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What Is Sales Pipeline Management?
A sales pipeline, which visualizes each stage of a deal, aids in tracking progress and guiding prospects toward making purchases.
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Have you ever received an email urging you to buy items you left in your cart? This is a strategy businesses use to advance you through the sales pipeline.
A sales pipeline breaks down each stage of a deal into manageable steps to help teams visualize and track how close a prospect is to making a purchase. You’ll need proper oversight to make this process successful. Here’s everything you need to know about sales pipeline management and how to optimize yours.
What is a sales pipeline?
The sales process can be complicated, so it helps to have a visual representation of each stage. That visualization, often called a sales pipeline, helps reps and managers track their progress and ultimately close more deals. Without a clear visual presentation, sales and marketing teams may have trouble tracking their progress and knowing what the next steps are. As Debbie Qaqish, partner and chief strategy officer at The Pedowitz Group, put it, “You don’t have a business if you are not managing your pipeline.”
You can create, organize and implement a sales pipeline within a customer relationship management (CRM) tool to better track which clients and deals are in the pipeline at any given time. The stages in a sales pipeline depend on your company’s particular sales strategy and process. Regardless of the specific individual steps, your goal is to move a lead through every step of the sales pipeline and earn a new customer.
What is sales pipeline management?
Sales pipeline management involves generating, tracking and communicating with prospects to convert leads into paying customers. Efficient pipeline management allows sales teams to track each deal going through the sales process and ensure they can keep new leads coming in. This is important for a growing business.
There are different ways to manage a sales pipeline. In some businesses, each member of a team supervises their own deals. More collaborative or unilateral teams may have a single person who manages the pipeline while the rest of the team follows that person’s direction. The specific sales pipeline strategy you use will depend on your team’s specific goals and priorities, but there are a few best practices to follow.
First, sales teams need to track their metrics. Then, they can analyze their data to improve their sales strategies. Here are some important metrics to consider documenting:
- New leads
- Conversion rates
- Average deal size
- Length of average sales cycle
- Win-to-loss ratio
- Number of open sales opportunities
Sales teams should also review each stage of their sales pipeline to evaluate what’s been successful and what needs improvement. At the end of each month, analyze the closed deals and number of leads moving through the pipeline to forecast sales revenue for the month(s) ahead. Use this information to optimize any slow or broken processes so you can increase your projected sales. [Read related: Revenue vs. Income: What’s the Difference]
Best practices for sales pipeline management
To maximize revenue growth and improve overall sales performance, you’ll need to take a strategic approach to managing the sales pipeline. Here are some recommendations to consider when building your plan:
1. Focus on a few key metrics.
Identifying the right key performance indicators (KPIs) can help data-driven decision-making and align efforts with business goals. Examples of KPIs to measure include:
- Sales and revenue: Monthly revenue, conversion rates
- Customer engagement: Retention rate, net promoter score (NPS)
- Operational efficiency: Cost per acquisition, time to hire
- Marketing performance: Click-through rate (CTR), ROI on campaigns
2. Standardize your sales process.
Creating a standardized sales process creates consistency, efficiency and scalability. By identifying and leveraging the common needs and motivations of your ideal customers, your team can optimize outreach and see better results.
3. Use software to manage the process.
Software solutions, such as CRM systems, centralize customer data and allow for automation, creating a seamless and organized sales pipeline. They can also provide real-time insights into your customers and your processes, providing valuable information to help you further optimize your processes. [If you’re ready to improve your business pipeline, consider implementing one of our picks for the best CRM software.]
4. Give your leads the information they need.
Providing the right content to leads can help guide them to make better decisions, moving them closer to conversion. Focus on high-value, engaged leads and share relevant, detailed resources regarding your product or service to increase the likelihood of landing a sale.
5. Follow up with leads regularly.
Following up is crucial since buyers often need multiple nudges to make a decision. Prioritize qualified leads and stay persistent — remember that most sales close after several attempts. Be strategic: keep follow-ups timely, personalized and respectful but know when to let go if there’s no interest.
Benefits of managing your pipeline
If a sales team manages their pipeline effectively, they’ll have a better idea of how to quantify their high-quality leads and successfully convert them into sales.
“World-class organizations have a repeatable, predictable and scalable pipeline and pipeline process,” Qaqish told business.com. “They know with a great deal of evidence how opportunities will flow through all the stages of the sales pipeline. With this level of predictability, a company is better able to ensure the right products and resources are available to serve the customer.”
Here are three benefits of keeping a close eye on your sales pipeline.
1. You’ll monitor your progress better.
Without visualization and organization, a salesperson may not know where their prospective deals are within the pipeline. Proper sales pipeline management allows a sales team to clearly see and follow their own progress and to analyze their own pain points. Pipeline managers can step in and help when the situation calls for it.
