November 29, 2019 | By Scott Snyder
So what is a sales pipeline? A sales pipeline is a visual representation of each stage that a prospect moves through, as they progress from a new lead to a customer.
It helps you keep track of the deals your sales team is working on and lets you determine how far they are from closing on a deal. It also shows you how much money a sales deal is going to fetch you.
You can think of a sales pipeline like Domino's Pizza Tracker. I personally love pizza, and I recently ordered online and was able to track every stage of my order in real time. It told me when my pizza was being prepped, when it has been put into the oven for cooking, when it is leaving the store for delivery and when my order was complete. At each stage when the step was complete the status turned green. Green means food on the pizza tracker, but in a sales pipeline, it also means money.
A sales pipeline is virtually the same thing, a sale shifts from one stage to another on the basis of solid actions, which can be represented visually through Customer Relationship Management (CRM). The CRM keeps you up to date with the progress of each deal at each stage so you can properly strategize and follow up with them so that you can close more deals.
Let me ask you a question, do you want to move more deals through your pipeline and be more efficient? Of course you do!
This article is your ultimate guide for why you need a sales pipeline, and how to wield it like a pro so that you can capture a bigger slice of your target market.
Read on to find out how you can achieve these kind of results.
What is the difference between sales pipeline and sales process?
Before you can implement your sales pipeline you need to implement a sales process for your business that aligns with the buyer journey. While the sales pipeline and sales process are similar, they are not the same, but they are related to each other. Read on to find out the difference between them.
The sales process, refers to the recurring tasks that a sales team takes on each lead in order to move them across the different stages in the sales cycle. The sales process typically includes anywhere from 3 to 10 steps and is unique to each business based on the product or services that they sell.
A sales pipeline is developed and implemented into your CRM by aligning deal stages to the sales process.
How do you know whether a stage should be added to your pipeline?
It needs to meet all 3 of the following criteria:
- It's Required - It's a step that you want your reps to take on every sale.
- It's Buyer-centric - It represents a step that the buyer takes, not the sales representative.
- It's Verifiable - You can verify that the buyer completed the step.
Tip: A good rule of thumb is to remove any stage that is redundant.
Building Your Sales Pipeline
While businesses in different industries, like Real Estate, Insurance, Car Dealerships and beyond have unique sales processes, the stages a potential customers goes through when making a purchase with them is generally the same. Remember the sales pipeline should be buyer-centric, it represents the steps the buyer takes with the help of a sales representative throughout the sales cycle.
In general, there are six stages to developing a solid sales pipeline.
- Appointment Scheduled (Qualify)
- Attended Meeting (Educate)
- Evaluated By Decision Maker (Meeting 2)
- Sign/Return Contract (Propose)
- Closed Lost
Selecting A Prospect
This stage is independent of your sales pipeline. It's a stage for your team to identify who your target audience is. This refers to the people and companies who are worth selling to, and can be identified by using your Ideal Customer Profile (ICP), which is built by looking at the details of the customers you have sold to in the past and who you are targeting for your current campaign.
It’s not just about identifying the target market. It's also about research, your sales team needs to conduct interviews and ask questions such as what are the problem areas of those who fall under your target audience, how they consume content and whom they share it with, their preferred modes of social media, etc.
The qualification stage is all about evaluating a prospect who has opted into your sales pipeline by showing interest in your product or service.
Once they've paved their way into your sales pipeline, it’s time to see whether they can become a prospective buyer.
Attended Meeting (Consideration Period of the Prospect)
In this stage, you are asking questions about the tools that have been employed by them in the past, the problems they are willing to solve, when they are ready to take action and who is the decision maker. If these questions don’t prove them to be your ideal customer, it’s best to remove them from the sales pipeline. However, if they are a good fit you'll want to schedule a product demo during the current meeting with the decision maker.
Evaluated By Decision Maker (Decision)
In this stage, your prospect looks at his/her options and evaluates whether you’re the right fit for them. During this period, your sales team is involved in asking additional questions, demonstrating your product, providing case studies, stating the technical features and answering any questions with regard to the product.
Sign / Return Contract (Prospose)
By this stage, your prospect has already made the decision as to whether your company will be ideal for solving their problem or not. Before you negotiate the price and formulate a contract, there are a few last-minute questions to consider. These include whether there are any other projects that could be given priority over yours, if the buyer needs approval from elsewhere, if your competition has been ruled out or not, etc.
When a deal doesn't materialize, it's important to identify the reason why and move the deal to closed lost.
Managing a Sales Pipeline
Here are some of the practices to follow in order to manage your sales pipeline efficiently:
In the current era, buyers have more choices than ever before. Therefore, not only are they flooded with options, but it also takes them a while to make a decision. If you want them to choose your product or service over others, you have to remember to follow up. This demonstrates that you’re serious about your business and sales, and actually care about your customers.
Although following up is known to be one of the top most difficulties faced by sales teams, it’s unavoidable. You can either set a reminder to send a follow-up or go for an automated sales email template that will do the work for you. Here at Sellution, we’re dedicated to providing you with the best CRM capabilities to grow your business.
Pay Attention to the Best Leads
If you look at your sales pipeline, you should easily be able to point out which leads are likely to be the most beneficial for you. The sales activities related to each lead will give you an idea as to which are the most engaged ones, and accordingly, you can focus on the best leads instead of wasting time on the ones that are probably not going to move forward. Similarly, be prepared to let go of leads that seem dead. If they can’t be contacted, keep delaying the next process, or don’t appear interested, you should know it’s time to bid goodbye to those leads.
Keep Track of Your Pipeline Metrics
In order to be aware of the progress of your sales pipeline and how well it’s doing, it’s imperative to keep track of core pipeline metrics. This includes information such as how many deals are currently there in your pipeline, their average size, an average percentage of the deals you’ve won, and how long it takes to close a deal. See to it that you review these metrics weekly from your sales dashboard, so as to also know the changes you need to make to your sales process in order to grow further.
Review and Update Your Pipeline
Much like every sales technique, your sales pipeline needs to go through periodic changes in order to stay up to date. The tactics that worked yesterday may not be relevant today. Go through your previous reports and see if your sales pipeline needs any updates. For example, if there are blockages you’re witnessing, work to remove them. You can also test out new changes before bringing them into effect.
Updating your sales pipeline is of utmost importance. With new leads getting added and old leads being removed, you constantly need to review your sales pipeline to makes your sales process more efficient and effective.
Shorten Your Sales Cycle
Sales reps consistently complain that longer sales cycle dampen sales effectiveness. It’s best to keep your sales cycle short, that way your prospects have less of a window to change their mind and decide to go for some other brand or company. Shortening your sales cycle can mean keeping a smaller gap between your follow-ups, or providing more details to your prospects so that they can make a quicker decision. A good sales pipeline CRM should give real-time visibility into these cycles.
A sales pipeline is extremely important to any sales-oriented business. It keeps a visual log of the practices that have worked previously, and the areas you need to improve on in order to have a better close rate. More importantly, it gets a sales team organized, allowing the sales process to scale without compromising on efficiency, leads or close rate.