The sales pipeline is a vital strategic tool used by sales executives to prioritize and manage the sales activities. However, the sales pipeline is not a tangible thing, and this often creates confusion among salespeople as to how to measure and manage its various stages. In this post, we will discuss how to define the sales pipeline and how to use the sales pipeline as a tool to manage the sales process.
Sales pipeline management is a process that helps sales reps deliver value consistently to sales people by helping them understand the value they are delivering to their customers. Without sales pipeline management, sales reps often think they are delivering value and write reports that describe how much value they are delivering. Without any feedback to validate their reporting, they are prone to making sales calls that are based on how they feel rather than the best way to engage with the customer.
We have all felt the pain of a shrinking sales pipeline. Product managers and sales leaders alike are frustrated when the sales pipeline is not as full as it should be. The reasons for a pipeline shrinking can be different, from a lack of activity from key accounts, to the lack of a product launch or a declining sales trend, or even to a decrease in new product sales.
Everything we do in sales revolves on sales pipeline management. All day, every day, your sales representatives stare at their funnels.
Because it enables sales representatives to stay organized and focused on selling, mastering the sales funnel is an incredibly effective method to generate revenue. This is an absolutely important step in the sales process.
We’ll go through the following topics:
What Is a Sales Pipeline and How Does It Work?
A sales pipeline depicts the position of prospects within a sales funnel. It lays out the phases a prospect goes through as they go from lead to customer, as well as the activities salespeople should take at each stage. It indicates how many transactions a salesperson is anticipated to complete in the near future in relation to their sales targets.
A sales pipeline, in basic words, is a series of phases that a prospect goes through as they move from a fresh lead to a client. It is divided into seven stages:
Creating Leads:
Salespeople use marketing campaigns, customized advertising, and customer information such as name and email address to attract and engage prospects.
Nurturing a Lead:
Follow-up on leads by keeping a line of contact open between you, the salesperson, and the prospect. The procedure include sending pertinent information to the prospect, which is usually done through email.
MQL (Marketing Qualified Lead):
This is a lead that is thought to have a higher chance of becoming a customer than others.
Accepted Sales Lead:
A sales accepted lead is one that has fulfilled the requirements and is ready to be sent to the sales team.
SQL (Sales Qualified Lead):
A sales qualified lead is one that has been evaluated and considered a prospective customer by a sales team.
Deal is done:
This is a prospective client who purchases something and turns it into money.
Post-Sale:
It’s a set of procedures that take place after a client has completed a transaction. Billing and collections, returns, complaints, and customer service are all part of the post-sale process.
What is the difference between a sales pipeline and a sales funnel?
Many people confuse the words sales pipeline and sales funnel, although they have different meanings.
A sales funnel indicates the quantity and conversion rate of such prospects via your pipeline phases, whereas both words are used to explain the movement of prospects through a sale. The sales funnel is a graphic depiction of the available possibilities for your team.
A sales pipeline, on the other hand, concentrates on the activities that salespeople perform at each step. The sales pipeline is made up of activities such as sales prospecting, lead creation, sales calls, outbound emails, meetings, and procedures.
What Is a Sales Pipeline and How Do I Create One?
Let’s look at how to create a sales pipeline now that we’ve defined what the phases of a pipeline are. The procedure may be broken down into six stages.
1. Make a list of potential customers and define your target market.
You may obtain an approximate estimate of how many consumers your company can serve by defining your Ideal Customer Profile, or ICP. The ICP is typically updated once a year for businesses that are less than three years old.
The target market and Ideal Customer Profile are created and updated by the CEO, founding team, and other c-level executives.
2. Make a list of the businesses you want to target.
Target businesses are firms with which you want to do business and are generated from your ICP. This is typically overseen by the company’s CEO, Chief Revenue Officer, and sometimes the Vice President of Sales.
3. Do your homework
Create an internal list of target businesses based on your ICP by working through target contacts. Here are some suggestions for making this procedure more efficient.
- Look up the names of the people you want to contact.
- Add further information to those contacts, such as email addresses or phone numbers.
- Find out more personal information about both the individual and the business by doing some further investigation.
This procedure may be approached in two ways:
Purchase the list, which includes names, contact information, and other customized information. This is the route of least resistance, but keep in mind the quality of the list. Many lists are of low quality, and even if list providers are careful in keeping them up to date, quality rapidly deteriorates when individuals move professions, positions, or businesses, bringing their contact information with them.
