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By Use Case
Get complete visibility of your deals across stages with a sales pipeline
If every business follows a rigorous sales process, why doesn’t every salesperson hit their targets? Broken sales processes lead to a lack of visibility and hinders salespeople from taking prospects through the entire buying journey. Having a sales process on paper is not enough. Building a robust sales pipeline helps manage deal stages and identify stagnant deals.
On this page, you will learn more about the various stages in a sales pipeline, how to build one for your business, and common mistakes to avoid.
A sales pipeline is a visual snapshot of opportunities in different stages of your sales process. The sales pipeline also tells you the number of deals and their value. It also enables salespeople to know which deals to focus on, where they need to put effort (sales activities), and how much they are likely to make in the coming months.
A sales pipeline provides the much-needed insights into financial metrics that indicate which deals are most likely to close.
A sales pipeline gives you visibility into the performance of different salespeople in your team, and monitor how close they are to meeting sales targets.
A sales pipeline is also an indicator of the value of deals that are likely to convert, and thus it helps sales leaders predict revenue month-on-month.
Sales pipeline and sales funnel are often misunderstood to be the same thing.
They are often likened to the two sides of a coin carrying the same value but different design—except they’re not. Sales pipeline and sales funnel are discrete, both in data and the representation of the data.
A sales pipeline is about deals, while a sales funnel is about leads.
A sales pipeline refers to every step in your sales process that a sales rep takes to move a deal from start to close.
On the other hand, a sales funnel comprises the stages in the buying process your leads go through before becoming customers.
For a business that follows a typical B2B sales process, here’s how its sales pipeline stages might look like:
Lead generation: There are various methods to generate leads for your business, including paid and non-paid campaigns, and to let your potential customers know that you exist. Typically, you create an ideal customer profile with certain set parameters—and try to reach prospects who fit this profile through various campaigns.
Lead qualification: An opportunity is identified with a potential customer, and a record is created as the first step to closing a deal successfully.
Initiate contact: A sales rep attempts to contact the lead to understand their business and requirements. This stage helps you map your business services against the lead’s needs.
Schedule meeting or demo: After your initial conversation, if the lead is convinced with your services, you may schedule a demo. You may also try to set up a meeting with the decision maker toward negotiating the deal.
Negotiation: The lead has expressed interest to buy your services and now arrives at the negotiation stage. You negotiate on price, services, conditions, etc. to make a profitable sale, and submit your proposal.
Closing the deal: The final stage in your sales process where you record the outcome of your deal. If it’s finalized between you and the prospect, you mark the deal as won or lost. There are times when the buyer is not ready to buy yet. In that case, you may mark them as ‘nurture’ to check back later.
Stages of the sales pipeline vary for each industry. According to Waqar Azeem, Founder, ContentStudio, “We follow a low-touch sales model. A deal enters the sales pipeline either through trial sign-up or directly booking the demo meeting. We have 6 stages in our sales pipeline including trial sign-ups, sales qualified leads, demo scheduled, on-hold, ready to purchase, and deal won/lost.”
As a first step, consolidate all your potential customers into your sales pipeline, and place them in different deal stages, depending on where they are in their buying journey.
If you salesperson has sent out a promotional mailer to a prospect, then the deal would be in the ‘initiate contact’ stage in your pipeline. If a prospect has requested for a demo of your product, then the deal would be in the ‘schedule demo’ stage.
In the same vein, if a prospect has shown willingness to buy, has responded to your emails, met your salesperson, and is discussing terms of the proposal, then the prospect would be in ‘closing the deal stage’ in your pipeline. Identifying which stages your deals are in helps you segment opportunities by each stage.
Often, sales activities are scattered and may take place all across different stages of the pipeline. Some companies push for many sales activities to ensure a fast-moving pipeline, while some stick to a few activities that have worked well in the past. While sales activities may differ from deal to deal, assigning them at the beginning of every deal brings clarity to salespeople. For instance, if your sales pipeline’s first stage is initiating contact, then what are the associated sales activities?
Creating and sending emails would be one task. Another would be tracking email metrics. If one of the emails requires you to share a promotional piece of content, then who creates the content? Connecting with the prospect over phone would be another sales activity. These are some of the sales activities for which you need to assign responsibilities to different teams.
