Ever wondered how sales reps manage all their tasks and still get on to close deals and win new clients without a miss? Well, the secret to sales success in the chaotic field lies in the sales pipeline – the visual representation of opportunities/leads in different stages of your sales process.
Since salespeople have a massive list of clients that they are following up on, new opportunities that they have to nurture, and other important outreach tasks that make up their sales process, they need a well-structured pipeline to keep track of everything that’s happening in the sales process – new opportunities, new deals, closed or lost deals, etc.
An effective sales pipeline management system can help you gain better control and visibility over your sales pipeline, which can tremendously help you bring in more sales and revenue growth. Research by Hubspot revealed the correlation between the number of opportunities in the sales pipeline and revenue growth. Essentially, the more opportunities in your pipeline, the more revenue you’re likely to generate.
As a business evolves and the sales team grows, it becomes challenging to track sales, and follow-ups, and nurture and manage leads in the pipeline using spreadsheets or other manual solutions. This explains why a lot of these businesses look out to transition from the disintegrated and slow system of spreadsheets and choose CRM software with pipeline management capabilities.
The great news about CRM software is that they are not very expensive to use for your pipeline management. Many CRM software has affordable payment plans that you can consider to manage your sales pipeline and achieve more sales. In this blog, we have provided you with all you need to know about pipeline management.
Keep reading!
Table of Contents
- What is a Sales Pipeline?
- What is a Sales Pipeline Management?
- Sales Pipeline vs. Sales Funnel
- Sales Pipeline vs. Sales Forecast
- Benefits of a Sales Pipeline
- Six (6) Stages of the Sales Pipeline
- How to Build a Sales Pipeline?
- How to Clean Up Your Sales Pipeline?
- How to Run a Sales Pipeline Review?
- What are the Sales Pipeline Metrics You Should Track?
- How to Manage Your Sales Pipeline?
- Six (6) Common Sales Pipeline Mistakes
What is a Sales Pipeline?
A sales pipeline is a visual representation of how a prospect moves through every stage of your sales process. Usually, the sales process starts when you find a new opportunity that has indicated an interest in your product/service and is more likely to become a paying customer.
Once you have this confined, they get included in your sales process, they move through your sales pipeline by completing specific actions that are visually represented in your CRM software.
The sales pipeline tells you about the number of deals and their value and also makes it easy for sales reps to know which deals to focus their sales efforts on and which ones to discard. Another interesting thing about the sales pipeline is that it also shows you how much you are likely to make in the future.
For most sales processes, a prospect moves through the sales pipeline at different speeds and times depending on factors such as their level of interest in your product or service, the urgency of solving the needs, and how much research and preparation they have done before contacting you about your products.
What is Sales Pipeline Management?
Sales pipeline management is a practice that enables you to oversee and direct the opportunities in your sales pipeline. It is a process of managing incoming sales opportunities and tracking them across various stages of the prospect’s journey till they are closed as won or lost.
Managing a sales pipeline provides you with an estimate of the total amount of money you’ll most likely make from the current sales opportunities. This enables sales reps and managers to organize, coordinate and monitor prospects to see how deals are performing against their monthly, quarterly, or annual goals.
In the past, sales pipelines were run on spreadsheets that are oftentimes difficult to track and identify the need for follow-ups. Fortunately, now with various CRM software and capabilities, it become a lot easier to manage the sales pipeline, track every opportunity/deal at different sales stages and incorporate a follow-up strategy in the sales process.
Sales Pipeline vs. Sales Funnel
Oftentimes, a sales funnel and a sales pipeline are misunderstood to be the same thing but mean different things in real-time.
A sales funnel otherwise known as the purchase funnel is a marketing concept that maps the journey or each step that a customer or prospect goes through when making a purchase or becoming your customer. It is a chronological list of the different activities that a prospect takes or goes through to transition from being a lead/prospect to a customer.
