I can imagine you already rolling your eyes. You’re probably hearing the words “sales pipeline” in your dreams because it’s thrown around so much. However, it’s vital that as a sales professional, you don’t get complacent.
“Pipeline” isn’t just a buzzword.
It’s extremely significant to the efficiency of your sales management operations. When built, maintained, monitored, and improved correctly, your team gets a better, more clear visualization of where deals are throughout the sales process.
However, when left to its own devices, your pipeline can very quickly become clogged, damaged, messy, and even crack, leaking valuable leads that could have become loyal, long-term customers.
First, we’ll cover what the ideal pipeline looks like and then move into your must-needed regimen to manage your pipeline.
Pipeline management includes how the sales pipeline is designed, how it is measured, and how it is used to drive sales performance.
At its most basic level, the sales pipeline is a representation of a company’s sales process and the overall efficiency of the entire sales team.
An Ideal Sales Pipeline: What You Need and What You Don’t
A sales pipeline is a detailed visualization of the process your prospect goes through and how your sales and marketing team engages with them.
While a standard sales pipeline has five basic stages (lead generation, qualification, consultation, proposal, and sale), a great sales pipeline dives a bit further.
There are eight stages.
Sales Pipeline Stage 1: Prospecting
This is where marketing and sales align. Through various marketing and sales efforts, such as ads, public relations, social engagement, pulling contacts from a database, and more, your sales team is able to identify your ideal customer. Salespeople who are top performers in prospecting generate nearly 3X more sales meetings.
Sales Pipeline Stage 2: Lead Generation
Now you know who your prospects are, it’s time to generate leads with high value offers that collect their information. This can be done through items like gated content, demo request forms, free trials, etc. Once you have the potential customer’s information, your powerful sales efforts can truly begin.
Sales Pipeline Stage 3: Lead Qualification
Not all leads should be treated equally. The qualification process allows your sales team to determine if their sales efforts will be worth the pursuit. If a lead matches your ideal customer profile—meets your budget requirements, has a need you can actually solve, and is a decision maker—it’s time to follow your ABCs and always be closing. If a lead doesn’t meet your ideal customer profile, it’s time to call it quits and mark them as disqualified. This process saves you time and money before you put your full effort into closing a deal that was never open in the first place.
Sales Pipeline Stage 4: Demo or Meeting
Once a lead has been marked as qualified, set up a face-to-face interaction to introduce the potential buyer to the full breadth of your offerings. If a lead is setting up a meeting with you, then they are truly interested in your product or service. Make sure you come to the meeting with complete information on what they’re looking for so you can best present your offerings and not waste the potential client’s time. The worst thing is booking a demo with someone who didn’t even research who your company is.
Sales Pipeline Stage 5: Proposal
During the meeting, evaluate if there is strong interest from the potential customer to receive a proposal. This is where you make a lasting impression. Summarize the concerns you’ve heard from the lead and state how your product or service can meet and exceed their needs. Talk about competitive advantages and return on investments. This will help show more value in your price points.
Sales Pipeline Stage 6: Negotiation
Your scope of work may grow or shrink depending on what the potential customer’s true needs are. Make sure you’re flexible with this while also managing expectations of what your product or service and team can provide the lead.
Sales Pipeline Stage 7: Opportunity Won
Or lost. But we don’t need to talk about that possibility.
If you’ve won the deal, the potential customer has decided to sign on the dotted line and is ready to move forward with your company.
Sales Pipeline Stage 8: Post-Purchase
Make sure you’re providing exceptional service even after your customer signs the contract. Trust me, this will do wonders for your retention rates. They’ll know you have their best interest in mind and you’re not just taking their money and running. This is also an excellent time to cross-sell some of your additional offerings.
Later on down the road, they’ll remember these interactions at renewal time. It is easier to provide exceptional service to keep a customer happy than try to make up for something that went wrong throughout the process.
Signs That Your Sales Pipeline is Weak
Surprisingly, many sales organizations have weak pipelines. If you’re continually failing to meet your quotas and seeing low conversion rates, something needs to change. While many sales managers focus on training SDRs and providing sales-closing tactics (which is awesome that they do), they don’t take a close enough look at the setup and functionality of their overall pipeline. This is an area in the revenue engine that consumes less resources and time to optimize.
Here’s what you should be looking for to see if your pipeline is weak and about to crack.
Absence of Cold Calls
Passively waiting for customers to reach out to you isn’t an effective prospecting strategy. Cold calls are still effective. Phone calls are the second most successful method for B2B salespeople, directly after referrals. As Anthony Iannarino says, “There is no greater obstacle to creating a healthy pipeline of opportunities than an inability or unwillingness to pick up the phone.”
Over-Reliance on Emails
The reason salespeople are comfortable sending an email is the same reason we are all comfortable sending an electronic message rather than having a face-to-face conversation. It comes down to confidence. If a deal or customer is important, there needs to be a face-to-face ask or conversation. Emails are easily ignored. In fact, 35% of all emails are left unread.
