What is a sales pipeline?
In its most basic form, the sales pipeline simply shows the stages a prospect goes through as they become a paying customer.
A sales pipeline helps you track your sales prospects throughout the sales process and outlines the stages a prospect goes through as they move from potential buyer to paying customer. It also shows 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.
The importance of the sales pipeline
The sales pipeline gives sales reps an accurate idea of how to progress deals and increase the company’s overall revenue. This is both good for the company, who is bringing in more money, and the sales representative who is earning a commission.
The sales pipeline can also help sales reps find potential problems within the progression of a sale so that it can be addressed before it is too late.
The seven stages of the sales pipeline
Following a deal’s progression from potential prospect to paying customer, there are seven key pipeline stages:
- Prospecting is when a potential customer discovers your business, potentially through promotional activities, ads or even public relations. Most of the time this is 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 is likely to want to know more about your product or services. It can be 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. Introduce a potential buyer to your services by setting up a demo or meeting. It is here that you will begin to figure out if there is a business case for the potential buyer and if it’s worth sending them a proposal.
- Proposal. How can you help the potential customer? The proposal is all about showing that 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 an agreement 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 provided exceptional service and the deal is closed, 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 especially pleased with your service or a regular user, ask them to refer their friends and family.
Sales pipeline management
How to manage your sales pipeline
Depending on your product, sales team and resources, the time it takes to build a sales pipeline varies. Here are the steps you will need no matter how big or small your team is:
1. Plan 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. Map out how much time a potential customer spends at each stage
You should identify the amount of time prospects are spending at each stage of your sales 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 converted in the sales pipeline. If you know that 20% of prospects result in a converted sale in the demo stage but 50% of prospects result in a converted sale in the negotiation stage, you will be able to develop estimates for your quarterly revenue 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 seven stages. You now have clear targets for your sales team to work towards in order to achieve your target quarterly revenue.
4. Identify common characteristics of converted deals
Understanding the common actions that sales reps take with deals that have been successfully converted allows sales reps 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 – and over time, you will be able to build the perfect sales formula to maximise sales conversions.
5. Using data to adapt to your sales process.
Using the data we have gone through, especially within step 2 and 3, optimise your sales process and targets to reflect your learnings. 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 robust followup strategies and a well planned out prospect engagement flow is a good solution to this.
For example, adding guidelines to define how to best manage the sales pipeline, such as:
- Every inbound lead will be contacted within 6 hours or less.
- 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 clean, you should also ensure that your sales representatives are removing prospects that have not responded by the last touch, from the sales pipeline.
8. Cleaning your pipeline.
If you want an accurate sales forecast, you should 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 length of time it has been in that stage.
For example, if you sent a deal proposal to a buyer one month ago and despite several follow-ups, you have not heard back, then most likely that deal will not go through.
Now say that 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 an additional £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.
How to manage your sales pipeline within the CRM
To manage your pipeline effectively, it is crucial that there is a clear strategy and a robust set of rules. This prevents sales reps from making mistakes that could affect the accuracy of the CRM. Reinforcing these rules and methodologies ensures that your sales reps feel supported and understand what they need to do.
There are many ways that you can do this but if you don’t already have a set of principles that help your sales representatives maintain engagement with prospects throughout the sales pipeline, try these three:
3 keys to effective prospect engagement = Personalisation + Value + Call to Action.
Other ways to manage your sales pipeline include:
- Look at the prospect’s data in the CRM before engaging. How should the sales rep respond and how will this affect the pipeline?
- Measure everything and use the results to choose the best course of action.
- Have regular coaching sessions with your sales reps to review the conversion rate, closed-won/lost deals, and their sales activities.
- Make sure there is thorough training to help the sales team make the most out of the CRM, the sales pipeline software and the pipeline itself.
Top tips for pipeline management
1. Always follow up. Leads that are followed up regularly make 47% larger purchases than leads that have had little to no contact. Following up is just a simple way to increase revenue and keep customers happy.
2. Focus on the best leads. If you know certain leads are going to be more profitable than others, it makes sense to allocate your best resources to those leads to make sure they have the highest chance of converting into a sale.
3. Watch out for your key metrics and KPIs. Track your sales pipeline KPIs and align your work based on that so you are not missing out on the best leads.
4. Set up your sales process. Get your sales process polished and make sure that everyone on your team is following them. Keep updating them as you learn more to get the most optimised process.
5. Use a good CRM. By keeping everything in the same place and automating repetitive tasks the CRM saves a lot of time in the long run.
How can you keep your pipeline healthy?
Sales forecasting and budgeting
An accurate sales forecast is crucial as the budget for all other departments is based upon the sales forecast to plan their expenditure. If it is not accurate, things can obviously go quite wrong. For example, if products are manufactured based on an incorrect sales forecast, then the production may have to cease if forecasting is incorrect.
The sales forecast and resultant budget need to be coordinated between departments such as sales, advertising, production, finance, etc.
Creating a pipeline report
A pipeline report is a useful way of getting a clear idea of sales performance as well as predicting revenue. But what should go into the pipeline report?
- Number of opportunities in the pipeline: The number of opportunities in your pipeline directly correlates to whether or not you will meet your sales goals.
- The size of the opportunity: How much revenue does an opportunity bring in if it closes?
- What are the predicted close dates: Knowing when an opportunity is likely to close allows your team to forecast the expected revenue.
- An overview: Looking at your pipeline’s history over time should show you whether your pipeline is growing. If there is little or no growth it would be worth investing more time into filling it with new opportunities.
