Sales Pipeline Management

Sales pipeline is a great indicator of a company’s health. It can literally show you the money (that you are going to make in the coming months). Manage your pipeline well and you'll stay well organized and feel more in control of your sales figures.

What is a sales pipeline and how to measure it?

A sales pipeline is a systematic approach to selling a product or service. There are four key metrics to keep in mind:

  • Number of deals in your pipeline (#).
  • Average size of a deal in your pipeline ($).
  • Average percentage of deals that successfully makes it through the pipeline - or lead-to-customer conversion ratio.
  • Average time deals stay in the pipeline before they are won - or sales velocity (days).

The more open deals you work with, the bigger they are, the better percentage that you are able to convert of them and the less time it takes to get a customer, the bigger your revenue.

These pipeline metrics will reveal even more useful information if measured by the different stages:

  • Number of deals in the first (second, third, fourth) stage.
  • Average size of the deal in each stage.
  • Average percentage of deals successfully converting from one stage to the next (for each stage).
  • Average time deals stay in each stage.

How to manage a sales pipeline?

Start by measuring sales pipeline metrics in your business. On the following example there are figures for a small team both for the whole sales pipeline and each stage separately. It's a useful benchmark for current results and future trends. It's recommended to complete this excercise at least once a year.

What you measure, you can manage. For example, if the company has currently just 7 deals in the first stage (while the average is 13), then they know they should quickly find at least 6 new opportunities to be able to make the numbers they’ve made previously. Or, if the average deal size of their current deals in the pipeline is $16,000 (up from $12,326), that's a good sign.

You might pick up other things this team could do to improve sales by just looking at this example. Eg.

  • try to get deals faster from first stage to second;
  • put more new deals into pipeline, maybe even hire an additional person;
  • convert more deals from 2nd to 3rd to 4th stage since now they are losing 7 out o 10 deals there.

Use sales pipeline management software

It’s not overtly easy to measure all these things. It takes some effort to gather the data on a regular basis, and sales pipeline software such as Pipedrive will help you do that.

Want more pipeline tips? Read sales pipeline tips on our blog.

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Shout out to the Pipedrive team for building a perfect small business CRM. Finally organized with prospects, contacts & outreach. Very happy!
Neha Sampat,
CEO, Raweng. Co-founder, Builtio & Kurbkarma

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