In real-time, a sales funnel suggests that the number of prospects you’re working with will drop off as the sales process continues. Depending on your type of product/service industry and other factors, some prospects will move on to the final stage while some will drop off.
A sales pipeline on the other hand focuses more on the deals than the leads and processes that the sales funnel focuses on. A sales pipeline refers to every step in your sales process that a sales rep takes to move the deal from a mere opportunity to actual sales while a sales funnel refers to the stages in the buying process that a lead goes through before they become a customer.
A sales funnel visually represents the customer journey from awareness to action and shares the idea that every sale begins with a large number of potential customers and ends with a much smaller number of prospects who makes a purchase
Sales Pipeline vs. Sales Forecast
Like the sales funnel, people also misunderstand sales forecast to mean sales pipeline. Building an accurate sales forecast is both an art and a science that keeps the business healthy and the leaders informed and happy.
A sales forecast is a visual representation of the expected sales revenue by predicting the number of products or services that a sales unit (which in most cases can be an individual sales rep, team, or company) will make in the next week, month, quarter, or year.
In its simplest terms, a sales forecast is a projected measure or estimate of how a market will likely respond to a company’s sales and marketing efforts. It estimates how much you’re likely to make within a certain period with a high degree of accuracy. Importantly, it measures ‘how much’ and ‘when. ‘
On the other hand, a sales pipeline includes every opportunity that a salesperson is handling at certain periods (no matter how new or mature it is). It helps sales reps keep track of the stage the prospects are in the sales process and help them make appropriate actions when necessary.
Unlike the sales pipeline, the sales forecast provides sales managers and reps with accurate estimates based on who the prospects are, what solutions you plan to sell to them, where the buying decision is made, why the prospect or existing customers considered getting your product or service in the first place, and how the prospects tend to make a purchasing decision.
Benefits of a Sales Pipeline
A sales pipeline provides a sales team with the following benefits;
1. Gain insights into deals
A sales pipeline provides sales reps and leaders with much-needed, valuable insights into the financial metrics and business opportunities that show the deals that are most likely to close.
With a sales pipeline, you eliminate guesswork and have access to real facts and metrics that can help you manage your deals faster.
2. Show the location of leads in sales
Every sales pipeline comprises three main leads – cold leads, warm leads, and hot leads.
Cold leads are the individuals who have shown little or no interest in your product or service, warm leads are the ones that have indicated an interest in your product/service but aren’t convinced to purchase while hot leads are the main prospects that are both interested in your prospect and willing to make a payment.
A good thing about a sales pipeline is that it shows the exact location or stage that each lead is at to help you determine when and where sales will occur. From this, you can develop effective strategies to convert the hot leads, and nurture the warm and cold leads.
3. Measure team performance
A sales pipeline gives you visibility into the daily activities and performance of different sales reps in your sales team and enables you to monitor their progress or how close they are to closing the deal to meet the sales targets.
4. Predict Revenue
A sales pipeline indicates the accurate value of deals that are most likely to convert with the number of leads in the pipeline. As a result of this, visual representation of deals can help sales leaders and managers predict revenue from month to month, quarter, and year. Check out the guide about gross revenue.
5. Explain the sales process
A sales pipeline explains all the sales processes by showing the sales and marketing management the entire process or tasks that have been carried out by a salesperson in the past and the ones that will be done in the future.
It helps to find the locations of the leads and follow up on charges when executing leads on product or service buying and selling transactions. Salespeople can make sales or marketing promotions in the future from the recorded processes.
6. It enhances productivity and work efficiency
Another interesting benefit of a sales pipeline is helping sales reps increase their productivity and work efficiency. Considering that the conversion rate in the pipeline shows the value of transactions, it allows sales reps to focus on transactions with higher conversion rates.
From these visualizations, the sales team can save time and effort by concentrating on deals with her values and are most likely to convert.