Ways to generate new qualified leads
Every day new ideas and tactics to generate leads are emerging. Both old and new methods are crucial for sales leaders in an age where digital marketing and social selling is so prevalent. Knowing how to increase your sales pipeline through both new technologies and traditional lead flow practices is the best way to stay on top of the market.
Here are our four top tips to improve your lead generation.
1. Urge your sales reps to practise social selling. Regardless of the industry, the best way to get a potential customer to consider a purchase is to form a connection. Sales representatives should focus on how they are coming across when interacting with a prospect. They should consider being more active on their social platforms, building a professional network, engaging and cultivating relationships with people interested in your field and joining relevant discussion groups. By implementing more social selling you will see sales teams more regularly exceeding their sales targets.
2. Use content like guides, ebooks, and white papers. Many organisations increase their number of qualified leads by networking and collecting prospects’ contact details. By providing these prospects with content like eBooks, guides and white papers, your marketing team can answer commonly asked questions to help move deals along quickly and smoothly.
3. Have an excellent cold outreach script. Providing your sales reps with good email outreach scripts can help streamline the process of generating more leads. Using well-planned out email outreach scripts will achieve a higher number of initial discovery meetings.
4. Use a data-driven sales strategy. Using third-party sales analytics tools can help you develop sales insights and create a strategy you can trust. More accurate capacity plans, territory forecasting, and sales quotas are just a few of the benefits of this technique.
Every company has data but instead of having it spread haphazardly across multiple charts and spreadsheets, you want to centralise everything into something clear and concise. By having all of this information organised in a way that helps you get actionable insight, you are giving yourself a major advantage over your competitors.
Keeping a deal active in the pipeline
How to reactivate stalled deals
Personalise your emails with up-to-date context
Personalisation turbo charges sales performance, but just adding your prospects name to an email template will not be enough to make them feel like you’re connecting.
If a potential customer has suddenly given you the impression that they are no longer interested in your product, they probably feel you can’t offer them what they are looking for. To resolve this, spend a little time trying to understand exactly what their pain point is and how you can help. The key thing to focus on is showing how your product can solve the prospects’ needs on an individualised basis.
Keep it interesting
Even if you find the perfect client, send them an amazing email and follow-up to make sure you get noticed, you might not get a reply. That is why it is so important to be creative and find some irregular ways to draw attention. We suggest:
- Creating a personalised video message: Although it doesn’t guarantee your email will be opened, a personalised video is a lot more likely to get you a response than a standard email.
- Dynamic landing pages that are personalised: By personalising your website for the individual prospect with their name and company logo on the landing page, you will make the experience feel much more tailored and increase the level of engagement that the sales team has with the prospect.
- Using the location of target prospects to tailor ad creative in campaigns: This is a great way to connect directly to your prospect in a way that they will instantly find relatable and improve the number of leads that your ad campaign generates.
Include social selling in your sales strategy.
If personalised video messages and websites are outside your budget, there are other ways to grab the attention of new prospects. Adding social selling as a new form of re-engagement could be exactly what you’re looking for.
Social selling is about looking at the big picture and playing the long game. Bolstering your sales programme with social selling via Twitter and Linkedin can give a broader set of touchpoints to engage prospects on.
When using social media, you should not expect immediate success. But if you are consistent and spend some time befriending prospects and decision-makers, you will find the time invested is well worth it.
5 tips for social selling
- Don’t scare prospects by being too direct! Warm them up, float your name a little and then send a direct message.
- Join the discussion related to their work and industry.
- If you have a relevant post, mention them in it.
- Track prospect progress, look at their topics of interest and company news.
- Start conversations naturally and don’t send out random messages.
Multi-channel engagement strategies
Running a multi-channel marketing campaign is a strong way to engage your customers. For example, if a customer visits a shop and agrees to receive messages, afterwards he could receive a discount code. Similarly, after accepting a welcome email, the customer could be encouraged to download an app. In this way, the business can continue to nurture their prospective customer on an ongoing basis, across multiple channels.
One perk of a multi-channel campaign is that it gives you valuable insight into your customer’s preferences and the way they communicate. You can use this information to provide relevant offers and things the customer will like consistently. Likewise, targeted promotions are a great way to draw them back in for new sales.
The more a customer engages through the various methods, the more insight you have into their buying habits and interests. You can then deliver personalised messages and provide the customer with content that applies to them instead of having to rely on standardised information that they might not be interested in.
Despite its many advantages, multi-channel marketing can have some drawbacks. To begin with, it can be quite expensive and take a long time to implement successfully. Another problem is that it can be quite hard to measure exactly how effective it has been.
Take a look at these seven simple suggestions to improve your current campaigns:
- Be consistent: Make sure that all of your different channels feel like they are connected. If a customer has wildly different experiences across these channels, they could start questioning the legitimacy of the business.
- Keep growing: You should be constantly improving your methods to stay on top of marketing trends across key digital channels. Update your systems and messages to keep up with your customers wants and needs.
- Simplify everything: All of your messages and content should be clear and memorable to keep your customers engaged.
- Research more: Make sure that you clearly understand your ideal customer and use that knowledge to adapt to their behaviours. This can make it easier to develop strategies for improvement, optimising marketing efforts and develop new ways to engage effectively with them.
- Use re-targeted advertising: Re-targeted advertising shows ads to prospects who have bounced from your site on another platform such as Facebook. It lets you see how many times previous website visitors have clicked on your ad and you can give compelling offers to those that visited your site but did not sign up.
- Stay focused: Marketers should strive to develop campaigns that can be delivered across many different platforms and throughout the customers’ experience as consistently as possible.
- Understand your limits: Focus on addressing the areas of multi-channel marketing that you need to be successful. Spreading yourself too thin by trying to be present on all channels at once doesn’t equal results.