A dried-up sales pipeline is an unpleasant sight that most sales reps dread. Several sales managers and reps are aware of the buzzword “sales pipeline”. However, most of them do not pay attention to it and manage it effectively. Sadly without a healthy pipeline achieving sales goals becomes a more challenging task.
It is easy to panic about dropping numbers, but very few sales professionals put in efforts to understand and manage the sales pipeline effectively. They are the ones who succeed in sales.
“Success is the sum of efforts repeated day in and day out. – Robert Collier
Gaining control over the sales pipeline can make goal attainment a stress-free process. In this detailed guide, you will get to know various aspects of the sales pipeline to develop a more disciplined and structured approach for closing more deals.
- What is the sales pipeline?
- Sales pipeline vs sales funnel – what is the difference
- What do you need to build an effective sales pipeline
- What are the stages of a sales pipeline
- How to build a sales pipeline?
- How to effectively manage a sales pipeline?
- What are the sales pipeline metric you should track
- How to keep your sales pipeline full?
Before we delve deeper into the sales pipeline’s various aspects, let’s first understand-
what is a sales pipeline?
A sales pipeline is a visual representation of the sales process. It is a systematic way of navigating stages within a sales process.
A pipeline visualizes the lifecycle of potential buyers from the initial contact to the closing stage. It shows the sales team where their potential prospects are in the buying process.
The probability of a deal closing is directly linked with the outcome of each stage of the sale pipeline.
The conversion success is dependent on the proficiency of the sales reps in managing and passing the deals through various stages of the sales pipeline.
You won’t find much difference in the stages of a sales pipeline and a sales funnel. However, a sales pipeline focuses on the value, quantity, and stages of the deal. While the sales funnel communicates the volume of the deals in total and the percentage of those that have successfully flown through various stages of the sales process.
A sales pipeline makes it easier to track deals that might take longer to progress. So, companies with a high-value product having a long and complicated sales process use a sales pipeline. While companies having a shorter sales cycle find sales funnel as a better fit for their sales teams.
If you do not sow a seed in the right way, you might not get the expected results. The same is the case with the sales pipeline. You need to build it in the right way.
Below are the things that are essential for building an effective sales pipeline.
A list of prospects
Before anything else, first, focus on having a list of prospects. A high-quality lead list is requisite. It should be a proper list of people who want to buy from, or people you think will buy from you.
Try to make it as detailed as possible.
It should have full names, phone number, email-id, the prospect’s company name, work position, and how they connect with you.
Either the marketing team can help you create the list or outsource them from a digital marketing agency.
However, make sure the list’s prospects meet the criteria set in the ideal buyer’s profile.
A clear buyer persona
Having a clear buyer persona can save a lot of time. It will prevent you from wasting your precious hours on chasing the leads that won’t convert into sales. So, before you think about building a sales pipeline, invest some time creating a clear buyer persona.
What is a buyer persona?
Well, it is a representation of your ideal customer. It embodies a buyer’s characteristics that give the most revenue, with the least opposition over the longest period.
So, how to create a buyer persona?
Well, here’s how you can do it.
- Look through your sales history (You can even take the help of a CRM software)
- Create a list of satisfied customers.
- Narrow down the most common traits and pain points.
- Once you collect the information of the ideal buyer, commence developing the buyer persona.
- Be explicit while describing your ideal buyer.
- Map the entire buyer’s journey. Note down how the ideal buyer purchases your product.
“71%” of companies who exceed revenue and lead goals have documented buyer personas.
Your revenue targets
A healthy pipeline can help in meeting your revenue goals. So, to design a successful pipeline, you’ll need first to set realistic goals.
Revenue goals give you a direction and keep you on the right track.
Besides, it helps you answer one important question- How many deals do you need to add to your pipeline to fulfill your revenue target.
So invest little time in setting achievable revenue targets before developing a sales pipeline.
A sales pipeline consists of various stages. These stages are the steps that a sales rep takes to convert a lead into sales.
Each company is different, so the pipeline stages might differ a bit.
However, here are the most common sales pipeline stages that most of the companies follow.
Sales prospecting is the first and most important stage of a sales pipeline. Sadly it is even one of the most dreaded stages of the sales pipeline.
40% of salespeople feel that prospecting is the most challenging part of the sales process
Prospecting done right can acquaint you with many opportunities.
Sales prospecting is the stage where new relationships are established.
Research is the cornerstone of effective prospecting. Make sure you do your research before reaching out to sales prospects.
There are many ways to reach to a potential prospect-
Cold calling– It is one of the oldest and most effective ways of connecting with prospects. Here you connect with potential buyers who have no prior knowledge of your call.
The best time to cold call is between 4:00 and 5:00 PM or between 11:00 A.M and 12:00 PM.
Cold email: Cold email is another powerful medium to reach the prospect. If the prospect isn’t available to pick your call, they can reply to your email at their convenient time.
8 in 10 prospects prefer speaking to sales reps over emails.
Text messages: Most of the prospects are busy travelling either for a meeting or for a business event. So, text messages are the safest way to grab the prospect’s attention as it won’t consume a lot of time.
