Have you ever found yourself losing track of potential deals, unsure of what stage each one is at in your sales process?
You’re not alone – many small businesses struggle with managing their sales pipeline stages, often resulting in missed opportunities and lost revenue.
Hi! My name is AJ! I recently sold my business for multiple seven figures, and now I focus on giving entrepreneurs advice on how to build a successful business.
After running a business for several years, I learned a lot (mostly through my failures)! One important lesson I learned was the significance of having a strong and reliable sales pipeline.
So, if you want to streamline your business operations, increase efficiency, and boost your sales, follow me as I break down sales pipelines and everything in between!
Key Takeaways
- A sales pipeline is a visual representation of the customer journey.
- A sales pipeline typically has seven stages, each integral to closing more deals.
- Following up with paying customers is a great way to build loyalty and encourage repeat purchases.
- Continually refine and tweak your sales pipeline stages so they're better optimized.
Related Reading: CRM for Small Businesses
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What is a Sales Pipeline?
A sales pipeline is a visual representation of the customer journey.
It maps out each stage of the process, from initial contact to closing the sale and beyond. Most pipelines usually have seven stages (we’ll talk more about each stage later.)
At each stage, you can adjust and improve your approach to increase efficiency and close more deals.
The goal is to make sure your potential customer progresses through the stages quickly and smoothly, ultimately becoming a paying customer.
A sales pipeline is usually represented by a funnel graphic or a chart making it easier to monitor and track your sales process.
Benefits of a Sales Pipeline
Pipelines hold sales reps accountable and make tracking and meeting sales goals easier! These tools break the entire sales process into small, trackable tasks.
Additionally, pipelines help keep sales teams organized.
For example, with a pipeline, each sales rep can see the following metrics:
- Where do their earnings come from
- Deals in progress
- The stage of each deal
- The potential buyers they need to reach out to
- Unqualified or dead leads
- Customers who are stuck at a particular stage
Sales pipeline metrics are valuable to sales agents and essential for sales leaders.
Sales managers can utilize pipeline data for the following things:
- See whether the sales cycle is effective
- How they can optimize each customer journey
- Individual performance
- The entire sales team’s performance
- Bottlenecks and weak points in the sales cycle
- Whether sales targets are being met
A sales pipeline offers incredible value to a company! But if you need help figuring out where to start, building a strong sales pipeline can feel intimidating.
Don’t worry! In the next section, I’ll review the seven sales pipeline stages!
What are the Seven Stages of a Sales Pipeline?
Although the specifics of the stages will change from business to business, the general stages of a sale pipeline stay the same.
That said, the pipeline stages include the following:
- Prospecting
- Qualifying
- Demonstrations or meetings
- Proposal
- Negotiation
- Win/Loss analysis
- Post-purchase activities
Let’s look at each of these stages closely!
1. Prospecting
The first sales pipeline stage is prospecting.
During the prospecting stage, your team aims to find potential buyers who need what you sell.
Every business prospects a little differently because there are several strategies.
For instance, some ways your company can find potential customers include:
- Having a lead generation team find people in your target audience
- Marketing campaigns (email, ads, social media, etc.)
- Social media engagement
- Email marketing strategies
A sales CRM (customer relationship management) system is another excellent tool for prospecting.
CRM tools can automatically find leads for your sales team, giving them more time to focus on building relationships and closing sales!
2. Lead Qualification
The second stage in the sales pipeline is lead qualification.
At the lead qualification stage, your team’s primary focus is to generate leads.
The objective is to evaluate these leads to identify those with a genuine interest and ability to purchase your product or service.
For instance, this qualification process involves understanding the following aspects of each lead:
- Needs
- Budget
- Decision-making authority
- Timeline within which they intend to make a purchase
Understanding and considering the following aspects is often called the BANT (Budget, Authority, Need, Timeline) framework.
Leads that meet your qualification criteria are considered ‘sales-qualified’ and move forward in the pipeline.
On the contrary, those that don’t match up are either discarded or nurtured for potential future opportunities.
A structured lead qualification process significantly improves your sales efficiency by ensuring your team focuses on the prospects with the highest conversion potential.
3. Demo or Meeting
After generating leads and qualifying each, it’s time for one-on-one meetings or demonstrations.
