As a sales rep, you are so closely involved with the individual deals you are attempting to make that you have a good idea about the state of your sales pipeline. For managers overseeing multiple reps, this becomes less clear as you are less involved in the finer details of each rep’s deals. This is why sales expert Jeff Hoffman says “managers must develop a more systematic process to test sales pipeline health across the organization as a whole.” And if you want to know the ways in which you can improve your sales pipeline, this article will explain more and provide real life examples.
What is (and isn’t) a sales pipeline?
A sales pipeline shows the steps that each prospect must take through your sales process before you close the deal. Your pipeline will be different from other companies, and you may even have separate pipelines for different products or services. Companies set up these pipelines in their customer relationship management (CRM) system so they have a visual representation of where different prospects are in the process.
An example of a pipeline might include:
- Prospecting and generating leads through advertising, blogging, public relations and other endeavors. This brings them to your business and creates a sales opportunity.
- Lead qualification allows you to assess whether they are a good fit for your product and whether they are interested. This could be through a survey of their requirements, some kind of a lead magnet or even a blog post. At this stage, you establish their intentions, credibility and the authority they have to make a purchasing decision.
- Consultation with a prospect through a meeting or demonstration comes next. This is where the sales rep gets to talk to the potential customer directly and lay out exactly how the product will benefit them.
- Making a proposal comes as a result of the consultation and is where the sale can be made. When selling to other businesses (B2B), this will take the form of an agreement on services and prices. When selling to customers (B2C), it could be a targeted email detailing the exact deal offered to them, based on their personal preferences and interests. It could even be the reminder email when a customer fails to check out on an online shopping site.
- Negotiation is the next stage, where the lead and rep discuss the finer details of the deal, with the aim of reaching an agreement and drawing a commitment from the lead.
- The sale is made.
- Post-purchase, you need to ensure that the onboarding process is smooth and the customer receives everything you promised them. You can then look to cross-sell and upsell this client.
People often confuse a sales pipeline and a sales funnel, but there are differences:
|Sales pipeline||Sales funnel|
|Shows the stages of the customer journey||Shows the number of leads who pass each stage of the sales opportunity|
|Focused Internally on how sales and marketing can progress leads through to a sale||Focused on the customer and the journey they take from discovering the brand to completing the deal and their experience with the process|
Why establishing a sales pipeline is important
Having a set sales pipeline for your business, or for each product, is essential to create a standardized approach to sales within your organization. It makes training new staff easier, as there is one set system to show them. In addition, when you want to improve your systems, you only need to refine the one process that all reps use. You can measure the effect of a single adjustment across the board in terms of improving conversion rates, for example.
When many different reps implement a variety of sales processes, there is no consistency for customers and it is difficult to keep track of the progress and, likely, the completion of deals. A single pipeline allows you to see exactly what has happened in each customer’s journey so far and what is left to do before they sign a deal.
Signs you need to improve your sales pipeline
If you spot a downward trend in any of the important metrics you use to measure success in your sales team, it could be that your sales pipeline needs improving. The main areas in which to look are:
- The number of deals in your pipeline
- The average size of those deals
- Your closing ratio, showing the percentage of deals that are closed
- The average time it takes to close a deal.
When one or more of these metrics are in decline, it could be that the health of your pipeline is worsening and this can mean missing targets in the future.
The 4 steps to improve your sales pipeline
1. Understand where you are
Before you look to improve your pipeline, you need to understand where you are with its current state. The fixes you might look to employ will be different if your sales are shrinking than if they are growing. It is also important to look at the data and find out key information such as where you experience the most dropouts.
Check to see when you are discounting, too. Do you do it just before deadlines or is it a more common occurrence in order to close deals. If it is happening too often, you need to assess your pipeline, work out why reps are having to resort to discounting and understand how to fix the problem.
2. Determine your sales pipeline stages
You need to develop your own healthy pipeline that works for your business. This should match the journey that your customers make when making purchases. Your ideal pipeline depends on the product or service that you are offering. So, delve into the ideal journey to draw insights and then create the pipeline to encapsulate that.
Example: If you worked for an organization that provides outsourced property management solutions to letting agents, your pipeline might involve:
- Prospecting for clients using targeted advertising
- Qualify the lead by offering a white paper download detailing property management tips for rental homes
- Consultation by meeting with the client and discussing their specific needs
- Propose a price for a set amount of property management services
- Negotiate with the client over the terms
- Make the sale and begin providing management to the client’s properties
3. Establish a pipeline management process
Sales pipeline management is the process of gleaning information from the data generated, as well as anticipating future events based on previous activity. This requires oversight and an established system so that you can draw the most accurate information possible.
