Ensuring that the sales pipeline is full is a common problem for growing marketing and sales teams.
Some don’t have the right approach to filling their sales pipeline. Some teams lack manpower. Some marketing teams are not aligned with their sales teams, resulting in a broken sales cycle. For some companies, their sales pipeline may not have been set up properly.
Now, HubSpot research shows a positive relationship between the number of opportunities in a sales pipeline and the revenue hit. In short, the more opportunities your pipeline has, the more likely you are to close sales and hit your targets.
What does this mean? It means that you should revisit your sales pipeline to make sure it contributes to your sales process. And if you don’t have a sales pipeline yet, this is your sign to start building.
This guide will take you through everything you need to know about building and managing a sales pipeline.
What is a sales pipeline?
A sales pipeline is a visual representation that allows you to track potential buyers and their locations in the sales process. It also shows the potential value of the deals in each stage.
To illustrate, take a step back and review the different stages that people must undergo before they officially become your client. This varies per company but the gist is pretty similar:
- New leads generated via lead magnets, ebooks, case studies, or newsletter subscriptions who may or may not be future clients
- Contacts who have signified interest in becoming a client (they can be new leads who went straight to booking a call or demo or existing contacts who suddenly decided to book a call or demo)
- Leads who have already been in a sales call but have not yet made a decision to buy the product or sign up for the service
- Leads who have been in a sales call but are not qualified to be clients
- Leads who have formally signed a contract, meaning they are now officially a client
With a sales pipeline in place, anyone in the team can easily get the information listed above. Of course, it also has other benefits.
Benefits of having a sales pipeline
There’s no standard as to what a pipeline looks like. Regardless of how you choose to execute it (more about that later), having a sales pipeline will give you the following benefits:
Ability to predict or at least estimate revenue
A sales pipeline makes it easy for you to see potential deals that are currently in the decision stage. This gives you an idea if you are behind or on track in terms of target revenue.
If you’re behind, you can identify and zero in on which leads have the biggest potential to be closed. You’ll also know the right time to align with the marketing team if you need more prospects to book calls.
Efficient tracking of KPIs and targets
Sales and marketing teams usually track key metrics like the number of deals closed, the number of calls scheduled, and even the number of qualified leads.
With a sales pipeline, it’s easy to get this information whenever you need it. Because of that, the management can make recommendations and plans based on actual data and trends.
Visibility on backlogs or bottlenecks
Which stage are the leads getting stuck before they officially convert? Since you have an overview of where leads are currently, you’ll also see if leads are piling up under one stage specifically.
Are they stuck in the decision stage after a call? Use this data to optimize the customer experience and the different stages of your buyer’s journey.
The different stages of a sales pipeline
Contrary to what some people may think, there is no standard template for the stages of a sales pipeline. Ultimately, your sales pipeline’s stages must accurately reflect your buyer’s journey and your corresponding touchpoints.
To help you get started, here’s an example. (Remember that this is just to guide you and give you the momentum needed to create your own pipeline.)
Prospecting or Opportunity
There are many ways to go about this, but the first stage in every pipeline is the same: looking for prospective buyers or customers. Some invest in a lead generation specialist or team, while some focus on inbound marketing.
Qualifying or Review
Now, not all leads or prospects will be the right fit. Some will lack the budget, some will be in the wrong industry, and some will not be in the right location.
This stage is all about filtering your leads to zero in on those who are the best fit for what you’re offering. After all, you don’t want to waste your SDRs’ time on leads who are not qualified.
The BANT criteria is one example of how to qualify leads:
- Budget – How much is the prospect willing to invest?
- Authority – What is the prospect’s role in the decision-making process?
- Need – Does the prospect really need your offer?
- Time – What is the prospect’s timeline or urgency?
Here’s a sample scenario: A prospect may have ANT criteria satisfied: they are the ultimate decision maker, they badly need this service, and they need it right away. However, if they fail to meet the Budget criteria, this means they are not qualified.
Qualifying leads can be done manually or automatically depending on your CRM’s features. Check out this list of best SDR software and tools that can help you make the lead scoring process more efficient.
Actual contact and conversation
In this stage, the salesperson meets the prospect via a phone call, an email, or even a video call.
For inbound leads, the prospects usually schedule a call with a salesperson. For outbound, the salesperson calls the prospect directly via cold emails or cold calls. Yes, cold calling is still a thing—check out our comprehensive guide to cold calling for SDRs.
Consideration and nurturing
After a call or the initial point of contact, the salesperson sends the contract or proposal. However, lead nurturing is not just about following up. It’s important to build relationships with potential buyers.
