This article explains what a sales pipeline is and why it is important for businesses. It also explains what the typical stages of a sales pipeline are and how to efficiently manage and track a sales pipeline.
A sales pipeline documents the different stages of the sales process that any sales rep must go through to close a sale with a customer. The sales pipeline shows the status of any sale that is in progress, and enables salespeople to keep track of the progress of their deals, as well as understand which leads they should be prioritizing, and which deals they should be focusing on.
The sales pipeline normally includes a number of different metrics that helps salespeople understand whether they have enough opportunities in progress to meet their quota, as well as how they measure up against their targets over a specific period of time. These metrics include how many deals are in progress, the average size of these deals, the average duration of a deal, estimated close dates, average deal size, and the average percentage of deals won.
Prospects move through the sales pipeline at different speeds depending on their interest, behavior, amount of research they have done, the type of products you sell, and the stage of the pipeline they start at. In theory, salespeople advance prospects from one stage to the next in a linear fashion, but in reality, potential customers can start the pipeline at any stage, and may often skip or move back stages during the process.
Managing your sales pipeline effectively is an important way to make sure you can close more deals faster, and to ensure you’re focusing your attention on the most high-priority leads.
What are the sales pipeline stages?
One of the first things you need to do when building a sales pipeline is to determine the stages that all your prospects will pass through. While different businesses sell in different ways, and there is no one-size-fits-all approach to managing the sales process effectively, the sales pipeline is broadly made up by five different stages. These are:
Each stage will typically last a different amount of time depending on your industry. For example, if you are selling cars, each stage of the sales process will take much longer than if you’re selling a pair of shoes. No matter what industry you work in, it’s still key to measure how long on average it takes prospects to move from one stage to the next, as well as the probability of making a sale when customers reach each stage, and how long it takes to close a deal in total.
How to manage your sales pipeline
Even if you start off running an efficient sales pipeline, leads can still end up getting stuck and not moving through the stages effectively and efficiently, or you can find that your close rate drops off as time goes on. To prevent that happening, you need to make sure you have optimized your sales pipeline.
Here are some ways in which you can manage your sales pipeline:
Work out how many opportunities you need to have in your pipeline to ensure that you can meet your targets. This will help you avoid spreading yourself too thin, or letting your sales pipeline dry up.
Make sure you have a clearly mapped buyer’s journey and target audience so you know exactly where each prospect should be placed in the pipeline. This will ensure that you are communicating with them in a way that is appropriate to the stage they are in.
If you don’t already have one, create a robust sales process tailored to the unique requirements of your business that all sales staff can follow. This will then help them know the right actions to take at each stage (tasks, communication methods, contact frequency, when to disqualify, etc).
Don’t be afraid to disqualify leads if they are stuck or have been in the sales pipeline for too long, and ensure all deals are moving along (although sometimes they may move back a stage before they move forward).
Regularly analyze and report on the success and failures in your pipelines, and identify ways you can learn from previous interactions, so you can optimize your sales pipeline to close more deals. Make sure you are measuring all the key metrics you need to help you understand what you should be doing more of, as well as what you need to stop doing.
How to track and report on your sales pipeline
Being able to accurately track and report on metrics in your sales pipeline is difficult if you are using manual methods such as Excel. To get insight into how well your sales process works, and how successfully your sales staff are moving prospects through the pipeline, you need to implement a sales pipeline management tool.
Using sales pipeline management software enables you to automate manual tasks such as collecting and entering data, and ensures that everyone has access to a centralized version of the latest data available. This software will put an end to having to email spreadsheets back and forth every time something changes.
You’ll also be able to collect more data, quicker so you can track and report on more metrics, which will help you better understand how to optimize your sales pipeline. It will also free your salespeople up to focus on providing more human-centric, personalized service to customers.
If all you have at the end of the month is a list of numbers, it can be difficult to glean any insight from this information. Sales pipeline management software provides data visualizations and charts so you can make sense of it all, even if you aren’t skilled in data analytics. You can then slice and dice these charts to create different reports with information that is relevant to the role or department you’re sharing them with.
Sales pipeline management software can also integrate with other commonly used business software, such as marketing automation solutions, email marketing tools or social media management apps, so you can bring all this data together to not only get a better picture of your customers, but also ensure you have more accurate data to report on.
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