Building a solid sales pipeline is a brand’s key to quality prospecting and consistent conversions. In this article, you will discover the anatomy of the sales pipeline, alongside how a sales pipeline analysis can boost sales performance. You will also uncover our 8-step guide to managing and building your sales pipeline effectively.
Having a strong grasp of the sales pipeline opens the door for a better understanding of how a prospect can easily convert into becoming a loyal customer. By the end of this blog, brands will know the best tactics for each stage of the pipeline, alongside how to properly maintain it to produce a healthy sales performance.
What exactly is a sales pipeline?
Simply put, the sales pipeline shows the stages a prospect goes through as they become a paying customer. It also helps you to track where they are on their journey. Performing a good sales pipeline analysis can show the recommended actions that sales representatives should take at each stage of a sale, and how many deals they will need to reach their sales goals.
How the sales pipeline affects your sales performance
The sales pipeline gives sales reps a good idea of how to keep deals progressing and therefore increasing the company’s overall revenue. This is excellent for the company because of the money being made, and the sales rep for closing a sale.
A great sales pipeline analysis can help sales representatives find potential problems within the progression of a sale so that it can be addressed before the lead leaves the pipeline.
What are the 7 Stages of a Sales Pipeline?
To make a potential prospect turn into a loyal customer, there are seven key pipeline stages that must be followed.
- Prospecting: When a potential customer discovers your business, maybe through promotional activities, ads or even public relations. This is usually done by targeting and raising awareness among potential buyers who fit the profile of your ideal customer.
- Lead qualification: This process determines whether the prospect wants to know more about your product/services. It is done by offering a type of lead magnet (something to capture their email address!) such as a webinar, e-book or white paper.
- Demo or meeting: Introducing a potential buyer to your services by setting up a demo or meeting. Here you will see if there is a reason for your company to spend considerable time and money on the potential buyer and if it’s worth sending them a proposal.
- Proposal. How can you help the potential customer? The proposal is about showing you have a better solution/product than any other business. Ensure that the potential customer knows your prices are worth it.
- Negotiation and commitment. Adjust prices, manage expectations and adjust the size and scope of the job to fit the prospect’s requirements. Find a middle ground that mutually benefits all parties involved and stick to it.
- Opportunity won. Finally, the sale is closed, and all that’s left is to fulfil the order.
- Post-purchase. After your sales reps have closed the deal, monitor the account. At the right moment, introduce customers to new services and premium solutions (this is called cross selling). Let them know if their contract is about to expire and remind them about renewal options. If a customer is pleased with your service or a regular user, ask them to refer you.
How to Manage your Sales Pipeline in 8 Easy Steps
Depending on your product, sales team, and resources, the time to build a sales pipeline will vary. Here are the steps you will need no matter how big or small your team is:
1. Planning out the stages of your sales pipeline
To maximise sales performance, the stages of your sales pipeline should reflect your prospects’ buying journey.
Consider your customer’s typical buying process:
- Awareness: The prospect realises they have a recurring problem or a job they need some help with.
- Consideration: The prospect thinks about what they need to solve their problem and researches potential solutions.
- Decision: The prospect knows what they want and is now comparing vendors or specific solutions.
Using this buying process as a guideline, the stages of your sales pipeline could be:
- Connect: The potential buyer comes into contact with your company through an email, downloadable content, a webinar, or a salesperson.
- Appointment set: The potential buyer agrees to learn more about what you can do for them in a meeting.
- Appointment completed: They went to the meeting and are happy to confirm the next steps.
- Solution-proposed: The potential buyer is interested in using your product to solve their problem.
- Proposal sent: The potential buyer reviews the proposal or contract.
2. Mapping out how much time a potential customer spends at each stage
Another step in your sales pipeline analysis is identifying the time prospects spend at each stage of your pipeline, both in won and lost deals. As an example, the average ‘lost deal’ prospect might spend only one week in the demo stage, whereas a prospect that actually buys something spends two weeks in the demo stage.
Understanding these patterns will help your team predict which prospects are most likely to result in a closed deal.
It is important to understand exactly where sales are converting during the sales pipeline.
If you know that 20% of prospects converted in the demo stage but 50% of prospects converted in the negotiation stage, you can develop estimates for your quarterly revenue. This may will be based on the deals you have in your pipeline and the stages that those deals are at.
3. What do you need to hit your sales goals?
Now that you can estimate your quarterly revenue, you can use that data to work out how many deals you need in your pipeline to reach your sales goals.
To do this, take your target quarterly revenue and divide it by your average deal size.
Next, take your target number of deals and divide it by your yield probability per stage.
So if your target was 150 sales and your sales representatives on average close 50% of deals at the negotiation stage, you would need 300 potential deals to reach the negotiation stage in that month.
Repeat this for each of the eight stages of your sales pipeline analysis. You now have obvious targets for your sales team to work towards in order to achieve your target quarterly revenue.
4. Identifying common characteristics of converted deals
Understanding the actions that sales reps take for successful deals allows them to optimise how they are working to convert more sales in the pipeline. These common actions could be things like sending a follow up email or agreeing to a meeting/demo.
Doing this at each of the seven stages of the sales pipeline will enable you to streamline and optimise your sales processes. Then, over time, you will build the perfect sales formula to maximise sales conversions.
5. Using data to adapt to your sales process.
Good sales pipeline analysis requires looking at your current data! The data previously discussed in step 2 and 3 can optimise sales processes and targets. By giving your sales representatives a proven framework based on data, they can prioritise their time and efforts to get maximum results.
Incorporating insights from sales pipeline data into your sales process makes it much easier for sales reps to convert prospects into sales.
6. Keep adding leads to your pipeline
Don’t forget to keep generating new leads! Even with an amazing sale process, only 5 out of 100 prospects close deals within the lead stage. Likewise, within the demo stage, only 2 out of 10 prospects on average will make a purchase. Because of this, you should always maintain your focus on capturing new leads.
7. Maintaining your pipeline.
A common mistake people make when using a sales pipeline is not following up with leads. If you don’t establish a follow-up process throughout, it will inevitably end in leads going cold and lost sales.
Providing your team with a set of followup strategies and a well planned out prospect engagement flow is an excellent solution.
For example, adding guidelines to define how to best manage the sales pipeline, such as
- Contact every inbound lead within 6 hours.
- Each lead will get 10-12 touches throughout a month.
- Every lead will be met with a variety of phone calls, emails and social media touches.
- Each touch will include a new piece of information or a new resource.
To keep the pipeline healthy, you should also ensure that your sales representatives are removing prospects from the sales pipeline who have not responded.
8. Cleaning your pipeline.
If you want an accurate sales forecast, clean your pipeline regularly. This is because sales forecasting uses each opportunity within the pipeline to determine whether it will close, but it doesn’t note the time taken.
For example, if you sent a deal proposal to a buyer one month ago and despite several follow-ups you have not heard from them, then most likely that deal will not go through.
Now say that the deal was in the negotiation stage and was supposed to be for £2,000. The sales forecast would still count this deal as having a 90% close rate and add a £1,800 to the estimated revenue for next month.
With each stale deal that the forecast is counting within its data, the gap widens between sales expectations and reality.