Here are some examples of nurture strategies:
- Enrolling them in your newsletter
- Sending valuable free resources like infographics or whitepaper
- Sending case studies along with your follow-ups to help nudge the decision
By incorporating nurture strategies, you’re continuously delivering value to your prospects even if they aren’t your clients yet.
Closing the deal: won or lost
Sometimes the prospect signs the proposal right away. Some take their time deciding, but still sign the proposal after a couple of follow-ups. Then there are some prospects who will decide not to move forward.
Regardless of the outcome, it’s important to track if deals were won or lost. By doing so, you’ll be able to track the following:
- Ratio of deals won vs. deals lost
- Number of calls conducted for one closed deal
- Average time of sales cycle
- Value of deals won and deals lost
How to build a sales pipeline
Similar to the stages of the sales pipeline, the process of building a sales pipeline can differ from one company to another. Here’s a sample that you can follow and further refine to cater to your business.
1. Define the stages of your pipeline
First step is to outline the different stages that your customers will go through before they become a client.
You can follow the template above and tweak where necessary. Don’t worry—you can still tweak this later on. (In fact, refining stages is really part of managing your pipeline.)
2. Calculate your ideal sales pipeline size
This is the tricky part. To hit your sales goals, it’s important to know the following:
- How long prospects spend time in each stage
- How many prospects you need in each stage continuously
- Percentage of prospects that move to the next stage
Remember that the number of prospects decrease per stage because they don’t all move forward.
So, to have a lot of opportunities in the contact and consideration stage, you’ll need a lot of prospects to begin with.
Here’s a very quick and simple illustration:
- 500 deals won per year = 42 deals won per month
- 2000 proposals/calls per year = 167 proposals/calls per month
Now, depending on your business structure, you may need to also compute the number of appointments set and the number of show-ups. Some businesses also do not give proposals after every call, so you’ll need to compute for that as well.
3. Refine your stages when necessary
Over time, you will probably realize better ways of assigning stages depending on how the actual sales cycle goes.
For example, you may need to add an additional stage for a “second meeting” if you notice that most prospects request an additional meeting before they sign up. Or you might want to separate the call stage from the proposal stage.
Quick note: it’s perfectly normal to change this up every now and then until you settle on what works best.
How to clean and manage your sales pipeline
Aside from refining the stages in your sales pipeline, there are other things that you must pay attention to.
Monitor key metrics
Since the sales pipeline will give you an idea of your progress, it’s important to regularly monitor specific metrics. That way, you’ll know if you need to put pressure on the marketing and sales teams. Additionally, tracking your progress will let you in on where you need to focus.
Examples of metrics to keep track of:
- Number of deals in pipeline – Are you on track or below the ideal pipeline size?
- Deal value in pipeline – If the number of deals is below your target but the deal values are all premium rates, you may still be able to hit your revenue goal.
- Number of qualified deals in relation to total number of prospects – if you’re attracting a lot of prospects but none are qualified, you may need to revisit your marketing strategies.
Conduct regular sales pipeline reviews
Some hard facts:
- Not all prospects who book calls will show up.
- Not all prospects who jumped on a call will become clients.
- Some prospects will go radio silent after a proposal has been sent.
If you don’t review your sales pipeline regularly, it will be clogged by old deals that have been in there longer than the average sales cycle.
So what should you do? It may be tempting to keep them in your pipeline in case they suddenly contact you again. However, it will be better to just purge them. By doing so, your forecast is more accurate. Plus, you can channel your resources into focusing on the deals that have better chances of being closed.
Quick note: don’t just purge them, but analyze why they are stagnating in certain stages.
Encourage collaboration and identify opportunities
The sales pipeline is not just the responsibility of your sales team. To reach its full potential in providing value for your business, the sales pipeline must be used by multiple teams, such as:
- Marketing teams – Marketing teams usually have KPIs centered around the number of inbound leads and the number of qualified leads. Having access to the sales pipeline helps marketing teams adjust their priorities.
- Finance teams – Finance team needs access to forecasts on revenue to be able to create their own budget forecasts.
- C-suite – Sales pipelines will give top management a quick overview of what the business progress is.
- Operations – The pipeline is also important for the Operations team to do their own forecasting of whether current resources will be enough to handle the influx of new business.
Wrap up: Execute a sales pipeline for maximum efficiency across your organization
Build your sales pipeline today and start seeing a radical change in your sales process. It will not benefit the entire organization—not just the sales and marketing teams.
As consumer preferences and needs change, a sales pipeline will provide a comprehensive visualization of where your business stands. Discover how you can make the most out of having a sales pipeline by scheduling a free consultation with our experts.