2. You’ll nurture leads more effectively.
Building a sales pipeline in your CRM system allows teams to collect and analyze the data they gathered during the sales process. That analysis gives your team better insight into how to nurture prospective customers. The data allows your sales team to build personal relationships with clients to close a deal.
3. You’ll make accurate sales forecasts.
Because every step of the sales process is tracked and monitored — and sales metrics are collected as well — sales pipeline management makes it easier for teams to forecast sales accurately. Managers can see how close their team is to closing sales that are in the pipeline. They can more accurately estimate closing timelines and understand how that affects quotas. In turn, this additional data helps businesses predict revenues, create budgets and recognize new areas for growth.
“Sales pipeline management is a critical function of any business, as it captures predicted revenue flows typically from three to nine months out into the future,” Qaqish said.
Sales pipeline stages
A sales pipeline has seven phases. You should account for each phase in your tracking and management process.
1. Prospecting
Customers have to know you exist before you can make a sale. Use promotional efforts to target potential customers who fit the profile of your existing client base. Your sales team can also use content marketing and referrals to teach prospective clients more about your company.
2. Qualification
Offer e-books, whitepapers, webinars or other lead magnets to amplify a prospective client’s interest and move them through the sales pipeline. These materials allow your leads to learn more about your organization and build a relationship with your brand.
3. Meeting
Once you have a list of quality prospects, contact them to set up a meeting or send them a digital pitch. Make a personalized pitch to your potential customers detailing how your product or service will directly benefit them or their business. After the meeting, discuss clear, actionable steps with your prospects to move them forward.
4. Proposal
After you’ve made your pitch, summarize key information in a sales proposal. This should include your prospects’ pain points, your solution, pricing information and a timeline for implementation.
5. Negotiation
Often, the first proposal is not the one you and your clients agree upon. Clients may have questions or want to renegotiate some of the terms. Some prospects may want to expand or shrink the scope of the work, adjust the pricing or manage expectations. Negotiate terms that are fair for both sides. If you cannot come to an agreeable compromise, walk away.
6. Closing
Once both parties agree on a deal, sign the contract. Use a digital signing service to make the process easier. This allows both you and your customers to find the contract, make changes and share the final contract version once it’s ready.
7. Fulfillment
After the contract is signed, it’s time to fulfill your order or service. Your sales pipeline manager should collect the information from the sales process to redefine and improve your strategy. When the time is right, follow up with the client to upsell them on additional products and renew their contract before it expires.
How to build and optimize a sales pipeline
Building and optimizing a sales pipeline can be complicated, but with the right strategies in place, you can streamline your processes and create consistent movement toward closing. Here are four steps for building out your sales pipeline and maintaining healthy progress along the way.
1. Define your pipeline stages and prospects.
Determining each stage of your sales cycle, along with the buyer personas associated with each step, helps you tailor messaging and strategies. It also helps to establish the length of your sales cycle, so you can properly allocate resources and follow up with leads in a timely manner.
2. Identify the sales activities necessary for each stage.
Identifying required sales activities for each stage allows you to optimize resources and effort while also maintaining accountability and consistency in execution. For example, lead generation and qualification might fall to the marketing team, while demos and closing activities may be handled by sales reps.
3. Establish metrics to measure.
To make informed decisions and track your sales growth, you’ll need to establish clear metrics for success. By measuring metrics like average deal value, win rate and conversion rate, you can assess performance at each stage and adjust strategies when needed.
4. Review and update your pipeline regularly.
Regularly reviewing and updating your sales pipeline can create a steady flow of opportunities and keep your data accurate. By analyzing performance on key metrics and seeking feedback from the sales team, you can identify bottlenecks, explore opportunities for fresh leads and make adjustments to improve your overall outcomes.
How CRMs help with sales pipeline management
CRM systems automate certain parts of the sales prospecting process. CRM software can automatically send out cold emails, create lead capture forms and post on social media. Once it collects prospective leads for you, you’ll be able to determine their potential. [Learn more about Keys to CRM Success for Small Businesses]
CRM tools are also valuable once the sales process is complete. You can set up the software to send your team reminders to follow up, or have it send the follow-ups automatically.
After sales are made, the CRM system can collect data and measure results. It can track your win rate, your conversion rate, the length of your sales cycle and your sales pipeline velocity.
The metrics you track through your CRM software give your team data and analytics that help make your sales pipeline more efficient. Through CRM reports, you can determine which leads are strong, how to expedite the sales process, and where your team can improve.
Sean Peek contributed to this article. Source interviews were conducted for a previous version of this article.