7. Closing deals faster
Using CRM software allows businesses to store their information in the cloud and cut down on manual tasks while automation the majority of sales-related tasks. From the last point, increased productivity and work efficiency can help sales representatives close deals faster to increase the company’s overall sales revenue.
Six (6) Stages of the Sales Pipeline
The six (6) improtant sales pipeline stages that every business that follows a B2B sales process includes;
1. Lead generation
In simple terms, lead generation is the process of gaining the interest of potential customers and combining the list of these individuals to increase future sales. It is a critical part of the sales process that every salesperson and organization has to go through to increase their customer base and make more money.
Different organizations and sales teams use various methods to generate leads which oftentimes include paid and non-paid outreach campaigns to gain the attention of prospective customers.
In most cases, you would have to create an ideal customer profile to reach the individuals who best fit your profile.
2. Lead qualification
After lead generation comes lead qualification – a strategic process where an opportunity is identified with a potential customer and the business decides on which potential customers are likely to make a purchase.
It is an essential part of the sales funnel where several leads are generated but only a fraction (of serious leads likely to make payment) are qualified and moved to the next stage for possible conversion.
3. Initiate contact
This is the stage on the sales pipeline where a sales rep attempts to contact the lead to understand their business requirements, personal interests, financial authority, budget, goals, and pain points.
This stage helps you connect with the lead/prospect to identify ways your business can solve the prospect’s problem or help them achieve their desired goals.
4. Meeting scheduling or demo booking
After the conversation or chat, if the lead seems convinced about your product or services, this is the stage where you request a meeting to be scheduled or schedule a demo. This is the stage where you are more into negotiating a deal with the decision maker or just simply giving them more reasons to make a purchase.
5. Negotiation
The negotiation stage is where you are convinced that the prospect has an interest in your product/service and is willing to make payment soon. With this, you go on to negotiate on price, services, conditions, payment plans, etc. to make a profitable sale.
6. The Closing Stage
This is the final stage in the sales process where you have successfully closed the idea (the prospect has made payment and you have converted a prospect to a customer) and eventually record the outcome of the deal.
Sometimes, it doesn’t always mean the deal was won, hence, it is important your share the finalized outcome of the deal specifying if it was lost or won. In situations, where the buyer is not ready to buy yet but has an interest in the product/service, you can tag them as ‘nurture’ to remind you to check on them later.
How to Build a Sales Pipeline?
Here are the basic steps to building a sales pipeline;
1. Define the stages of your sales pipeline
The stage of your sales pipeline refers to the different steps your prospect takes from the first time they heard about your product or service to the last stage when they decide to either make a purchase or leave.
There are two ways to define your sales pipeline stages – firstly, you can use a sales pipeline template to create yours or you can create stages from the scratch. Either way, you must ensure that all stages of the sales pipeline match your buyer’s journey.
In the previous section we have identified some of the general stages of the sales pipeline, alternatively, your sales pipeline stages could only have the awareness, consideration, and decision stages. Depending on how complex your product or service is, your sales cycle and pipeline stages could be longer.
2. Identify how many opportunities continue through each stage
You should be informed about the amount of time your prospect takes in each stage before they move to the next stage or become lost. For example, you can notice that it takes three to four weeks for prospects to purchase while other average buyers spend 2 weeks to decide if they want the product or not.
From this, your sales teams can effectively predict when opportunities are likely to close and determine the percentage of opportunities that would most likely advance to the next stage. When your sales teams can identify opportunities in the pipeline and the expected time it takes to close the deal, they can be well-prepared for the strategies to close the deal.
3. Determine the number of opportunities you need at each stage to hit your goals
Sale is a goal-oriented field, so if you are working on a prospect or lead, you must know how those deals you are working on will help you achieve your sales target.
Similarly, you have to determine how many opportunities you need in each stage of your pipeline. Consider dividing the monthly or quarterly target revenue by the average deal size to get the number of deals you need to win in a month or quarter.
