‘Sales pipeline’ is one of those sales terms that gets thrown around a lot: if you spend any time in sales circles you’ll hear a lot about ‘getting prospects into the pipeline’, ‘increasing your pipeline’ and ‘filling your pipeline with hot leads’.
It can be easy to forget that ‘pipeline’ is more than just a buzzword. Instead it’s an important sales tool for any sales management operations, and it can make a significant difference to your bottom line.
A sales pipeline can help you visualize your sales process. It will show you where in the sales funnel all your deals are, where deals are stalling and which sales activities are bringing in the most revenue. It adds a layer of accountability and makes goals easier to achieve by breaking the sales process down into small, trackable tasks.
If you aren’t using a sales pipeline, you may be driving blind: you may lack insight about how effective your sales process is and where your deals are. If that’s the case, read on, as this article will explain sales pipelines, why you need one, and how to build your own.
In this article, you’ll learn:
What is a sales pipeline?
A sales pipeline is an organized, visual way of tracking multiple potential buyers as they progress through different stages in the purchasing process.
Often, pipelines are visualized as a horizontal bar, sometimes as a funnel, divided into the stages of a company’s sales process. Potential buyers are moved from one stage to the next as they move through the sales process: when contact is made, for example, or when a prospect is qualified.
It’s a way of illustrating where prospects are in their journey from lead to (hopefully) customer; with a pipeline, salespeople are able to see exactly where their money, deals and other sales efforts are at all times. It’s a vital tool for salespeople, who are often juggling many sales prospects and deals, and can’t afford to have one slip through the cracks.
It’s also an important tool for sales managers who want more data on how well their sales process is working; because a pipeline tracks a salesperson’s activities, it offers more visibility into which sales activities are giving a company the greatest return.
“Companies don’t know what their possibilities are,” says Michelle Seger, a partner at Atlanta-based SalesGlobe. “If you can actually look at your activities, how long they’ve been there and what are your conversion rates, it tells you where you are and what’s not working.”
Building your sales pipeline: what you need to get started
Because a pipeline is such an important sales tool, you can’t just throw one together. Instead, you’ll need to make sure you have specific information about your company, sales team, customers and product before you can assemble one.
Here are some of the things you’ll need to have on hand before you can start creating a pipeline:
- A list of your prospective buyers
- Your team’s sales process
- Your revenue targets
- A meeting scheduled with colleagues
Let’s take a look at each:
A list of your prospects
The first thing you’ll need is a list of the people who want to buy from you (or a list of prospects you think might want to buy, at least). This list should be as detailed as possible. You should have names, contact info, their company, their position at work and how they got in touch with you—or how you know they’re likely to be interested.
If they’re already talking to you, try to assign them a rough pipeline stage: did a rep make contact with them, or have they been qualified? Don’t worry. You can adjust these stages later.
Your sales process
A sales process is a clear, structured, step-by-step formula that tells your team exactly what activities they need to do to close a deal. When you’re working with a good sales process, your reps will be able to repeatedly win deals simply by following the steps.
If your team already has a defined sales process, great news: you’ve more than likely got the steps of your pipeline outlined. If not, don’t worry. The stages of your pipeline, which we will get into in the next section, will help you build out your sales process.
Your revenue targets
Your pipeline is a tool that will help you meet your revenue goals, so in order to design a successful pipeline, you’ll need to have your goals on hand.
Those numbers will eventually help you answer an important question: How many deals do you need to add to your pipeline to make your objectives? If you know how many of your leads convert into customers, you can easily calculate the number of deals you need in each of the early stages. If you calculate your numbers, you’ll be able to see how your pipeline looks and how many deals you need to be adding to the top of the pipeline to reach your goals.
Your pipeline is a company-wide tool. Since everyone on your sales team will be using the same pipeline, you’ll also want to include your sales team in the decision-making process as you build. Also, it helps to have more than one set of eyes on a sales pipeline; a second opinion often helps you spot flaws in your plan before implementation.
The stages you should have in your pipeline
No two businesses are exactly the same, and neither are all sales pipelines. Some organizations use a five-step pipeline, some use one with as many as eight stages, and some swear by seven stages. The number and type of stages in your pipeline has depends on a few factors, including how you contact leads and your product. For example: SaaS tool salespeople will often have a sales presentation stage, where they can demonstrate their product to customers; car salesmen will have a test drive stage at some point in their pipeline; a real estate agent’s pipeline, meanwhile, will contain a house viewing.