Depending on your industry and target audience, this stage may not apply to your business.
Still, some qualified leads prefer to learn more about the products or services they want to purchase.
Demonstrations and one-on-one meetings are the perfect opportunity to show your potential customers precisely what your company does!
During this stage, it’s essential sales reps aren’t too pushy, as this can drive people away.
Instead, focus on connecting with the person individually and pointing out how your products or services will solve an everyday problem.
4. Proposal
The proposal stage often follows a meeting or demonstration.
At this point, your sales team estimates the cost and other details related to the product or service you’re offering.
A proposal should include important information like:
- Payment terms
- Delivery schedules
- Any additional materials that are necessary for installation or usage
A well-defined sales pipeline lets your team use previous proposal templates for each sale.
That way, sales efforts aren’t wasted on creating a new document whenever you must send a proposal.
Your initial proposal should contain transparent pricing and deliverables so customers aren’t left questioning certain aspects of what they’re buying.
5. Negotiation or Commitment
The next sales pipeline stage is negotiation or commitment; this depends on how your prospective customer handles the proposal you send.
For instance, some potential customers wish to negotiate certain things in their proposals.
Of course, whether your team accepts negotiations is entirely up to you.
While it can be beneficial to meet customers halfway, you also don’t want to undersell your products or services.
In other cases, a potential customer will immediately commit to purchasing your product or service!
Whatever happens during these pipeline stages, tracking what happens for future reference is vital.
6. Opportunity Won/Lost
The opportunity won/lost stage is essential for your sales manager to understand the effectiveness of their team.
At this point, you’ll know whether or not a sale was successful and which pipeline stages may need improvement.
By noting which leads were won or lost and why, your team can recognize areas to focus on to make more sales.
For instance, if a high volume of lost leads comes at the negotiation stage, it may be worth revisiting your offer and how much you charge for each product or service.
This step helps you understand which pipeline stages are working well and which ones need tweaking to move forward.
7. Post Purchase
If you thought the sales stages end after you secure a sale, you’re about to learn how valuable post-purchase activities are!
Following up with the individual after a sales rep closes a deal is critical.
You want to learn about their satisfaction with their purchase or if they encountered any issues.
If you ghost a paying customer, it leads to fewer customer referrals and repeat purchases.
Instead, you should focus on learning as much about how the person enjoyed the sales process.
An easy way to do this is to send follow-up surveys. That way, paying customers can fill them out on their own time.
Building customer loyalty after a purchase is also important.
Here are a few ways to do so:
- Send a post-purchase coupon for their next order
- Send offers and discounts for repeat customers
- Offer personalized customer service
- Send promotional emails
By doing this, your customers will be more likely to recommend your company and become long-term supporters!
What You'll Need Before Building a Sales Pipeline
What does it take to build a sale pipeline? If it’s your first time creating a pipeline, you may think the process is overly complicated.
However, you only need a few things to create a pipeline! These include the following:
- Creating a prospect list
- Identifying your sales process
- Identifying your revenue targets
- Understanding your workforce
Let’s review each of these in more depth.
A List of Prospects
The first thing you need to build a sales pipeline is a list of prospects.
Prospects are individuals who fit your target audience and ideal customer profile (ICP).
Additionally, these people must have a need and budget for your products or services. If you target someone without money, what good are they to your sales pipeline?
Ensure this list of prospects aligns with your buyer personas (detailed profiles of your ideal buyer).
What should a buyer persona profile include? Easy! Make sure buyer personas include the following information:
- Name
- Contact information (email, phone number, etc.)
- The company they work for
- Whether they’re a decision maker
- How you initially made contact with this person
- Their pain points and challenges
You should assign the prospects you’re already talking to a rough pipeline stage.
It’s okay if you need to change it later, so don’t worry about it being perfect the first time.
Your Sales Process
The next thing you need to build a sales pipeline is a structured, well-performing sales process.
What’s a sales process?
These processes give your sales reps clear, step-by-step instructions for closing deals.
Therefore, your sales team isn’t stuck guessing what to do in certain situations. Instead, they have a tested formula right in front of them!
Additionally, sales processes ensure sales reps can consistently win deals if they follow the steps you’ve created.
A company’s sales process isn’t set in stone. So constantly look for ways to streamline and improve your process.