4. Pinpoint the similarities between opportunities that convert at each stage of the sales pipeline
After determining the number of opportunities you need, the next stage is to identify some of the similarities between the opportunities that convert for every stage.
This includes the steps or actions that the sales reps take with the response gotten from the prospect e.g. sales rep sends a follow-up email and the prospect agrees to schedule a meeting or books a demo.
You must understand that qualitative data is just as important as quantitative data to help you define your goals and understand your prospects better.
5. Create or adjust your existing sales process around this data
After generating and compiling the data about your sales pipeline stage, length of time to close the deal, the number of deals needed to hit your sales targets, etc., you can create a new sales process or adapt the existing sales process around the actions, numbers, and stages.
When you have a strong sales process, the sales reps can consistently close their deal or achieve their sales targets as it gives them a proven framework to follow. Adding your sales pipeline data to your sales process also enables you to move your prospect and opportunities to win the deals.
6. Consistently add leads to your sales pipeline
One thing a lot of sales reps fail to do after creating the sales process is that they forget to add leads to the sales pipeline as they move more leads down the sales pipeline. The problem with this is that after finishing closing the deal, they end up having no new leads or prospects to work with at the end of the month or quarter.
A way around this is to ensure that the sales pipeline is always growing or stable when you are working on other deals to ensure that you don’t have to start from the bottom every month or quarter.
7. Always maintain a healthy sales pipeline
An integral aspect of the sales process is the follow-up strategy. A uniform follow-up strategy can help your sales reps maintain a clean and organized pipeline that tell them when to disqualify a prospect – possibly after failing to get a response from them after some time.
If you don’t create a standard follow-up process through your sales pipeline that your sales reps can follow, you could be losing valuable leads out of negligence. The follow-up strategy rules out the full actions and timeline that sales reps must follow to follow up with prospects with specifications on the timing, cadence, and contact methods.
This also involves spelling out the tasks that sales reps should take to effectively follow up with the prospect such as “send meeting agenda,” “call again in three days,” “comment on two blog posts,” or any other actionable suggestions to keep your reps on track and achieve sales quota.
8. Clean sales pipeline regularly
If you want an accurate sales forecast, you must regularly clean your sales pipeline because most forecasts consider the stage that the opportunity is in to predict when it’s likely to close.
How to Clean your Sales Pipeline?
You can clean your sales pipeline in the following ways;
1. Identify prospects who have been in your sales pipeline longer than your average sales cycle.
The first way to clean your sales pipeline is by identifying the prospects who have been in your sales pipeline longer than the normal period and using personal judgment to determine if they should be removed or not. You must consider all factors related to that deal and prospect to determine if they will still convert or are not worth it.
2. Ensure you send a breakup email to your prospect before giving up on them completely
Due to the number of tasks that an average sales rep performs within a month coupled with their monthly sales targets, they can become impatient with leads or prospects that are not very responsive and finally give up on the leads. Before you give up completely on a prospect and decide never to reach out to them again, be sure to send a breakup email to the prospect.
3. Ensure that your data is accurate and up-to-date
Sales data are sales-related statistics that can provide you with actionable insights into a sales team’s performance, and the sales process, help them build better strategies, and significantly improve the sales team or organization’s decision-making. Similarly, all data about your sales pipeline can be used to forecast revenue and close deals.
4. Review your sales pipeline periodically
It is common to want to leave some prospect on the prospect with the hope that you can convert them later, but if care is not taken you will realize that these “hopeless’ prospects fill your sales pipeline and get you nowhere close to your goal.
Hence, you must ensure that you review your pipeline at regular intervals either weekly, monthly, or quarterly depending on how the length of your sales cycles.
How to Run a Sales Pipeline Review?
Functional sales teams can use sales pipeline reviews to coordinate and sync the activities of the team.
1. Use CRM software to analyze sales performance before the sales pipeline review
Before you begin the sales pipeline review, be sure to understand how the sales reps are doing first in terms of their daily activities and performance.
