The sales pipeline is where it all happens.
At the beginning, your future customers don’t even know you exist. They are unaware of your product, which will totally change their lives for the better.
Well, they're in luck, because you just prospected them and dropped them into the pipeline, where they will emerge the other side a happy customer. Soon, they'll be hearing from you for the first time -- the start of a beautiful relationship.
But for that to happen, you've got to have a solid sales pipeline or you'll end up frustrated when you go for the close.
There are four key steps you must take to fill your sales pipeline and then execute so you are closing as many sales as possible.
At a glance: Understanding the sales pipeline
- Map out the pipeline's structure in order to understand the process each customer must go through.
- Determine what sales figure you need to hit and your close rate so you can identify how many prospects you need to develop.
- Set objectives and create checklists so that you are making the right moves at the right times.
- Start filling that pipeline and make adjustments along the way.
What is the sales pipeline?
The sales or customer pipeline describes the process through which a salesperson takes a potential buyer from ignorance about a product or service to a purchasing decision.
A salesperson manages different prospects at different locations in the sales pipeline at any given time. Some potential clients have only just been introduced, while others have had multiple conversations and are ready to close.
A sales pipeline will help a good salesman figure out how many deals he or she can be expected to close in any given time period. It can help them determine if there are enough prospects in the pipeline, or if the close rate needs to improve, for example.
Sales pipeline vs. sales funnel: What’s the difference?
The sales funnel refers to that inverted pyramid we all know so well. This shows where prospects are in the funnel, from the top where there's still a lot of selling to be done, to the bottom where a salesperson is ready to make the close.
It differs from the sales pipeline in that the funnel is focused on leads, while the pipeline is all about conversions.
The funnel describes the journey of a potential customer, from awareness to making the decision, while the pipeline describes the salesperson's process, from qualifying a lead, to proposing a solution, to closing the deal.
Benefits of having a sales pipeline
A sales pipeline is vital to any successful salesperson for a number of key reasons.
It organizes the sales process
As a salesperson, organization is critical to success.
You have to juggle a lot of different prospects all at once, and they’re all at different sales pipeline stages.
If you do not have your ducks in a row, you will lose sale after sale because you tried to close on a customer who wasn’t ready, or you drive away a potential client with one too many meetings.
It improves your own understanding of sales
A sales pipeline provides you with a complete picture of your situation, and helps you better understand the sales process itself.
You’ll notice trends in how quickly you move prospects from one stage to another, for example. This will help you modify your strategy in subtle but important ways.
It increases your closing efficiency
By seeing clearly how many times your potential client has been contacted and what conversations you’ve had, you have a lot clearer picture of whether it’s time to close, and also what structure your close should take.
For example, if the client mentioned they hoped to have a new solution in place by the beginning of the quarter, that could feature heavily in your follow-up email as you set up the close.
How to create and monitor your own sales pipeline
A sales pipeline is an absolute must for any salesperson hoping to be successful, so if you don’t have one, drop everything and set one up.
These four easy steps will get you there.
1. Map out the pipeline's structure
This is basically the same whether you’re focused on business-to-business (B2B) sales or direct to consumer (D2C), but it's going to look a little different depending on the salesperson. You should probably break it up into something like the following categories:
- Prospects (people you have identified as potential customers, but you have not yet reached out to)
- Contacted (people you have reached out to, but not had a meeting with )
- Meetings (people who have agreed to a meeting)
- Proposals (people you have met with and submitted a proposal to)
You can add another step for closes if you want, but once you've made the close, they leave the sales pipeline, so it's really not necessary.
Examples of a good pipeline structure include:
- It divides your customers into the four categories
- It lists when you have contacted them
- It shows when you need to move to the next phase
2. Determine what number you need to hit
The next step is to come up with a target you want to hit. For example, if you want to hit $50,000 in sales for a quarter, that would help you figure out how many people need to be in your pipeline in order to reach the number based on your typical close rate.
If you don't have enough prospects in the pipeline to achieve this, that's a sign you need to do some more prospecting. If you do have enough prospects but your close rate is bad, you may need to spend more time on the middle parts of the pipeline.
Examples of key figures include:
- A total sales figure
- An average sale price
- An average close rate
- Total number of prospects needed at the beginning of the pipeline
3. Set objectives and create checklists
Each stage in your pipeline should have an objective that you're trying to hit before you can move it to the next stage.
For the prospecting stage, it's getting the prospect to agree to a meeting. For the meeting stage, it's submitting a proposal. And for the proposal stage, it's getting the client to make a purchasing decision.
Set up a checklist of actions for each stage of the pipeline that will get you to that objective, and track each prospect's progress through each.
Examples of objectives include:
- The customer agrees to a meeting
- You submit a proposal
- You ask the customer to make a decision
4. Start filling that pipeline
At some point, you have to stop planning and start doing.
Don’t be afraid to make mistakes early on: the best way to learn is through experience and some trial and error, so start plugging prospects into your pipeline and start closing. You’ll notice ways to do things better along the way and make adjustments.
Examples of taking action include:
- You start creating a list of prospects based on a customer profile and add them to the funnel
- You reach out to these prospects as soon as possible to introduce yourself
- You set up as many meetings as possible
Should you use Customer Relationship Management (CRM) for your sales pipeline?
CRM software is a godsend for salespeople. Rather than create your own pipeline from scratch, a software solution can provide the framework right off the bat and help you track each potential client without any heavy lifting on your part.
A CRM solution is a must for every salesperson who wants to take their sales success to the next level.
Start revamping your sales pipeline today
Chances are, you’ve identified some flaws in your sales pipeline by now. Don’t wait to fix them, because every moment you delay fixing your process will cost you money in terms of lost sales.
Research some sales pipeline examples to spot opportunities for further improvement.
Carve out a few hours to separate your sales pipeline into the aforementioned categories, determine your target sales figure, and adjust your process to add enough prospects to the pipeline to hit that target.
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