Your sales pipeline is heavily dependent on your sales cycle and how quickly or slowly your salespeople close deals. The length of your sales cycle depends on a number of factors. It may vary according to:
Complexity of your product- The more complex your product is, the longer the sales cycle would be. This is mainly due to multiple people or teams involved in helping the prospects understand those complexities and convincing them to buy.
Customization it requires- If your product requires customization, then the deal takes longer to materialize due to frequent changes in customer requirements. So it would take a relatively longer time to meet those needs and deliver the product.
Source of leads- Typically, outbound sales, like cold calling and email marketing, implies your sales cycle is longer compared to if you have inbound leads, say, via a website.
By fine-tuning your product delivery, lead sources, and sales engagement, you can control your average sales cycle length.
How many deals are your salespeople pursuing? This is vital to achieving your sales targets and revenue goals for the year. Work backward based on how many deals they need to close for the year to achieve the revenue goals. Going after the target is not enough, as many deals rot over time, and may not convert to a sale. In fact, an estimated 24% of forecasted deals go dark.
For instance, for every 50 deals your salespeople pursue in a month, a significant number, say 10 or 12, may become stagnant over time. So maybe you should keep an eye out for 70 deals instead of 50 to realize your sales goals.
For a lot of opportunities to make it to the end of the pipeline, you need a lot of deals to begin with. For instance, for a sales team to close 250 opportunities, you must have at least 500 prospects to pursue.
Determine monthly or quarterly sales targets for all your salespeople by dividing quarterly revenue by average deal size.
Deals do not age like wine. As time passes, the likelihood of winning the deal diminishes, often turning it into a rotten deal.
Keep track of the age of your deals (any deal that exceeds your sales cycle length should be on your ‘dead deal’ radar).
If you have a stagnant deal that exceeds your sales cycle for a long time, then prioritize and pay attention to it.
This process will help you clean up your sales pipeline by getting rid of deals that are old and are unlikely to convert.
Having a CRM that automatically intimates your team on stagnating deals and sales activities performed for that deal will help you maintain a fast-moving pipeline.
Sales pipelines are great visual aids for sales managers to track and monitor their salespeople.
The pipelines constantly change with sales activities, however, and monitoring sales metrics can help track the health of your pipeline on a regular basis.
Once you define your sales targets for the quarter or the year, tracking sales pipeline metrics on a regular basis will help you identify how many deals your team needs to bring in, to meet targets and earn profits for the year.
At any given time, you need visibility into the number of deals that are being pursued by your sales team.
Number of deals in pipeline = Number of qualified opportunities in the pipeline
Every lead is worth some amount of business. While the deal value could change by the time the lead becomes a customer, having your eyes on an approximate deal value will help predict revenue.
Don’t place your bets only on the biggest deals. Focus on deals where the prospect shows interest in your product and is willing to invest. Sometimes, a series of small deals may convert sooner than one large deal.
Average deal value = Sum of value of all deals won/number of deals won
Many opportunities find their way into the sales funnel, but how many actually convert into a sale? Tracking the average win rate, out of all opportunities in the pipeline, will help you gauge this metric.
Use this metric to identify ways to improve an individual salesperson’s performance and provide different approaches that work.
Average win rate = Qualified leads/opportunities
Opportunities may be won or lost, but are your sales teams able to convert them into leads? This will indicate the determination of your sales team and identify what steps need to be taken to convert more opportunities into leads.
While opportunity conversion rates is a good metric to track, it might not fully show the effort a salesperson makes to bring new leads into the pipeline for the next month. If a salesperson is focused on bringing in new leads, but his conversion rate for the current month is low, it would still mean he has a lot of valuable deals in the pipeline. So it should not be considered a short-term metric to determine the health of the sales pipeline.
Lead to opportunity ratio = Closed deals / total deals in pipeline
How long does a salesperson take to run a prospect through various stages in the sales pipeline? Sales cycle length refers to the amount of time it takes for a lead to move from the initial contact to a sale. Depending on the company, the cycle comprises five to seven stages and often involves steps such as sales prospecting, lead nurturing, and objection handling. The length of a B2B sales cycle often depends on the product or service being sold and the size of the deal.