Below are some of the stages common to most sales lead pipelines, with an explanation of what each stage means to a pipeline.
The first step in any pipeline is always the same: finding prospective buyers who need what you’re selling.
Every organization prospects differently, depending on its clients, products and the structure of its organization. In some cases, you may have a lead generation team, or leads might be generated through downloadable content, social media, or when a potential client expresses an interest in your product. You may also hunt for cold leads who look like ideal customers.
This step—which is all about finding prospects who are the right fit for what you’re selling—is sometimes called Research. Occasionally it comes later in the process, after a rep has made contact with a prospect.
Qualification is an extremely important step, because you don’t want reps wasting their time on leads who can’t or won’t buy your product, or who might be wrong for your product and cause problems down the line. In this step you’ll sort the hot leads from the cold leads.
But how do you know a hot lead from a cold one?
Qualifying your leads may entail independent research, or a conversation with a prospective buyer, which you’ll use to answer the following questions:
- Does your prospect have the budget for your product?
- Can the prospect actually make the decision to purchase, or do they need to convince someone else?
- Do they truly need your product?
- Do they seem ready to buy now?
You’re hoping to get a yes for each of these questions. If you do, that’s a hot lead. So sell, sell, sell!
If you get one or more negative responses, however, that lead might not be a good fit for your product or service—in other words, they’re probably cold.
You’ll need to do a little more work to determine if your leads are truly cold. At this point your reps should hear out the objections of a prospect and overcome those objections where they can. If the objections aren’t surmountable, then yes, that lead is cold. Leads can also go cold if they ghost you.
There’s nothing wrong with cold leads, you just don’t want to keep them in your pipeline. Instead, save their contact information (or move them to another category if you’re using a CRM with multiple pipelines) and move on.
About 20% of your leads are going to provide about 80% of your revenue (according to the Pareto Principle). To get at that 20% more quickly, it may help to quickly run through all of the contacts in your sales pipeline once a week or so. If you find a prospect who has been clogging your pipeline up for longer than your typical sales cycle, put the prospect in a different category, such as a future pipeline or a future callback list.
This step is pretty straightforward. In this stage, a salesperson makes first contact with a prospect. This might be done over the phone, via email, or through social media. It might even be done through text or chat.
Try out our cold calling sales scripts to start engaging leads.
It’s not enough to sell to the customer. Your reps should be nurturing potential buyers and building relationships with them.
This doesn’t mean your reps should annoy your clients by calling or emailing them constantly. It may be forwarding an article that applies to the prospect’s unique issues, or liking their posts on LinkedIn. It could be as simple as honestly listening to objections and responding. Basically, you want to build trust with your prospects so they’ll feel comfortable buying from you.
This part of the pipeline is usually across a number of stages, depending on how many touch points leads and prospects need to be converted into customers.
Once your reps have made contact, explained your product and built trust it’s time to finalize the deal.
How do you ask for a sale? Well, that depends a lot on your reps, organization and customers. Sometimes the customer says ‘yes’ outright. In some cases, you might need to make concessions in order to make a sale, but you should always be okay with those specific concessions in advance.
If a customer ghosts right before a deal, make a few attempts at contact, and then send a message explaining that you realize it may not be a good time, and that the client can reach out when they’re ready.
Then mark that contact as a cold leads.
Following up with cold leads
Speaking of which, contacting cold leads should also be a stage in your pipeline. Just because they weren’t ready to buy when they were first contacted doesn’t mean they’re not ready to buy now. Check in periodically to see how they are and what they’re up to (this is also part of the building relationships) step.
You never know; they may now have the budget, authority or need now that they didn’t have before.
But wait. How do I know when to move a deal from one stage to another?
For the most part you’ll know. Some stages are like a checklist: if you’ve made contact, or set a meeting, that activity is done, and it’s time to move them to the next stage.
For others, like lead qualification, the rules about moving a deal can be fuzzier. There are a couple of things you can do to avoid confusion about which stage a deal should be in.
- First, be very specific about potentially vague stages. Make sure you know which conditions must be satisfied for a lead to be qualified.
- Second, consider breaking some of the broader stages into smaller, easy to tick off stages. This might mean that Making Contact is sorted into three stages: First Contact, Set Meeting and Presentation, for example.
- Third, if you have too many stages, and moving deals from one to the other is becoming cumbersome, you may want to do the opposite and consolidate. Your pipeline is an important tool, but reps shouldn’t spend all their time managing it.
How to build a sales pipeline
Now that you know what the stages of a pipeline are, it’s time to take all the information you’ve gathered, and start building your own.