Creating a healthy sales process can be challenging, but it’s worth it because it leads to more sales and happier employees!
Your Revenue Targets
A healthy sales pipeline helps your company meet revenue goals consistently.
However, to design a successful sales pipeline, you must have your goal and targets in the front of your mind.
Setting revenue targets (eventually) helps you figure out how many deals you must add to your pipeline to meet your goals.
So, when you understand how many prospective customers your team must convert, it’s easy to determine the number of deals you need in each sales pipeline stage.
Also, setting revenue targets gives sales teams something to work toward, acting as a form of motivation.
Your Colleagues
The final ingredient you need for a sales pipeline is your colleagues!
Pipelines help improve individual and team task management, tracking, and total sales.
Therefore, everyone should be involved in decision-making processes that concern your sales pipeline.
Rely on the people using the pipeline daily to build it efficiently.
Turning to your colleagues addresses opinions, advice, and questions.
As a result, your sales pipeline will be more efficient than if you were to build it on your own.
Sales Pipeline Management Steps
How can you ensure your sales pipeline continually improves?
Check out these six sales pipeline management steps you must implement to ensure success!
Step 1: Outline Your Sales Process
First, you must outline your sales process.
Make a detailed list of each task and activity your reps must perform to close a sale.
Consider all the tasks your team must complete before reaching their end goal, from identifying a potential customer to closing a deal.
The sales process is different from the pipeline.
Sales processes include all the actions needed to close the deal. A pipeline organizes these actions into stages.
Step 2: Determine Your Revenue Goals
Next, determine your company’s revenue targets!
Revenue goals help you measure how successful your sales pipeline actually is.
Determining goals is easier when you choose the correct key performance indicators (KPIs) to help measure success.
Ensure everyone on your sales team knows the revenue goals, which will motivate them to hit the target.
If you need to alter your revenue goals between quarters, that’s okay!
It’s essential to have realistic, attainable goals. So if your first targets are unreasonable, tweak them to be more in line with current business operations.
Step 3: Collaborate With Other Teams
Collaborating with other teams is something I should have done when implementing my first sales pipeline!
Why should customer service or marketing departments care about the sales pipeline?
Each part of your business must work together if you want to be successful.
Therefore, it’s critical to meet with your customer support and marketing team and ask how they think the sales pipeline should be constructed.
For instance, ask these team members about tasks that should be included in the sales process that are missing.
Additionally, find out what sales data would help these departments perform their jobs better.
Step 4: Define Your Pipeline Stages
Step four is defining your pipeline stages. I created a seven-stage process in a previous section for you to rely on.
While you may only need six stages, creating a rough draft of what happens in each stage is crucial.
Consider the goal associated with each sales action and categorize them to a sales pipeline stage that matches best.
Also, you may need multiple pipelines if your sales process is complex.
Step 5: Setup Your CRM Pipeline
Next, you must transfer your sales pipeline stages to a CRM platform and set up your CRM pipeline.
Customizable CRM software allows you to adjust formatting and entries to match your sales pipeline stages.
That way, you can track results more accurately and set up automations as you grow accustomed to the process.
Automatons are an excellent time-saving tool that boosts productivity!
Does your business need a CRM system?
Most businesses can thrive with CRM technology, especially those looking to streamline and improve their sales process and pipeline.
CRMs include in-depth data and reports that help you understand customer preferences and close more deals!
Step 6: Test, Refine, and Pivot
After creating your first sales pipeline, there’s a (very) high chance the system has some weak spots.
That’s okay! I’ve never heard of anyone getting a pipeline right on the first try.
What’s important is that you and your team continually revisit each stage and make edits where necessary.
Sales Pipeline Vs. Sales Funnel
The difference between a sales funnel and a pipeline is minor yet essential.
A sales pipeline creates a visual representation for a company, allowing them to see the sales process and understand how to turn a prospect into a customer.
On the other hand, a sales funnel represents the purchasing journey from the customer’s perspective.
Final Thoughts
Sales pipelines are tools companies use to create step-by-step formulas for agents.
As a result, sales reps can close more deals because they see where each customer is on their way to becoming a paying customer.
What questions do you have about sales pipelines? Let us know in the comments section below!