For smaller deals, a typical B2B sales cycle is around 3 months. For larger and more substantial sales, a B2B sales cycle is more likely to fall between 6 and 9 months. Typically, your sales cycle length will be shorter if you’re selling to SMBs and longer if you’re selling to enterprises because of the number of gatekeepers and processes involved.
The sum total of all deals in the sales pipeline refers to pipeline value.
Pipeline value helps you predict revenue in the coming months and plan your bootstrap strategy.
Pipeline value = Total value of all deals in the pipeline
Analyzing your pipeline through regular review meetings helps you understand:
Pipeline reviews enable you to forecast revenue for the month/quarter/year (for senior leadership) and gauge the depth of prospecting into every account (for first line managers).
It is a good practice to inspect your sales pipeline every month and meet weekly with your salespeople to talk about real opportunities moving through the pipeline, and about where your process is stagnating.
Stay on top of all the deals in your pipeline with the help of a CRM software. For example, if you’re in the ‘pipeline view’ and notice that your salespeople missed following up on a deal, they can email or call the lead straight from the pipeline.
With a sales CRM, you can do away with manual tasks that eat away your salespeople’s precious time. Sales teams can send out reminder emails, set up calls and schedule demos automatically.
An efficient free CRM tool allows you to perform actions directly from the sales pipeline view and manage your deals. Some CRMs provide deal insights (how well a deal is doing, value of deal, sales activities against each deal, etc) and show color-coded icons for deal tasks in the pipeline, giving you a quick idea if tasks are complete, pending, or overdue.
This is helpful to know how efficient each salesperson is in closing deals and meeting business targets.
To provide you the most value, sales pipelines require multiple teams to do their jobs well.
Unless they are all in sync, they cannot function to their optimum best.
This might impact deals in the pipeline.
Ensure visibility into the sales pipeline for departments like:
Here again, a CRM can help all those team members get visibility into the sales pipeline.
Your pipeline can get stagnant if you don’t measure sales metrics on a regular basis and take corrective action.
If a deal is sitting in the same stage of your pipeline for weeks, then ensure the salesperson handling that deal has all the resources to move it down the pipeline.
Create reports automatically using a CRM that provides custom templates, which can help you crunch data faster and make better decisions vis-a-vis just gut instincts.
It also helps you estimate incoming cash flow and plan your business accordingly.
A Forrester report states that automating tasks can help save 90% of costs. You can increase efficiency and productivity while cutting down on costs. Tools like the CRM help you automate a lot of manual tasks in the pipeline, like follow-ups, scheduling appointments and creating proposals, so your salespeople can make the best use of their time to ensure deals move through. With a CRM software, you can:
If you have multiple sales teams, sell different products, or target various markets, you need to expand your sales processes as well. This is where multiple sales pipelines can help you capture every deal’s journey. Instead of expanding one sales process for all types of products/markets, create separate pipelines with different deal stages. This will bring clarity to all your teams and ensure they achieve their unique goals. A sales pipeline management system lets you customize the stages in multiple sales pipelines based on your business needs and internal structure.
According to Raul Galera, Partner Manager at Candy Bar, "Our sales pipeline typically starts with an agency reaching out to us and then going into the discovery phase (demo call, questions about our agency program, etc.) but once we close a new agency — that’s actually when the real work begins. As those agencies bring new customers to our business, a new sales pipeline starts all over again."
Sales pipelines are just an indicative number of deals that your business has. While it might look like you have a lot of deals in your pipeline for this month, many may not convert immediately, so always having more deals in the pipeline helps.
To prevent your pipeline from running dry, always ensure your salespeople have more deals than their target. If the target is 4 deals a quarter, then they have to have at least 6-8 deals in their pipeline for four to convert.
"Lack of lead generation often leads to drying up of the funnel. You need to focus on having long-term constant lead generation processes in place to ensure you have enough deals in the sales pipeline.”
Naveed Ahmer, Product Marketing Manager, Keka
Often, sales cycles are lengthy and might reduce the prospect’s desire to buy your product if they have to jump through a lot of hoops. Shorten your sales cycle and ensure there aren’t any hurdles in your sales pipeline. A shorter sales cycle means your team is closing deals faster month-on-month, and hence bringing in more money as well as achieving their sales targets. You can also identify which deals are taking longer than your sales cycle and the effort you need to put in for a faster turnaround.
