. Identify buyers and stages
First, identify your potential customers and prepare different deal stages, according to your real sales process. Let’s take an example. If your sales rep first contacts the potential customer by phone to define if there is a deal (opportunity) then the sales pipeline will have a stage “first contact”. If the same customer has requested a presentation or a demo, then the deal should be placed in the “presentation and demo” stage, and so on.
2. Assign activities for each stage
Although sales activities may differ depending on the deal, defining a process helps sellers. Even if it is not easy to standardize, you know very well how your product is sold and you know what the sales processes are in your company. So, when you define the stages of the pipeline, you just translate what actually happens every day into a crm system.
3. Duration of your stages
How long it takes a salesperson to manage the stages of the sales pipeline is a very important aspect. Depending on the company, the sales cycle typically includes 5 to 7 stages and often a stage for handling objections. The B2B sales process duration often depends on the product or service sold and the value of the deal. On average, a B2B sale takes about 3 months, but for larger sales it is likely that the deal can be closed between 6 and 9 months.
Metrics that you should consider
Number of open Deals
You need to be able to see how many deals your sales team is pursuing at any given time. The number of deals in the pipeline equals the number of qualified opportunities in the pipeline.
Deal Value
Every lead has the potential to generate some amount of business. By keeping an eye on the average deal value, you can predict revenue more accurately.
Total value of deals / Number of deals
Conversion Rate
What is the average win rate for all opportunities in the pipeline? Tracking this metric will help you identify ways to improve an individual salesperson’s performance and provide different approaches that work.
Won deals / Number of opportunities
Sales process length
How long does a salesperson take to run a lead from the initial contact to a sale? The length of a deal can vary from one company to another, and it often includes steps such as lead nurturing or objection handling.
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