90% of text messages are read within 3 minutes
You cannot cast your net wide and sell to everyone, so lead qualification is necessary. Qualification is a vital stage of the sales pipeline as no one likes to waste time on leads that won’t convert into sales.
So give special attention to this stage of the sales pipeline and qualify all the leads that enter the pipeline; the best way to do it by using the BANT methodology.
BANT stands for-
Budget – Finding out if the prospect has the budget to purchase your product
Authority – Discovering who play a decisive role in the company for purchasing a product
Need – Understanding the prospects’ needs
Timeline – Finding out what’s the solution implementation timeline
This is one of the most advanced leads qualification methodology that helps determine if the prospect is a good fit based on their ability to buy, internal influence, need for the product, and purchase timeline.
It is a pretty straightforward step where the sales rep tries to set a face to face meeting.
Appointment setting is challenging but is an important stage to push the deal ahead in the sales pipeline.
With persistence, it is possible to convince a client to meet you.
Face to face meetings can help in influencing buying decisions. So, it is pivotal to schedule a face-to-face meeting with a potential buyer.
Here are few appointment setting tips:
- Target the decision-maker from the company.
- Build enough interest and curiosity during the initial calls to easily set appointments.
- Use multiple channels like call, email, social media, and text messages to set appointments.
- Understand the prospect’s concerns and don’t appear too pushy.
- Be explicit about what will the prospect gain from this meeting.
Sales Demo is the stage where you get in front of the prospect and present your product. You can’t afford to make any mistakes in this third stage of the sales pipeline. A little carelessness here and the deal might slip through the crack.
So ensure you plan for your sales demo before meeting the prospect.
Below are a few sales demo best practices:
- Set an agenda for a demo.
- Humanize the sales demo and try to connect with the prospect.
- Provide background by summarizing past conversations.
- Explain the product or service in detail.
- Make sure your demo has time for the Question and Answers session.
Negotiation is the deciding stage of the sales pipeline. If handled smartly, the negotiation can be driven to a better outcome that’s beneficial for both.
Negotiation is the make or break moment of the sales process. After investing many hours on a deal, you can’t afford to lose it at this stage.
So it is important to master the art of negotiation.
- Take control of the negotiation and lead the negotiation.
- Stay calm while negotiating.
- Make the prospect feel appreciated.
- Make the prospect visualize the consequence of not investing now.
- Instead of arguing, try to discover new possibilities for coming to any agreement.
It all comes down to this: It is the final stage where the sales rep asks the prospect to finalize the deal. If all goes well, the prospect will agree to your term and conditions and proceed.
Sales closing best practices:
- Avoid complicating your contracts. Use clear language that reflects the agreed-upon terms.
- Make the payment process as easier as possible.
- No matter how big or small the deal is, make sure you acknowledge the prospect.
Now that we know what a sales pipeline is and which stages do it consists let dig deeper and find out how to build a sales pipeline
Determine how your ideal pipeline looks like
Map out your pipeline. By creating a buyer persona and list of prospects, you’ve already taken your first few steps towards building your pipeline. Some of those prospects will complete the sales journey and close; others won’t. However, the interaction you have and the progress of these prospects towards purchasing the product will form your sales pipeline.
You are already aware of the stages of the sales pipeline. However, while building a sales pipeline, you need to ensure that the sales pipeline stages mirror your prospects’ buying stages. Keep track of your customers and how they buy. Create your sales pipeline by keeping the buyers in mind.
Calculate your numbers
It is a great feeling to win every deal you’ve submitted a proposal to. Sadly, that doesn’t happen. However, systematic planning and calculation can help you in winning maximum deals.
If you are aware of how many deals you win on an average, you can easily calculate the number of deals you require in each of the early stages. Calculating your number will help you anticipate the number of deals you need to be adding to the top of your pipeline to achieve your goals.
Develop a stage-to-stage momentum
Once the pipeline stages are laid out as per the prospect’s buying stages, the next task would be to develop and maintain a stage-to-stage momentum. For a healthy sales pipeline, the deals should be flowing from one stage to another.
Take control of sales activities and set objectives for key events to ensure the deals aren’t stalled, and the momentum is maintained.
Keep your pipeline up-to-date
An up-to-date sales pipeline creates a systematic approach to selling. So make sure your sales pipeline is clean. Keep cleaning your sales pipeline to get an uncluttered view of your sales pipeline.
Try to unlock the blockages by identifying and addressing the deals that aren’t going anywhere. Engage the leads and bring them back in motion. Even after several attempts, if the prospect is reluctant, abandon it and try to focus on more promising leads.
The only way to improve your sales result is by managing the sales pipeline effectively.
Here are ways to do it.
Work with a sales pipeline management system (CRM)
The market is filled with different technologies to make your life easier. One such technology is CRM software that can help you in sales pipeline management.
CRM software provides a pipeline view of the deals.
It provides answers to various question like-
- Where are you high-value deals in the pipeline?
- Which stage of the sales pipeline needs your attention?