With pipeline management, you can take a look at your sales activities to:
- Predict future revenues
- Analyze the sales process to identify weaknesses
- Predict future sales growth or shrinkage
- Work out the average sales velocity (the time it takes to turn a lead into a client).
Ensure your process involves regular data analysis and measurement. Are the sales being completed quickly enough to meet targets? If not, you should look for ways to help your reps cut the length of the sales cycle and bring in more business.
Example: By tracking the data in their CRM, a car dealership finds that those leads who have viewed a promoted YouTube video about the benefits of an electric vehicle tend to make a quicker purchasing decision than those who read the white paper about the impacts of electric vehicles on carbon footprint. In this case, marketing teams would dedicate more resources to making videos than creating text-based resources.
4. Improve lead generation
Lead generation is where the pipeline begins and, without it, there would be nothing to come out of the other end. It is so important to the sales performance of businesses that 70% of marketers say they have made lead generation their top priority.
It makes sense that not everyone who starts at the top of the pipeline makes it through to become a customer, so you need to have an active lead generation strategy in place. In addition, you want to concentrate on good quality leads; those who you truly believe stand a reasonable chance of buying.
Here are some lead generation strategies:
|Social media lead generation||HubSpot research revealed that two-thirds of marketers brought in leads by spending as little as six hours per week on social media. The added bonus is that social media lead conversion rates are 13% higher than that of the average lead.|
|Focus on the best leads||The saying goes that ‘time is money’. By spending time on leads that are of poor quality, you waste an opportunity to engage a serious potential customer. Using data from your CRM, you can gain a greater understanding of the types of leads that convert and grade or score your leads accordingly.|
|Don’t let leads slip away||There are many reasons that leads slip away. From not responding in time to not providing the right information, these are all issues that can be addressed by creating a more robust and intuitive sales pipeline, where the next stages are obvious to both the rep and the client.|
|Revive dead leads||Dead leads are very much worth revisiting. These were people who showed an interest at one point so, although they are not hot leads, they are not exactly cold leads either. There is something to base your pitch on, a connection. Revisit them and inform them of changes that have happened and new opportunities for them that might just turn them into clients this time.|
|Ask for referrals||Who is better at generating leads than happy customers? Word-of-mouth marketing creates US$6 trillion of spending every year, which accounts for 13% of consumer sales. This makes getting a personal recommendation from a connection invaluable when it comes to improving leads in your pipeline.|
How often should you review your sales pipeline?
There is a balance to strike when considering how often you should review your pipeline with regard to sales performance. You need to give the actions from the previous review long enough to settle in. But you don’t want to wait too long because problems may escalate out of control before you can address them.
Of course, the length of your average sales process will dictate how often it is worth reviewing the pipeline, as does the experience of your sales team. However, many businesses look to review their sales pipeline every week or every other week.
How do you communicate the changes to your reps?
It makes sense to communicate changes to the pipeline during review meetings between the sales manager and the reps. This offers them the opportunity to have their say on the sales pipeline stages. After all, they are the ones who use the pipeline every day and have insight when it comes to what is working and what is not. Relaying the information in-person also allows for follow-up questions and means that there is nothing lost down the line, unlike with email.
What are the most important sales pipeline metrics?
There are so many metrics you can study from a sales pipeline, from sales opportunity to deal, but the most important include:
- The number of leads qualified
- Win rate of sales compared with opportunities
- How many leads make it through each of the sales pipeline stages
- Average deal size
- Average order size
- Length of the sales cycle
- Sales velocity
- Retention rate
For a sales manager, understanding these metrics helps you work out whether each stage of the pipeline is working as it should and whether you are seeing the requisite return on investment.
Are you getting the right leads, converting enough into customers, doing so quickly enough and keeping them sweet once they have signed up? When you track these metrics, you can see the journey of prospective customers more clearly and how well your sales activities are working.
Your sales pipeline is absolutely crucial to hitting targets and making the business profitable. It is a great way to visualize where each deal is and whether it is moving at the right pace or starting to lag. It can flag potential problems and help you finesse your processes if it works in the right way.
With that in mind, any opportunity to improve your sales pipeline should be taken seriously, so make sure that you keep it under review and check in with your sales team regularly to help them bring in the best quality deals in the quickest possible time frame. One way to speed up the process is to use fullInfo’s platform to find contact details for your prospects at the click of a mouse or the tap of a finger.
References & Further Reading
- The 9 Sales Pipeline Management Tips Every Manager Should Know
- 9 B2B Sales Time Management Techniques Of Top Salespeople
- How To Build A Lead List That Brings Results
- What is a sales funnel?
- What are qualified leads?
- The Simple Guide To Sales Qualification Frameworks
- Master These Proven Sales Closing Techniques to Boost Your Results
- Formal sales processes for revenue growth
- Improve sales organization’s resilience