Create the list: this is a time-consuming procedure that entails manually searching for names and other personal information. Even though it takes more time, this is the best method to guarantee the greatest list quality.
4. Make contact with your intended audience
Email, direct email, and even physical encounters are examples of communication methods. At least three contacts each month is the usual guideline when it comes to prospecting.
5. Establish a routine
By concentrating on value-based selling, you may segment your pipeline. Make sure your salespeople are excellent communicators who can form genuine personal connections.
6. As you move farther down the funnel, build momentum.
You gain momentum by transferring your Sales Qualified Leads to the Account Executive, which helps you achieve your goals and stick to your objectives. The conclusion of the sales process is symbolized by this procedure.
The Account Executive is responsible for following up on and assessing leads until they are closed or lost.
What is Sales Pipeline Management, and how does it work?
Sales pipeline management include keeping track of prospects, objectives, and quotas, as well as determining if particular transactions need extra attention.
Effective pipeline management helps salespeople to maintain track of transactions by understanding precisely where they are in the process and if they have enough deals on the table to meet their objectives and quotas.
Sales Pipeline Management Characteristics
We must first grasp what makes up a sales pipeline before diving into the idea of pipeline management. The first is metrics, which refers to information gathered about the sales funnel that can be utilized to evaluate your sales process.
After that, there’s optimization. A well-managed sales pipeline allows you to analyze and improve your process at each step, resulting in more revenue at the conclusion of the sales cycle. Sales forecasting is the practice of anticipating sales revenue and methods to increase it as part of pipeline management.
Regular progress monitoring and assessments of your salespeople are also part of sales team management. This is accomplished by collecting crucial information such as when and how your sales staff maximizes the sales process.
Finally, pipeline management tools and apps are intended to boost income while also improving the performance of your sales pipeline and team.
6 Sales Pipeline Management Best Practices
1. Keep track of your sales figures.
Understanding the statistics and components of the sales funnel is key to mastering the sales pipeline. Sales managers can better anticipate and generate predictable income if they know the averages.
Here’s what you’ll need to know:
- Source generates new leads every month.
- Lead-to-opportunity conversion rate
- Opportunity to closed transaction conversion rate
- Deal Sizes Won on Average
- Length of a Sales Cycle on Average
- Win Rate
- Total Number of Available Positions
It’s crucial to have the correct info! Any company’s sales process may be hampered by inaccurate data.
Additional metrics to consider are:
- Leads are valuable.
- Rate of deal closure
- Velocity of the Sales Pipeline
Getting better data necessitates ensuring that sales representatives enter accurate information into the sales CRM.
A Sales CRM is a fantastic pipeline management solution that provides visibility into sales pipeline data. It performs frequent spot checks to identify when a measure is incorrect, provides insight into how to fix it, and assesses progress once the changes are implemented.
In order for this to succeed, sales managers must clearly prioritize data quality. You can better anticipate future outcomes by using historical data, reliable evidence, and past patterns.
Let’s use the Pipeline Velocity measure as an example. The sales team’s earnings per day may be calculated using this method. When it comes to pipeline velocity, the most important thing to remember is to concentrate on each individual input rather than the ultimate output measure.
Pipeline Velocity is calculated as follows:
Each of Pipeline Velocity’s four components is a lever that may be used to influence business outcomes. The example below shows how increasing any one of the four indicators may result in increased revenue.
Here are three ideas for keeping your sales pipeline in order.
1. Recognize cold leads
Examine your pipeline velocity analytics to find leads where you’ve taken longer than usual at certain stages.
2. Make a decision on what to do next.
Choosing whether or not to delete inactive leads is part of this procedure.
3. Conduct follow-up and re-evaluation
Before permanently deleting a lead, do a re-evaluation through email to see whether it’s worth following up on in the future.
Keeping an eye on underperforming indicators may help you spot places where your development has stalled and figure out how to go forward.
2. Conduct pipeline evaluations on a regular basis.
Increasing the number of eligible, available opportunities is the most effective method to improve Pipeline Velocity.
This is partly owing to the fact that, once specified, the lead generating system may be readily scaled. While improving the win rate necessitates a focus on a number of interconnected variables and activities, these may be difficult to systemize and enhance.
Every Sales Manager has forecast meetings on a regular basis. Unfortunately, forecast meetings, like most things in sales, are primarily focused on prospects that are anticipated to close within the next week.