- How long will it take to close a deal?
With a sales pipeline management system like CRM software, you can fix bottlenecks in real-time and close deals quickly.
Keep track of your interaction
Without a good grip one your conversation with the prospects, it will be difficult to maintain a smooth flow of deals in the pipeline.
Whether its call, email, or text communication, keep track of everything. Make sure all your conversation is streamlined in one place, so you do not have to struggle to find any communication.
Try to revive dead leads
Most of the sales reps make the mistakes of discarding the deals lying in the sales pipeline for a long time.
Avoid this mistake and try to bring back these dead deals to life.
Approach those prospects and try to reignite their interest. Rebuild trust and try to get into their good books.
Automate your some part of your follow-up
Follow-up is a vital sales activity to avoid stalled deals. So make sure you follow-up consistently. Yes, there are many deals in the pipeline, so it might seem difficult to follow-up. However, you can automate some part of your follow-up and save a lot of time. For instance, create a sequence of emails to follow-up with your prospect at your preferred time.
A healthy sales pipeline needs a lot of effort. Here are a few sales pipeline metrics that you should be tracking regularly.
MQL to SQL conversion rate
It is necessary to know how many of your marketing qualified leads are turning into sales qualified leads. A huge drop-off from MQLs to SQLs implies that the marketing and sales teams are not aligned. This can affect the revenue growth of the company. So it is necessary to keep the marketing and sales team on the same page
Average deal size
It is pivotal to know how much revenue does the average deal brings in. Only when you know how big your deals are can you start strategizing to increase the deal size.
To calculate your deal size, divide the sum of the value of won deals with the number of won deals.
$32,000 value of won deals /82 won deals= $390.24
Customer acquisition cost
How much does it cost to get a new customer? The lower the number, the better it is for the company.
To calculate the Customer acquisition cost, your need to divide Totals sales and marketing expenses by the number of new customers
$355215 expenses / 200 new customers = $1,826 CAC
Customer lifetime value
How valuable is every customer over the course of your business relationship? This metric is very important for companies selling SaaS products as they depend on recurring purchases.
To calculate customer lifetime value, you need to subtract the average total revenue generated over customer lifetime from the average associated cost per customer.
$87673 average total revenue- $6789 average associated costs = 85,699
Average sales cycle
Knowing sales cycle length is important to identify the deals that are stalling in your sales pipeline. These are the dead deals that have been in your sales pipeline for longer than your average sales cycle length.
To find the average sales cycle length, you need to divide the total number of days to close deals with the number of closed deals.
53 Days to close deals/ 6 closed deals = 59days
Pipeline stage conversion rate
Tracking the sales pipeline conversion stage helps in spotting the stages that slowdowns the sales process. You’ll be able to find the gaps in the pipeline and fix it in real-time to prevent deals from slipping through the crack.
If you have plenty of opportunities in your sales pipeline, your chances of achieving the sales quota increase. So, try to keep your sales pipeline full.
Here is how you can do that.
Do not skip prospecting
Prospecting might appear as a time-consuming task, but it can give you the best returns for the time invested in it. However, it must be done with unwavering determination to achieve success in it. Set a special time for prospecting every day and avoid skipping for any reason. One to two hours of sincere prospecting can help in filling your sales pipeline with lucrative opportunities.
Continuously test and tweak your sales pipeline
The sales game is always changing. So you need to be prepared and adaptive to the new changes. Explore ways to optimize your sales pipeline. Change the game plan as per the new trends.
There is always room for improvement. So, analyze your sales pipeline, find out the improvement areas, and work on them.
Tap into referrals from happy customers
Do not forget your past customer, especially the ones who are happy with your product. Approach them for referrals. Leads generated from a trusted source have a high tendency to convert into sales. So do not hesitate to ask for referrals from your happy customers.
Work closely with the marketing team
Build a good rapport with the marketing team as they can help you in keeping your sales pipeline full. Besides, quality is more important than quantity. If you have a healthy relationship with the marketing team, you can share your requirements to add some high-quality leads to the pipeline.
If you are selling more than one product, then don’t miss out on any cross-sell opportunity. Each product has certain strengths; when used together, it provides more benefits. You need to convey this to a potential buyer to propel them to purchase more products. Make an offer that is appropriate for the potential buyer. Don’t be pushy but try to help the prospect.
A well-maintained sales pipeline can take you closer to your sales goals. So, in efforts to build and maintain a healthy sales pipeline. Analyze your sales pipeline regularly. Pay attention to the stages where the deals are getting stuck. Try to tweak your approach.
Managing the sales pipeline is vital for every business. For e.g. If you are startup, and looking the best CRM for your startup. A sales pipeline is of prime importance as it can give your insights at every stage of your sales pipeline and help you plug the holes to streamline your sales process and generate more revenue.
Take the help of a sales pipeline management CRM. You can either invest in a tool that only offers pipeline management or go for an all-in-one sales solution like Salesmate CRM that allows you to do a lot more and manage your pipeline. You can streamline your sales, automation various time-consuming tasks, create reports, and do many more things with this helpful sales software.