An efficient sales pipeline can bring in more revenue. In fact, HubSpot found a positive relationship between the monthly number of opportunities in your pipeline and revenue achievement. Further, Salesforce says that 68% of companies have not identified or tried measuring a sales funnel. The same study also showed that 79% of marketing leads never convert into sales.Much coincidence, right? I think not. It is almost impossible to boost your lead conversion without a solid sales pipeline, and sales funnel. Today’s blog is about sales pipeline – what it is, how to build one, best practices, sales pipeline management, and much more. To learn more about a sales funnel, check out our 101 Guide here.
What is a Sales Pipeline?
A sales pipeline can be defined as the representation of how potential customers move through the different stages of the sales process. It has a series of steps that begins with an initial lead interaction and ends with converting the lead into a customer.The different sales pipeline stages help to break down the sales process into small, manageable activities. Thus, it becomes easier to achieve organizational sales goals.
Things You Need to Start Building a Sales Pipeline
So, it’s great that you have decided on building a sales pipeline. But you’ll need a few things before you start building your sales pipeline funnel.
Potential Buyers’ List
The first thing you need for building a sales pipeline is a list of prospects that fit your ideal customer profile. Make this list detailed and ensure that all the prospects align with your buyer personas. What info should you include in the list? Include important information like name, contact, company info, industry, company size, job title, decision-making power, how they found you, purchase likelihood, pain points or challenges, etc.
Sales Process
A sales process is a step-by-step guide that helps the sales team determine their actions at each stage to successfully close a deal. A good sales process includes actionable insights and activities in their workflow that empower your sales team and guide them to make sales repeatedly.If your sales team has a defined sales process, that’s great news! You have the outline for building a sales pipeline. However, there’s nothing to worry about if you do not have a sales process. You can map your sales process together as you build your sales pipeline.
Business revenue targets
Regardless of what process or system you are building, it is significant to have the goals set out first. Your sales pipeline will work towards achieving your company’s revenue targets. Hence, set the goals before you can establish the sales pipeline. Considering the revenue goal, you can ask an important question: How many deals must be added to the sales pipeline to achieve the revenue goal? For instance, if you know how many qualified leads convert into customers, you can calculate the deals needed in each initial sales pipeline stage.
Team discussions
Building a sales pipeline involves several meetings and team discussions. Since the entire team uses the same sales pipeline, it is essential to include them in the decision-making. This way, everyone in the team gets the opportunity to present their ideas and opinions. Further, with the team’s involvement, you can create an effective sales pipeline that enhances communication, collaboration, and improves project management.
The Sales Pipeline Stages
Neither two businesses can be the same nor their sales pipeline. The number of sales pipeline stages may differ. While some may have five stages, others may have six or even seven. For instance, a SaaS company may have a presentation stage where they share a demo with the prospects. Similarly, a car company will have the test-drive stage. However, a few basic sales pipeline stages are more or less the same for different companies.
Stage 1: Lead generation
In B2B companies, the marketing team mainly carries out lead generation. But the sales team can also help a lot in lead generation. Hence, it is considered the first sales pipeline stage. How can the sale steam contribute?Here’s what the salespeople can do:
Create an ideal buyer’s profile.
Your salespeople can research the existing customer profiles or successful deals to find out common attributes among the customer profiles. You can build a crystal-clear profile for your prospects by identifying common customer traits. Also, involving real-time marketing can help in the job.
Align activities with marketing and content plans.
The sales and marketing teams must align to achieve business goals. Since content marketing forms play a role in lead generation, sales and marketing teams can brainstorm to make better content plans. When both departments are aligned, you can create more valuable content that appeals to the prospects.
Stage 2: Prospecting
Prospecting is the stage where you find and draw high-potential buyers. It is about drawing the prospects who would purchase from you.According to research, 50% of the prospects do not fit into the ideal customer profile. Thus, it becomes significant to conduct lead scoring before you let your prospects into the sales funnel. At this stage, let your sales team engage with prospects. The conversation must not be about selling the product/ service but building trust with the prospects. Cold calling and sending cold emails can deliver results at the prospecting stage of the sales pipeline.
Stage 3: Lead qualification
At this sales pipeline stage, you choose only those prospects who match your ideal buyer’s profile. Determine whether or not your prospects have the need, budget, decision-making power, and timeline to purchase your product. Ask the right questions, get details about their company, pain points, challenges, previously tried solutions, etc., to qualify the prospects. The best way is to prepare a lead qualification checklist and then qualify prospects based on the checklist criteria.
