A sales pipeline is one of the most critical systems your business will ever develop or maintain. It doesn’t matter how good of a salesperson you are – most of your prospects aren’t ready to buy after initial contact, which means you’ll be keeping track of dozens, hundreds and potentially thousands of ongoing conversations with prospects at different stages of the sales process at any one time. This makes it necessary for almost all businesses to develop and manage in one form or another an effective sales funnel that efficiently converts prospects to customers as they progress through the stages of a sale (sales funnel).
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What is a sales pipeline?
A sales pipeline is a system that allows you to methodically organise your sales and outreach efforts, so you can maximise your sales by effectively organising and tracking individual leads (prospects).
A sales pipeline is often broken up into stages (sometimes in totally called a sales funnel), these different stages of the sales process allow you track where a prospect is at all times and for your or your sales team to be able to take appropriate action to move the prospect from contact to closing a sale.
Why build a pipeline?
A standardised sales pipeline allows you to put your focus only on the things that require your immediate attention. While a decade ago you might have gotten away with just a pen and paper, things have gotten substantially more complex with time and thus need a system to keep track of what going on and effectively convert prospects.
Furthermore, every step of your buying process likely requires a unique approach and a specialised outreach message. Having a pipeline in place helps you quickly customise your pitch for each stage, recognise the prospect’s needs and cater to them accordingly at any given moment.
Creating a sales pipeline
One of the most important parts and arguably the basis of any sales pipeline is defining stages of the sales process you want to track, this allows you to see at any time where a prospect is and what action should be taken. It also gives you access to data to see where you could improve your sales process, solve bottlenecks and try different approaches to maxmise sales.
A conventional pipeline looks something like this (bear in mind these vary company to company, product to product and can become substantially more complex, this is just an outline).
1. Initial contact
The initial stage of any pipe is when a prospective customer is contacted. This is typical via email or telephone, this stage is critical to keep track of as on many occasions you will need to follow up to receive a response and either remove the prospect from the pipeline or progress the prospect further down the pipeline.
Qualifying a prospect is a step beyond the initial research you carry out to identify potential customers, it is about discovering if the customer has a need for your product, do they have the budget to buy your product, is it the right time for them to purchase your product and many other questions. Effectively this stage is about making sure a prospect is worth pursuing now, at a later date or never. Qualification is typically done in the form of a meeting either in person or over the phone.
Once you have qualified a customer and understand their needs, the proposal as a stage is about selling a customer your product/service tailored to their individual needs as a business or professional. This is typically done in the form of a quick email, pdf proposal or powerpoint presentation highlighting the key details of the product/service and how it would work for the customer
Negotiation is another critical stage to keep track of as it is when a prospective customer has responded mostly positively to a proposal but is looking to negotiate on price, features or further details. Before you can arrive at a sale its important for this stage to be concluded.
At this stage it’s all about turning the prospect into a customer and closing the sale as quickly and efficiently as possible, this stage will often require multipe followups.
Tailoring a pipeline to meet your needs
Of course, the final draft may vary significantly based on your product, your particular niche and even your own business model.
Once you’ve identified the main steps of your sales cycle, make sure to refine the approach for each of the declared stages. Not every step has the same ‘closing potential’, so modifying your message based on the prospect’s whereabouts within your pipeline is paramount.
Ask yourself – what do your prospective buyers expect in that particular stage? How will you tend to their needs? Which outreach format suits that step the best? If you’ve already taken the time to create your buyer personas, this process should be a walk in the park.
Removing friction and maintaining simplicity in sales
It’s very important to ensure a seamless transition from one stage to another. While having a pipeline can be vital for automating your sales process, your leads should never feel like they’re being dragged through your internal sales funnel.
Create a clear-cut strategy for moving from stage X to stage Y. Once you’ve qualified a lead, how exactly do you approach scheduling a meeting? How does a proposal turn into a sale? Once you’ve mapped out your prospect’s entire sales journey, you’ll be able to identify any potential blind spots and create personalised calls-to-action to get the ball rolling.
While specific stages vary from business to business, try not to go overboard when creating the pipeline steps. Any more than seven stages in your pipeline is going to be counter-productive, according to some industry experts. The point is to create a lean system to streamline your outreach efforts – if you’re getting lost in the steps, it’s probably a good idea to trim down the fat.
Managing a pipeline that converts prospects into customers effectively
There is no one size fits all to managing a successful pipeline but there are several key tenants you should follow in maximising the conversion of prospects to customers.
Sales measurement & tracking
Without understanding the vitals of your leads and clients, and what data you should measure, there’s no way to manage your pipeline efficiently. A few key areas you should track include, stage of prospect, timeline / communication points and deal size, there are much more but always start with the essentials. With the above tracked you can start to understand what’s in your pipeline, what’s converting, what is not and analyse to identify issues, opportunities and what should be prioritised.
Clear pipeline stages
Unless you have a very complicated (justified) sales process, you should never need more than 12 key stages in your pipeline. We often find organisations either clutter their pipeline with too many stages or have too few. Both are bad as one side creates needless complexity that can result in an overwhelming pipe and on the other minimal stages leads to an unclear understanding of where a prospect is at and a loss of efficiency/conversion in the pipe.
A sales pipeline is much more than a piece of software in the cloud or an excel sheet, and it’s used to track the entire sales funnel and is arguably one of the most important processes of your business, sales. One thing people often overlook is the human element involved in this, you can have the best CRM (client relationship manager) on the planet, but if your team isn’t clear on their responsibilities and haven’t incorporated behaviour patterns around using the system, you’re losing money.
Active updating of your pipeline is one thing, but you also need to have clear ownership of a lead once it enters the system. We’ve found that in many occasions leads are passed around from sales person to sales person, and this often leads to the loss of the lead. Once a lead comes in it needs to have a clear owner who is responsible for taking it through the sales process.
Sales & revenue forecasting
Once you’re sorted on the above, and you have a working process and tool, you’ll be able to gather and analyse data, as well as to look at structural problems in your pipeline and create/track optimisations that can lead to efficiency and conversion gains.
The key to a successful pipe
It’s important to remember a sales pipeline is not static, creating and managing a successful pipeline is an ongoing process that will evolve with your business, so keep building and keep iterating!
Finally, there is a slew of sales automation software on the market, many of which provide you with all the tools necessary to create your own sales pipeline, although the right CRM software largely depends on the scale of your business, some of the most popular choices include Salesforce, Pipedrive and others.