Your company’s sales pipeline plays a critical role in whether your business succeeds. That might sound dramatic, but it’s true. Your sales pipeline impacts everything you do in sales, including, of course, how many deals you close.
Whether or not you’ve explicitly defined it or not, if you’re selling something, you have a sales pipeline. And no matter how much attention you’ve given it, it impacts every member of your sales team. So, it pays to take the time to optimize your pipeline by following the best practices for managing it. Luckily, implementing these best practices is doable, especially if you work with the right partners.
The Building Blocks of the Sales Pipeline
So, what is a sales pipeline anyway? It’s the process by which your prospects become your customers. Just like a physical pipeline transports oil, water or some other product, the sales pipeline moves prospects through the steps necessary to close a sale. It includes everything from prospecting to lead generation to sales meetings. You might also hear the term sales funnel, which is closely related but more often used to describe a visual representation of the sales process.[/vc_column_text][/vc_column][/vc_row]
Sales pipelines consist of several stages. At the beginning of the pipeline, you have all your prospects. The further along the pipeline you move, the candidates become more and more qualified, meaning they’re more likely to make a purchase. This also means there are fewer prospects the further along you go. People include different numbers of stages when describing their pipelines and give them different names, but here’s a typical structure:
In this stage, prospects first become aware of your company’s products or service, typically through marketing tactics. This step includes lead generation and nurturing.
Next, a prospect, if qualified, may express interest in your product or service by requesting information, downloading a white paper or taking another action.
Next, the sales team will reach out to the prospect and further qualify them, often through a phone call. This step also usually includes a demo of the product.
Then, the lead will decide whether to purchase the solution. If they’re interested, the salesperson will send them a contract.
The final stage is the closing of the sale. The salesperson will also typically follow up at several points after the sale to check in, get feedback or offer upgrades or new products.
Your sales pipeline is the backbone of your sales department. It describes the processes you use to close sales, which is naturally the ultimate goal of a sales department, so it’s vital that you optimize it. So, how do you create an efficient and productive sales pipeline?
What Is Sales Pipeline Management?
Sales pipeline management is the practice of optimizing your sales pipeline. It includes setting up processes to help you keep track of your prospects, qualify leads and assign them to staff members, as well as a few strategies for closing sales. It also includes defining procedures for evaluating your team’s performance and identifying areas for improvement at each stage of the pipeline so you can continuously improve your processes. Your pipeline management definition will likely vary from that of other companies since each business has its own unique needs.
If you manage your pipeline efficiently, your sales team will know what stage each prospect is in and who is responsible for which leads at all times. You’ll also have a clear picture of your quotas and what you need to do to meet them. Your department will run more efficiently, close more sales and, ultimately, boost your pipeline management revenue.
Guide to Sales Pipeline Management
How do you manage your sales pipeline for optimum results? Here are seven of the most crucial sales pipeline management tips to follow.
1. Formalize Your Process
An essential preliminary step to optimizing your pipeline is creating a formal sales process. Studies have shown that doing so can increase your revenue by around 18 percent. Write up a manual that outlines each stage of the pipeline and describes what to do at each step. Include scripts. Add case studies about specific opportunities and situations, as well as a guide on what to do if problems emerge.
To create this manual, look at the processes you have been using and identify what has worked well and what has not. Include the tactics that have had the best results. You may want to get together your top salespeople to contribute their ideas to the guide and look at any data you have that indicates what helps you close the most sales.
Once you’ve developed your guide, distribute it to every member of your team and ensure they know how to follow it. You might want to conduct a training session, too, especially if the manual includes substantial changes.
2. Have the Right Number of Steps
The pipeline described earlier involved five steps, but that might not be the ideal number for every business, product or situation. Tailor your pipeline to your company’s unique needs.
Having the right number of stages in your process is crucial to its success or lack thereof. If you have too many, it will be over-complicated and counterproductive, as you’ll end up spending a lot of time managing it. You could also lose promising prospects along the way as their interest wanes or competitors sweep them up.
If your pipeline is too short, on the other hand, your salespeople will have to rush, which could lead to errors and perceived pushiness that could turn leads off.
3. Use the Right Metrics
Collecting and analyzing data helps you to understand your sales process better and improve it accordingly, as long as that data is accurate and relevant.
Take a look at any historical data you have and set up procedures for collecting information on an ongoing basis. Include information on both an individual and organizational level. Useful metrics include:
- Leads created, organized by source
- Conversion rate
- Average sale size
- Average sales cycle length
- Total number of open opportunities
4. Use the Right Technology
How do you keep track of all of this data? There are various technological solutions available to sales teams that can help them organize this data, analyze it and otherwise improve their processes.
A customer relationship management system, or CRM, is one such platform. A CRM provides a central location to collect all customer data and track leads as they move through the sales pipeline. With an all-in-one CRM solution, you can manage contact information, communications, purchase history and other data, as well as other aspects of your operations such as quote management, marketing automation and call prioritization. You can also use specialized sales tools such as LeadMaster’s Sales-Xtreme Sales Acceleration platform.