Stage 4: Lead contact and nurturing
At the next stage of your lead qualification process, you have a list of qualified prospects. Now, what? Make a move and contact the qualified leads. Approach the prospects interested in buying your product or service. Schedule a phone call, send an email, or set up an in-person meeting for a product demo. Ensure to sell your offering without being salesy.Focus on the prospect’s pain points, make the conversation customer-oriented, and try to win their trust.
Stage 5: Proposal
As the name suggests, this sales pipeline stage involves placing your solution to the prospects. At this stage, your sales reps summarize the prospect’s pain points and propose your product/ service as the ideal solution to their problems. They communicate the product details like pricing, demos (if any), the time needed to implement the solution and train the employees. The sales team must maintain transparency and honesty at this stage. They must mention all terms and conditions related to making a purchase. Of all things, ensure that your sales reps customize their proposal according to the prospect’s needs and preferences. Plus, the sales reps must stay customer-centric throughout the process.
Stage 6: Negotiate and close
At this stage, a negotiation process takes place between the prospect and the sales reps. Your sales reps can negotiate with the lead a little, considering their decision-making power and criteria. If things go well and the prospect decides to make a purchase, you can secure your win! Then, move forward with the required documentation and purchase process.
Stage 7: Retention
If you think winning a sale is the end, then you’re wrong, my friend!Customer retention is one of the most important things in business. But companies often miss out on including retention in the sales pipeline. This stage involves making the customer stay. Or, you may say, this stage involves activities that can convert a customer into a loyal customer. Instead of making a one-time sale, aim to secure a long-term customer. Assist customers with post-purchase services like installation or configuration, help them with sales onboarding, check on your customers at periodic intervals, send them updates, new release details, personalized discounts, offers, loyalty schemes, etc. Also, ensure to take their feedback after they have started using your product or service.
How to Create a Sales Pipeline for Your Organization?
Learning about sales pipeline stages isn’t enough. You must know how to establish a sales pipeline for your organization. So, let’s see the steps.
1. Learn more about your prospects.
It starts with creating a list of all potential prospects. Look for common attributes in your existing customers, the pain points they share, and what challenges bother them. Understand your target audience well and then get going with collecting data. Here’s what you can do 👇
- Check out your company’s CRM to find out about customer pain points.
- Use tools like Google Analytics and find out who visits your website.
- Get in touch with customer service agents to determine the usual struggles of customers.
- Conduct interviews and surveys to get first-hand information.
- Get insights from social media platforms – Facebook, Twitter, LinkedIn, Instagram, etc.
Besides studying your prospects, ensure that your sales team knows the product thoroughly. Also, help your sales team stay updated on the latest trends, industry updates, etc. This will help them pitch the product more efficiently.
2. Set your sales pipeline stages.
Plan and craft your sales pipeline stages. Your sales team should not jump into pitching the product or service to prospects. They must ensure that going through each sales pipeline stage, nurture the lead, and pitch the product when it is right. I have already given you a basic idea of the sales pipeline stages. Adjust and tweak these stages according to your business requirements and functions. To create effective sales pipeline stages, first, identify the milestones a prospect must achieve before converting into a customer. Then, map out the stages based on the milestones.
3. Create lead segments.
The next step is prospect segmentation. To optimize revenue, you must segment your leads at the very start of the sales pipeline. One-formula-fits-all does not work well in sales. If your sales reps use one approach for all the prospects, it won’t fetch the desired results. So, segment your leads based on a few criteria like;
- Demographics – Group prospects based on their age, gender, income, qualification, etc.
- Behavior – Categorize prospects based on their buying patterns, online behavior like a website or social media interactions, their purchase history, and loyalty towards a brand.
- Geography – Segment your leads based on their locations.
These are just a few examples of segmentation. You can segment your leads based on other aspects too. However, ensure picking the right segmentation approach. It will make the buyer’s journey better.
4. Observe and identify trigger behaviors
This step is not always included in building a sales pipeline as it involves identifying the subtle hints of a potent buyer. To ensure a steady flow of quality leads in your sales pipeline, closely observe the leads’ trigger behaviors. Observe which trigger behavior takes them to the next stage of the sales pipeline. For instance, trigger behaviors can be watching product demos, downloading eBooks, scheduling meetings, booking a demo, signing up for free trials, etc. These behaviors indicate that the lead is interested in your product or service. Once you identify these triggers, you can take action to encourage such behaviors. For example, you can send personalized offers, follow up on the lead, upgrade content, make website improvements, offer incentives, etc.
5. Make your sales process better.
After identifying the trigger behaviors, set up your sales process to seal more deals. For better sales pipeline management, establishing an effective sales process is significant. Here’s how you can do it👇
- Analyze your existing sales process – Your analysis should include identifying the channels getting you the best leads, time taken to close a sale and how to reduce it, and identifying the stage with the highest drop-off rate, etc.