Pipeline Reviews, rather than forecast meetings, are more useful. Pipeline reviews concentrate on possibilities at the top and center of the sales funnel. Reviewing the Pipeline:
- Salespeople may assess the quality of new prospects that have just been introduced to the funnel.
- Because they are fresh possibilities, managers may have a larger impact on the result.
- Sales representatives and management get a better overall picture of the pipeline.
According to Aaron Ross, author of Predictable Revenue: A Guide for Business Owners,
“Be brutal in pipeline evaluations or one-on-one coaching sessions.”
Interrogate your sales representatives on the quality of their leads, the decision-makers involved, and how they manage their sales pipelines.
3. Concentrate on modest changes at each step of the sales funnel.
As you may know, sales is a numbers game, and teams that use a Predictable Revenue system have a large number of leads to exploit. This frequently leads to salespeople focusing less on high-value prospects.
Their pipelines may suffer as a result of their lack of emphasis on high-quality prospects. Small changes in funnel stage pipeline management may provide some encouraging results:
4. Maintain a clean sales pipeline.
There is a potential 50 percent improvement in the number of won transactions if representatives boost conversion rates by 5% in two major funnel phases. A sales funnel, like a marketing funnel, must be adjusted and monitored. Sales is becoming more and more like marketing as the SaaS Sales Stack evolves. Know the applications, understand the funnel analytics, and keep an eye on the conversion funnel in the pipeline.
Use Pipeline Reviews to remove sales possibilities that aren’t working. For efficient sales pipeline management, this is a must-have feature.
Salespeople are naturally upbeat. This may lead to their squandering time on TOFU chances, since they genuinely think these fresh opportunities are “certainly in our striking zone.”
The truth is that a significant portion of the chances in your team’s funnel fall outside of your striking zone. Aaron Ross claims that
Consistent lead flow is ensured by predictable revenue. A steady supply of leads enables your salespeople to concentrate on the most qualified leads that fit your desired customer profile and strike zone.
5. Create a structured operations manual for pipeline management.
From open to close, provide case studies of particular possibilities. At each step of the funnel, provide representatives scripts and specific tasks to do. Sales managers should consider the following questions:
What does a buyer’s journey entail?
What should a rep do if an opportunity becomes stuck at a certain stage? What has shown to be effective in the past?
What is the conversion rate for each step of the funnel?
All sales managers should do a better job of assisting their salespeople with pipeline management. Each member of the sales team plays a critical part in the development of the sales funnel.
Account Executives are in charge of win rates, whereas Sales Development Reps are in charge of the quantity of opportunities. The sales manager, on the other hand, is in charge of the machine that generates the pipeline. Work on the system rather than in it to build a Predictable Revenue Pipeline Machine.
6. Create sales enablement material for each step of the buyer’s journey.
This entails giving extra information to your leads in addition to the standard phone calls and emails. Consider your Sales Funnel and the information that is given at each step.
Salespeople interact with their leads at the top of the funnel by using blogs, articles, and infographics to pique their interest. You want your prospect to grasp precisely what you have to offer and how it will help them, but you want to do it in a manner that is enjoyable and interesting.
Salespeople nurture leads in the middle of the funnel by offering extra information in the form of ebooks, case studies, and video lessons. The objective is to convert the prospect into a paying client.
The action stage is at the bottom of the funnel, and here is when the prospect becomes a paying client. At this level, salespeople perform assessments and follow up to ensure that a one-time client becomes a long-term customer.
Note from the editors: This is a guest post from Matt Smith, the inventor of The Predictable Revenue Bundle. The package provides anybody with the tools and training that the top sales teams in Silicon Valley have. In 2024, the post was updated.
Sales Pipeline Management is the process of creating a sales pipeline that will help a company grow. Sales pipelines are designed to anticipate the buying cycle. Companies use sales pipelines to ensure that they are able to respond to the needs and wants of target customers. Sales pipelines can be used to predict customers’ behaviors and to forecast the number of customers a company can expect to sell to.. Read more about salesforce pipeline management best practices and let us know what you think.
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Frequently Asked Questions
What is sales pipeline management?
Sales pipeline management is a process that helps companies plan and manage the sales of their products.
What are pipeline management principles?
Pipeline management principles are a set of guidelines that help companies manage their production processes.
How do you organize a sales pipeline?
A sales pipeline is a process that helps to organize the steps of a businesss sales cycle. It starts with identifying opportunities and ends with closing deals.
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