2. Ask the sales reps to summarize each deal
From their experience with working with deals, ask the prospects to quickly summarize each deal and give them positive feedback and assess their performance.
3. Develop an action plan for the deal
After identifying strategies and tactics to close deals faster, the next step is to create an action plan on how the strategies will be implemented to generate your desired results.
What are the Sales Pipeline Metrics You Should Track?
1. Number of deals in the pipeline
This is the total number of deals in the sales pipeline that the sales teams are working on. The number of deals in the pipeline equals the number of sales-qualified leads or opportunities in the pipeline.
2. The average deal value
The average deal value is the measure of the estimated value or revenue that is expected from an average deal. Experts recommend not only focusing on the biggest deals but on the ones that have indicated an interest in the product or service.
It is calculated by dividing the sum of the value of all deals won by the number of deals won.
3. Average win rate
This is the measure of the total number of deals that are won at the end of the specific period. Identifying this metric can help you identify ways to improve a sales rep’s performance and provide different approaches that work.
The average win rate is calculated by dividing qualified leads by opportunities.
4. Conversion rate or lead to opportunity ratio
Opportunity conversation rate is a measure of the number of opportunities, won or lost that are successfully converted to leads. It indicates the determination of your sales team and identifies the steps that should. betaken to convert more opportunities into leads.
The conversion rate or lead-to-opportunity ratio is calculated by dividing close deals by total deals in the pipeline. Check out the guide about lead-to-revenue management.
5. Sales cycle length
The sales cycle length measures how long it takes a salesperson to run a prospect through the various stages of the sales pipeline. It is the amount of time it takes for a lead to move from the first stage to the last stage – the conversion stage.
Depending on the structure of the company, the size of the deal, and the complexity of the product/service, an average sales cycle length can contain five to seven-stage.
6. Pipeline value
The pipeline value is the total of all deals in the sales pipeline. The pipeline value can help you predict revenue in the coming months and plan your strategy.
How to Manage Your Sales Pipeline?
You can manage your sales pipeline by doing the following;
1. Condict sales pipeline meetings
Review the sales pipeline regularly during meetings to gain insights into how many deals you have in the pipeline, the status of deals, the additional deals needed to achieve goals, the entire sales process, and the effectiveness of your team.
2. Use a CRM to track the deals
You can use the help of CRM software to stay on top of all deals in your sales pipeline and leverage sales automation to automate manual tasks that take time. You can also use CRM software to manage sales pipelines.
3. Encourage collaboration
Encourage the collaboration of the sales and marketing teams, the finance and customer service/support teams to get the most value from your sales pipeline.
4. Create Sales pipeline reports
If you fail to measure the important sales metrics regularly and take corrective action, your sales pipeline will become stagnant. A sales pipeline report can help you see how the deals move through the pipeline, develop effective strategies, and close deals faster. You can create a report with sales CRM software.
5. Avoid manual tasks
Use CRM software to automate all the manual sales tasks to save time and help you achieve your goals faster.
6. Customize multiple sales pipelines
Consider creating multiple sales pipelines if you have multiple sales teams, sell different products, or target various markets.
Six (6) Common Sales Pipeline Mistakes
- Not creating a clearly defined sales process.
- Letting the pipeline go dry
- Long sales cycle
- Lack of effective collaboration with the sales and marketing team.
- Lack of coordination among members of different teams.
- Failure to understand customers.
- Lack of deal insights
- Focusing too much on one stage
Sales Pipeline Management: The Conclusion
With the increase in tasks that most sales reps have to manage now, it has become imperative for sales teams to use a comprehensive sales pipeline management system that can help them to automate manual tasks, build and nurture relationships and help them close deals faster.
CRM software like Sloovi Outreach can help you effortlessly load thousands of hot leads, accelerate, manage and enhance campaigns, prioritize leads with dynamic Smart Views, automate outreach and followups, build stronger relationships and win more deals.