- Focus on the actions that helped you make more sales in the past – Find out what actions led to the success of your past sales. Identify the common factors and document all the info to make more sales.
- Tweak your strategies and add new ones – Make changes to your strategies as you move along the sales process. Observe what action yields what results and keep making improvements. For instance, if you see that a better initial offering can attract more leads, offer something more valuable than a free eBook.
Once you have built your sales pipeline, keep it updated. Use sales pipeline management tools to auto-update your pipeline with the latest contacts and deals. Also, maintain a to-do list for each stage your sales team can follow while moving down the sales pipeline.
Top 5 Sales Pipeline Metrics
After establishing your sales pipeline, it is significant to perform sales pipeline analysis to measure how well your pipeline works. Here are the top 5 metrics that you must track to keep your sales pipeline performance in check.
1. Average deal value
Knowing your lead’s worth can help you to forecast revenue. Instead of paying attention to only high-value leads, focus on leads interested to buy your product or service. Even smaller sales deals can help you achieve your revenue targets. Calculate your average deal value by dividing the total values of dealswon by the number of deals won.
2. Conversion rate/ Lead to Opportunity ratio
The conversion rate indicates the number of opportunities your sales team can close. The metric shows the sales team's determination and actions to boost the conversion of opportunities into leads. However, the metric doesn’t show how much effort your sales reps have put into the process. A sales rep with low conversion rate may have high-value deals lined up the pipeline that are yet to be closed. Here’s how to calculate the lead to opportunity ratio:Lead to opportunity ratio = Closed deals / total deals in pipeline
3. Sales cycle
Sales cycle measures the duration a prospect takes to go through the different sales pipeline stages. In other words, this metric determines the time taken by a prospect to move down the sales pipeline from the first contact to closing the deal. The shorter the sales cycle length, the more efficient is your sales pipeline.
4. Customer churn rate
SaaS companies mostly use this sales pipeline metric. It measures the customer attrition rate.The lower the churn rate, the longer the business survives. Hence, it is significant to have customer retention strategies in place.Calculate customer churn rate as follows:Customer churn rate = (Number of customers at the beginning of the month – customers at the end of the month) / customers at the beginning of the month
5. Pipeline value
Your pipeline value is the total value of deals present in the sales pipeline at any given moment. Determining your pipeline value from time to time can help you plan your future strategies and actions.
Best Tips to Manage Your Sales Pipeline
To see desired outcomes, you must maintain your sales pipeline. So, ensure implementing sales pipeline management practices that I have listed below!
Schedule review meetings
Regular review meetings are a must. Be it daily or even weekly, ensure that you organize review meetings to;
- check the progress of deals,
- identify the number of deals needed to achieve revenue targets, and
- assess the team’s performance.
Get CRM software
Using the right kind of tools in business is important to ensure better efficiency. With a CRM, you can make your sales pipeline management effective. A CRM can reduce the manual workload of sales reps and save a lot of their time. Further, your CRM can auto-update your sales pipeline with the latest contacts and info. You can collaborate better with other departments along with streamlining teams to produce the best outcomes.
Track sales metrics
Keep checking the sales metrics periodically. Track deals in the pipeline and their progress so that you can make changes, if needed, to keep the leads moving down the pipeline. Generate sales pipeline reports to get insights into pipeline deals.
Focus on the best leads.
Instead of giving equal time and effort to all your prospects, closely observe the sales process to identify the high-value and most sales-ready leads. Prioritize the leads based on their sales activities. Find out the most engaged prospects and the ones that are highly interested in your product or service. Besides, focusing on the best also ensures dropping the dead leads. Especially when you have nurtured the lead for weeks or months to get no result, let them go.
Provide your leads with more relevant content
Phone calls and emails are fine. But, at times, your prospects look for in-depth information about your product or service. So, provide them with the right content at each sales pipeline stage. Think about the content that can motivate leads to move to the next stage and plan your content for each stage. Relevant, valuable, and stage-appropriate content can drive higher sales.
In Conclusion
When it comes to business growth, establishing and maintaining a solid sales pipeline is important.While you can keep the basic sales pipeline stages intact, you must fine-tune the stages according to your business needs and existing sales process. Also, adding the right kind of tools can help you in sales pipeline management. Use sales pipeline management platforms, CRM platforms, etc. to make your workflows seamless. You can also add sales acceleration tools like RevenueHero to ensure perfect lead qualification, routing, prioritization, and scheduling meetings. Reach out to know more!
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