Ineffective Value Props
It isn’t about you. It’s about your customer. If you walk into a meeting, begin a cold call, or send an email without truly knowing the customer you’re talking to, especially their pain points, you’re making it extremely easy for them to say “no” to whatever you’re offering. Your value prop needs to fit the customer, not the other way around.
Focus on Quantity over Quality
Many sales leaders get excited when looking at their pipeline and seeing the active deals. However, the leads coming through the top of the funnel are what determine the strength of the middle and bottom of the funnel. While each sales member has quotas to hit, the focus should be quality over quantity. This makes lead qualification and prospecting efforts some of the most important focuses within the sales pipeline.
Inexistent Lead Nurturing
Leads will eventually go silent if not nurtured properly. Your sales team can’t constantly use the excuse of, “The lead was weak.” Some potential customers will require more than a couple touchpoints in order to understand the value of your offerings. Designated sales sequences and email nurture campaigns should be crafted and implemented to guide your lead through the pipeline and get them closer to the “Opportunity Won” deal stage. This is also an excellent opportunity to ensure that at-risk deals are flagged and addressed early in the sales process to provide more long-term pipeline visibility for sales reps and managers.
Unrealistic Expectations of Your Sales Team
It’s unrealistic to expect your team to be perfect at everything. Yes, they ultimately have the responsibility of meeting their numbers. However, they may need additional help along the way to make it happen. One salesperson can’t be expected to have the gift of gab during cold calls, be an excellent writer for highly impactful sales sequences and nurture campaigns, and be your marketing team. Working closely with your actual marketing team will allow the professionals with experience in lead generation and nurture techniques to provide the tools so your sales team can build the house.
If organizations don’t minimize the risk in their sales pipelines, they’ll suffer inaccurate forecasts, a lack of pipeline visibility, and an overall unhealthy pipeline that produces an unreliable revenue stream.
How to Actually Fix Your Pipeline Game
To minimize pipeline risk, focus on the data. Your goal should be to fix the leak, not just patch it.
Analyze your pipeline for the following metrics, which can provide you with a solid understanding of where your sales opportunities stand:
- New qualified leads per week: It’s impossible to close more deals without qualified leads in your pipeline.
- Conversion rate per stage: Tracking this data can not only allow you to predict future buyer behavior but can also give you insight as to which stage in your pipeline is the weakest and needs the most improvement.
- Sales pipeline velocity: Take the number of deals in your pipeline multiplied by the average size of the deals divided by the average sales cycle length in days. This shows you how healthy your pipeline truly is and which leads are taking the longest to convert.
- Average number of days leads spend in sales pipeline stages: This allows you to set realistic expectations for your quotas and your team.
- Overall pipeline value per stage: This is the total value of each deal in a particular stage. The higher the value of the overall sales pipeline, the better.
Active, effective sales pipeline monitoring and management helps you build and maintain a healthy sales pipeline full of opportunities.
Effective Sales Pipeline Management
It’s best to make pipeline maintenance a regular action item. You’ll want to check up on your pipeline at least every six months, but once a quarter is best practice.
When looking at your pipeline, you should review a few key questions:
- Have you clearly defined each stage of your sales cycle, as well as relevant terminology?
- Have you identified how many opportunities, on average, move from one stage to the next?
- Have you determined how many opportunities you need to convert at each stage to meet your revenue goals?
- Have you considered what opportunities that move on to the next stage have in common?
- Have you built a consistent sales process around the numbers and behaviors you’ve identified in the previous steps?
- Does your organization’s ideal pipeline coverage ratio depend on factors including your business sector, sales cycle length, average deal size, conversion rates, etc.?
Maintenance starts with the data collection process. You’ll want to optimize data collection by standardizing your processes.
However, none of your optimization techniques or data analysis efforts will matter if your sales team isn’t aware of how and why your sales pipeline is built.
Developing Your Sales Team’s Sales Pipeline Knowledge
It’s extremely important for companies and employees to be on the same page when it comes to their sales pipeline.
A study of B2B companies found that 44% of executives think their organization is ineffective at managing their sales pipeline. Let’s fix that.
How to Drive Better Sales Pipeline Health and Results:
- Clearly define the sales process. Sales forces were most effective at managing their sales pipelines if they had invested time in defining a credible, formalized sales process. There was an 18% difference in revenue growth between companies that defined a formal sales process and companies that didn’t.
- Spend at least three hours a month on pipeline management. Research revealed that companies that spent at least three hours per month managing each rep’s sales pipeline saw 11% greater revenue growth than those that spent fewer than three hours per month.
- Train sales managers on pipeline management. 61% of executives admit their sales managers have not been adequately trained in pipeline management strategies and techniques. Companies that had trained their sales managers to manage their pipelines saw their revenue grow 9% faster than those that didn’t.
Efficiencies of a Smoothly Working Sales Pipeline
There’s endless value in a smoothly implemented pipeline and displaying new techniques/processes that can be implemented to create a more efficient pipeline, a streamlined workload, and an improved bottom line.
Remember, we’re looking for quality over quantity—more leads don’t always mean better leads, and it’s better to audit and fix your pipeline than patch a crack that will continually leak valuable leads.