Your prospect may have to interact with different departments in your company in their buying journey. During hand-offs from one team to another, there is potential for an error to occur.
Mistakes with the highest impact on value of deals closed usually happen during hand-offs. From the Marketing team to SDRs and from SDRs to AEs, deals are passed on from hand-to-hand, often without context. Deals can be lost or followed up late and this often leads to a lost deal
Marek Beran, Head of Sales, Cloudtalk.io
Ensure that each team working on the sale makes a smooth transition onto the next department and is up-to-date with all the information related to that deal. Often, miscommunication and lack of coordination among members of different teams can result in a lost deal.
Better communication and coordination between teams will help deals flow faster through the sales pipeline.
One of the major sales pipeline mistakes is having an uninformed team. While tracking your sales prospects is important, keeping track of what others are doing is more crucial. Imagine reaching out to a prospect after the deal has been closed by one of your team members. In one word, it's chaos. You need a CRM that provides real-time updates.
Pritha Bose, Senior Content Marketer, Automate.io.
Often, salespeople try to push a deal through the pipeline, without providing proper attention and care required by different prospects. Some prospects may need more hand-holding than others, while others may grasp your product relatively more quickly.
If a prospect is not sure of your product, but your salesperson assumes the prospect knows everything and has moved them to the ‘Interested’ stage, then this would result in clogging of the sales pipeline. Get an in-depth understanding of your customers’ needs before pushing them through the sales pipeline.
Mistakes are our most important learning tools. In the beginning, we often prioritized “more lucrative” deals rather than recognizing the “right” deals. We’ve learned that, although a colossal deal might seem attractive, you have to consider fulfillment requirements and if the client has synergy with your team—after all, we want partnerships, not clients.
Vincent Bucciachio, founder of SociallyInfused Media
At times, your salespeople may be flooded with work and not know which deals to prioritize. This results in a crowded pipeline and could lead to lost deals. Often, it is easy to lose sight of where deals are in the pipeline. Salespeople have to track how many days a deal has been stagnant, if the associated lead has shown signs of interest, what is the degree of interest, and what are the sales activities conducted in the last 30 days, etc. Without such extensive tracking, salespeople are often not sure which deals to focus on.
Implementing a CRM that provides AI-powered deal insights (deal scoring, for instance) can help you determine how your deal pipeline is faring. It also predicts the next best action to take, based on past deal characteristics, to help you make better decisions and win more deals. You can also track parameters such as the frequency of sales activities in the last 30 days and the sales engagement rate.
Deal scoring is extremely valuable only if executed correctly. We use a scoring system where every time a user performs an action, for example, visits our website or blog, they get 5 points. Once a user can effectively score up to enough points (40) they become an MQL (marketing qualified lead), at which point we begin using a sophisticated nurturing process. That quickly brings the lead up to become an SQL (sales qualified lead) where the real conversions happen.
Kas Andz, Founder, Kas Andz Marketing Group
Too often, we focus on one important development at one particular stage of a deal, and then later lose track of the deals in the sales pipeline.
One of the most common mistakes I see is businesses over-emphasizing one of the steps at the expense of others. For example, businesses invest heavily in aggressive marketing, but once they get a customer to their website there’s no support or a lack of user friendly purchasing interface. Much like a real pipe, a sales pipeline will only flow smoothly if it’s clear of blockage along its entirety.
Nikola Baldikov, Digital Marketing Manager at Brosix
With the changing expectations of customers and burgeoning target pressures, sales teams need a comprehensive sales pipeline management system that accelerates focus on relationship building, automates the sales pipeline, and helps close more deals faster.
Modern pipeline management systems like CRMs help you visualize the number of open deals, the status of each deal, expected sales, distribution of deals among sales reps, and more through a visual sales pipeline.
Sales cycle and velocity reports to keep you up to date
Trendline reports to track sales trends and forecast deals
How Freshsales helped customers drive growth and gain traction
Configure multiple sales pipelines for your business
Sales activity reports for emails, phone calls, tasks and…
Create tasks and appointments from the deal pipeline
Prioritize activities from the deal pipeline
How to use sales pipeline in Freshsales
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