What is a sales pipeline?
A sales pipeline visually represents where your prospects, customers and channel sales are in the buying process. The pipeline acts as a map, plotting the waypoints a person crosses as they make their purchase decisions. It helps you monitor progress as potential buyers move from “just browsing” to “sold”. A typical sales pipeline looks like this:
- Prospecting: Your prospects are researching solutions, and you’re identifying which of them will be a potential customer.
- Lead qualification: This is the point where you decide if the prospect is a sales lead. With lead qualification, you set criteria based on your business goals, indicators of buying actions, and industry specs to measure how likely the prospect is to become a customer. Do you have a solution to fit their need? Have they conveyed timing or urgency?
- Sales call: If the lead checks most of your criteria, reach out to them to understand their particular challenges and forge a connection. This is the most important step in setting the foundation for your pipeline. Your approach and attention to their needs can determine if it will progress further or drop from your pipeline.
- Proposal: Now it’s time to make your offer. The prospect has shown real interest in your product or service, and you explain how you can help them with their challenges and be mutually successful.
- Negotiation: You discuss and agree on terms, including price, delivery, and other contract details. Working together to get to a mutually agreeable partnership. Consult your sales strategy to learn how to keep the deal moving forward, clearing any roadblocks between you and closing.
- Contract signing: The prospect agrees to your sales contract. Congratulations — they’re now your customer.
- Post-purchase: You offer ongoing support and continue to build on your relationship with the customer after you complete the sale.
A sales pipeline shouldn’t be confused with a sales funnel. A sales funnel is your customer’s journey from prospect to customer, and has a broader application. A sales pipeline is a tool to help you closely monitor the sales progress of each individual customer.
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What is sales pipeline management?
Sales pipeline management is how you oversee and track prospects as they move through the sales process; it’s a core responsibility for a salesperson. Different from sales forecasting, sales pipeline management helps you create a sales plan, prioritize opportunities, and predict future business. You do this by tracking specific, defined activities associated with each sales pipeline stage. Your customer relationship management system (CRM) will help you monitor and evaluate the effectiveness of your process. We will explore how you define each stage and determine if the prospect is ready to move to the next step further below. First, let’s discuss why effective management is necessary.
The importance of pipeline management in sales
A lead becomes an opportunity only after it has been qualified. A sales-qualified lead is an ideal customer who can be warm or cold. A warm lead means they have an understanding of your company, know about your products and services, and may have even browsed your store or website. A cold lead doesn’t know about you (yet), but they fit your ideal customer profile.
An ideal customer is someone who has a need, can benefit from your product or service, and has the right budget for it. You’ll want to develop a solid lead management strategy to help you generate a steady flow of prospects into your pipeline who can quickly move from cold to warm.
Cons of not managing your sales pipeline
An efficiently managed pipeline brings opportunities to fruition, either by closing the sale or putting them on the back burner for a later time when they are ready to close. Your sales tools and a pipeline management process will help you categorize, score, and communicate with those prospects so you can decide if they’re a qualified lead you should nurture. If they aren’t, you may still want to keep them in a holding spot in the pipeline and stay in contact. It gives the chance for you to develop an authentic relationship that could turn them into a warm lead if their needs change in the future. A mismanaged pipeline can affect your business’ bottom line. Without a clear system in place, you risk:
- Limiting your possibilities: Without tracking leads and their progress, sales teams might not prioritize the most promising leads. Prospects could move on to your competition who paid more attention to them. Now, they won the deal, and you lost.
- Decreasing sales productivity: You may spend time, resources, and budget on unqualified leads or people who are unlikely to convert. This inefficiency could cause sales teams to feel overwhelmed, disoriented, and demotivated. You need a structured approach to managing leads to boost productivity. Conduct a thorough sales pipeline review to spot any issues or miscommunications within the sales process.
- Poor customer experiences: A disorganized sales process can result in leads feeling neglected or receiving inconsistent communication.
Let’s get your team set up for success with a few steps to help manage your sales pipeline.
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