The words “sales pipeline” is one of those sales terms that gets thrown around. However, a “pipeline” is more than a simple buzzword. It’s a useful sales tool that helps with visualising your sales cycle. In fact, understanding and ironing out your sales pipeline can increase your bottom line. After all, the more you know about your prospects, the more targeted your approach can be. But what is a sales pipeline anyway? And how do you build a winning one that ensures you bring in more revenue?
A sales pipeline is more than an industry buzzword. It’s a visualisation tool that will make your sales team more efficient. Our sales experts break down how you can build one in four simple steps.
What is a sales pipeline?
Let’s begin by stating that your sales pipeline is not the same thing as your sales funnel. A sales pipeline represents the stages a person goes through to become a customer. It looks at the different steps in the sales process, from gaining a lead to closing the sales, and the actions which your sales and marketing teams need to take to move a deal from start to finish.
A sales funnel looks at the customer journey as a whole. From becoming aware of your brand to making a purchase, and represents the number of prospects who make it through those stages. This is why the shape of a funnel is wide to narrow.
What is a sales pipeline?
A sales pipeline is a visual representation of the stages a person goes through to become a customer. It tells you the number of deals in progress, their value and helps your sales team prioritise their efforts.
Sales pipeline stages
No two businesses are exactly the same, and neither are all sales pipelines. Some organisations use a five-step pipeline, others use one with as many as eight stages, and some swear by seven. The differences depend on how you contact leads, what you are selling and your personal preference. However, there are some common stages listed below to help you develop your own pipeline.
First things first, you need to find prospective buyers who need what you’re selling. Based on an ideal customer profile, you need to let potential customers know that you exist. This can be done in a variety of ways, both paid and organically. Your prospecting method all depends on your target audience, your offering and organisation structure. If you’d like to learn more about how to set up a winning lead generation strategy, check out this article.
Once you’ve cast a wide net and attracted the attention of many people, you need to sort through your list of leads and identify if they’re a good fit for your product. By deciding who’s hot and who’s not, something which lead gen software can help you do in a matter of seconds, you avoid wasting your time and money on someone who will never convert.
However, don’t disregard cold leads completely. Save their information and check in with them every so often to further build your relationship. In fact, this could even be a separate stage in your sales pipeline As, just because someone wasn’t ready to buy initially doesn’t mean this person isn’t ready to buy now.
Initial contact or product demonstration
After identifying hot leads, it’s time to zoom in on these people. To do this, reach out to them to understand their business, requirements and potentially demonstrate how your product or software can help them. This can be done face-to-face, via phone, email, social media, or text. Whichever style of communication you choose, make sure to focus on how your product works and explain how this person can benefit from using it.
If you’ve managed to catch the interest of a prospect and you’ve established their need and financial ability, it’s time to make them a personalised offer. When writing your proposal, remember to hit on all their pain points, describe the advantages of your product and repeat pricing information.
Depending on your business model and offering, negotiation may also be a stage within your pipeline.
Fingers crossed that after you sent off an offer, your prospect signed it. If so, pop the bubbly because you just closed a deal!
However, some companies may back out at the last minute. If they say no, it’s a good idea to follow up to understand what made them change their opinion and stay top of mind should the situation change.
Landing a deal is not the last step. Depending on your industry of operation and offering, the customer experience may just be starting now. Buyers will expect attentive service and may come to you with follow-up questions or implementation problems. By staying in touch with your customers, you can also upsell premium products or solutions. So be sure to treat your new customers well.
Build your own sales pipeline
Now that you know the general stages that need to be included in your pipeline, it’s time to build your own.
1. Define your ideal customer
Before you even have a pipeline, you need to know who your customers are, as this will affect your selling approach. So brainstorm demographical traits, what makes these people tick and how to best reach and communicate with them. Build up detailed persona’s which take also take into account how your product or service can help them overcome obstacles and achieve their goals.
2. Design your pipeline and assign sale activities for each stage
Based on the stages mentioned above, map out your sales cycle and make sure it matches your buyer’s journey. Spell out the activities associated with each stage, potential triggers which will move prospects from one stage to the next, and how long each stage lasts. This detailed breakdown empowers sales reps by giving them the activities they need to complete to guide a user in making a sale.
3. Calculate the number of opportunities needed at each stage
To achieve your sales targets, how many deals do your salespeople need to pursue? To figure this out, work backwards. How many deals do you need to close a year to reach your revenue goals? Setting your exact target as a goal is not enough as many deals don’t convert to a sale.
Start with your target monthly or quarterly revenue goals divided by your average deal size. This shows how many deals you need to win during that period. Then, divide your target deal number by close rate per stage. For example, if you need to win 500 deals and your sales team close 80% of deals in the negotiation stage, then 625 prospects must make it to that stage.
4. Review and update your pipeline
Once you have things going, don’t be afraid to refine and edit your process as you go along. Based on patterns and experiences, maybe you need to add stages. For example, if you’re a marketing agency, you may have multiple contact meetings with clients before a deal is closed.
So don’t worry about getting the entire process right the first time. It may take numerous attempts to figure out what works for your business. However, when you do, your sales pipeline will be like building blocks which will shape your company’s sales and marketing strategy and predict sales revenue with decent accuracy.
Build a winning sales pipeline
Your sales pipeline lets your sales team prioritise their work, track deals and allows you to easily monitor your organisation’s progress. And you can build one in four simple steps. With your ideal customer in mind, map out the stages and tasks required to transform users into customers along with the number of opportunities needed to meet your bottom line. And then keep refining and maintaining your pipeline as you grow and gain more experience. Master your sales pipeline, and you’ll master your results.