Step 1: Take stock of your prospective buyers
In the beginning, before you even have a pipeline, all you’ll have is a list of the people you think would like to buy your product. If there are a lot of them, you will need something to help you manage not only those contacts, but also your interactions with them.
One way to do this is to use a spreadsheet tool such as Google Sheets or Excel. Here is a free template to get you started. Alternatively, a dedicated sales CRM also works.
Using a spreadsheet template like this makes perfect sense if the number of deals you need to manage simultaneously is fewer than 10, or if you’re just starting out and want to organise your pipeline before finding a purpose-built tool to manage it.
A CRM, however, is a more efficient tool if you’ve got more than a few deals, or more than a few salespeople. CRMs allow a team to manage deals collectively, easily move deals from one stage of a pipeline to another, let you link to contact information and allow sales managers to keep an eye on an entire team’s progress toward revenue goals. Need more reasons to look into a CRM? We’ll get deeper into CRMs a bit later.
Step 2: Set up your stages
It’s easy for reps to get overwhelmed by their goals; sometimes a quarterly or annual number may seem too big to achieve. There’s a way to control this sort of overwhelm: by breaking down each deal into the daily activities a rep needs to do in order to close a sale. By managing and focusing on sales activities, your team is likely to be more successful at making their sales goals.
So that’s what your pipeline is measuring and managing: activities.
To set up the stages in your pipeline, think about the activities your team does most and the ones you think have the most impact on your sales. You can use the list of stages above to guide you, or work out the steps in your own sales process.
If you need more ideas check out our guide to activity-based-selling.
Step 3: Refine your stages as you go along
Once you have things going, you may see that some conversation types happen consistently. You need to decide whether these regular occurrences lend themselves to being sales stages in your pipeline.
For example, if you are a real estate agent, you may want to add a “reassure buyer” column, if you face a lot of nervous buyers.
Sales stages, when clearly defined and planned, constitute your pipeline’s fundamental building blocks and set you on your way to predicting your sales revenue with decent accuracy.
Don’t worry about getting it right the first time. It may take numerous attempts to figure out what works for your business. You’ll find that some stages end up being unnecessary, and discover others that you actually need.
Step 4: Keep your pipeline up to date
You’ve built a pipeline. You’ve put your existing contacts and deals into it. Now, how can you make sure it stays updated?
This part can be tricky. Often, when a team hasn’t worked with a pipeline, they may have a hard time adjusting to the habit of entering contacts and deals into the pipeline and moving them through the stages. The key here is to develop a habit of moving deals through the pipeline.
The easiest way to do that is by thinking of the stages of your pipeline like a to-do list. Each stage correlates to an activity your team must complete. Once an activity is completed, your team will move a deal to the next stage. It may take a while for your team to get the hang of it, but after a while, the pipeline will be an invaluable tool for them because it shows them what they’ve done, what they need to do and where in the pipeline each deal is.
Tools to help you create the perfect sales pipeline
You can build and manage your pipeline with just about any tools that come to hand, from sticky notes to, as we pointed out earlier, an Excel spreadsheet.
Here’s the thing, though: if you have a complex or long sales cycle or you’re managing more than 10 contacts, a spreadsheet is likely to get out of hand pretty quickly. You’re probably better off using a CRM for efficiency. A good CRM allows you to link contacts to deals, integrate email correspondence, see your team’s sales data in real time, automate tasks that will keep you on top of your game, and more.
Pipedrive for example, allows you to customize your pipelines so that they map to your sales process. If you manage more than one team and the sales processes are different for each, no problem. You can add pipelines for each of your sales projects.
Pipedrive’s intuitive interface makes it easy for salespeople to log their activities: they log in and work on the platform every day, completing activities, checking them off as done and sending emails right from Pipedrive. Using integrations like those found on the Pipedrive Marketplace, or the call tracking feature, your team can also make calls from the platform.
Care and feeding of your new pipeline
Congratulations! Now you have a new sales pipeline built just for your team and organization. Used and updated properly, your pipeline will let your sales team track their deals, and it will let you track the team’s activities,
In summary, set up your stages based on the activities your sales team does to bring in revenue and do what it takes to move deals from one stage to the next. Adopt a healthy approach to your pipeline building activities and don’t be afraid to revise if it seems like your pipeline needs more or fewer stages. Honing your pipeline will make it more accurate, which will help you meet your numbers.
With a clear, functioning pipeline, you’ll be able to work out what brings in revenue and start making more of it.