If you’ve ever had a deal fall through because of mismanaged follow-ups or disorganization, you could use a sales pipeline. These not only help keep leads organized, but they can also guide prospects through a predictable set of steps so you’re not over or under communicating with a potential sale. Doing so allows for better sales forecasting. Thankfully, there’s technology that can make this process easy.
What is a sales pipeline?
A sales pipeline is a structured way to move your potential customers or clients from prospecting all the way to closing a sale and the follow-up afterward. It represents a visual way to know at all times where a lead is in the sales process and allows for better insights and a visual way to track leads.
How do sales pipelines work?
The sales pipeline maps out the journey prospects take from first contact to purchase. Sales representatives designate qualified leads as prospects in the sales pipeline and monitor their advancement as sales discussions develop. The prospect then progresses to the next stage of the pipeline when they meet the specific criteria, such as scheduling a demo.
Sales reps track this progression using a customer relationship management (CRM) platform. As sales teams typically handle a large volume of potential leads, this allows for a quick, visual way to view where each prospect is in the pipeline. These can also prioritize your sales pipeline, so you can spend more time on hotter leads.
monday.com
| Base price: | $15 per user, per month |
| Free trial length: | 14 days |
| Free plan available? | Yes, for up to two users |
at monday.com
Pros
- Unlimited customizable pipelines, boards, and documents
- Web forms for capturing leads
- Customizable notifications
Cons
- Lacks lead and deal management features
- Limited to 5GB storage per user
- No two-way email integration with Gmail or Outlook on the Basic CRM Plan
at monday.com
How to build a sales pipeline
While there are many nuances along the way, you can break the sales pipeline building process down into five simple steps:
Step 1: Methodology and standardization
Before adding a prospect to the pipeline, you need to know who qualifies as a prospect. To do this, identify specific criteria you’re looking for. “Methodology and standardization for pipeline management are foundational,” says Katie Wilson, founder of Serious Moonlight Consulting and former Google Head of Sales. “All team members and leaders must understand how each stage of the sales cycle is defined and how often they should be updating their deals.”
For example, if you sell strictly to medical professionals but have someone who is a rancher who wants to purchase your product, they are not qualified leads and don’t belong in the sales pipeline. Where do your medical professionals hang out online and offline? How can you best reach them? What are their specific needs and preferences?
Step 2: Sales process stages
Once you know who your leads are, define each stage of the sales process. Typically, the stages are:
- Lead generation
- Initial contact
- Qualification
- Proposal
- Negotiation
- Closure
Some industries require more or fewer steps, such as an in-person sales demo or trial. You may also need to add steps or remove steps, based on where leads drop off. Joel Wolfe, President and Founder of HiredSupport, suggests, “You can refine the sales pipeline by adding filters, such as location, ensuring that your sales campaigns are effective with an increased return on investment.”
Step 3: Track sales
Track your sales pipeline in a CRM tool. Not only can CRMs track your entire sales process but they can help identify problem areas, generate reports, and give valuable insights such as a customer’s lifetime value (CLV), which helps you identify your most loyal clientele.
Step 4: Analyze sales data
Monitor and analyze your sales pipeline performance. What are your conversion rates? Where do most leads drop off? For example, if most leads drop off during the follow-up stage, ensure sales reps are doing proper follow-up to provide the best customer experience.
Step 5: Follow-up process
There’s nothing like buyer’s remorse that can turn a great sale into a chargeback or return. Sales reps spend so much time trying to close a sale, that when they finally do, some customers are left feeling as though they’re not being taken care of after the close. Having an after-sale follow-up process can reduce churn rates or chargebacks significantly and can give you opportunities for referrals and increased customer satisfaction.
Sales pipeline vs. sales funnel vs. sales flywheel
Many use sales pipeline, sales funnel, and sales flywheel interchangeably, though they each have a place in the sales process, and have a lot of overlap. A sales pipeline defines the specific steps a sales rep takes to close a customer. A sales funnel focuses more on conversion rates throughout each step of the sales process. The sales flywheel is more about creating momentum throughout the sales process to earn referrals and repeat business.
In short, sales pipelines help clarify the sales process, sales funnels analyze conversions, and sales flywheels help maintain customer engagement.
The takeaway
Understanding a sales pipeline and how best to implement it can lead to better sales and a better customer experience. Using a CRM to understand the step-by-step process and where a lead fits into it can create better sales efficiencies and revenue forecasts. Refining the sales pipeline based on analytics can improve sales efficiency and customer satisfaction by identifying trends and optimizing conversion rates.
About the contributors
Katherine Haan is a former financial advisor turned small business coach. Katherine holds an MBA, and is a former staff writer for Fit Small Business. She is a regular contributor to Forbes and maintains a popular lifestyle and travel blog.
EDITORIAL DISCLOSURE: The advice, opinions, or rankings contained in this article are solely those of the Fortune Recommends™ editorial team. This content has not been reviewed or endorsed by any of our affiliate partners or other third parties.
