A sales pipeline is a visual representation showing your prospects at the various stages in your sales process. The sales pipeline helps you to find out how many prospects will be closed for a particular week, month or year. This helps you to find out if your sales team is on track to achieve their targets. A prospect moves through various stages of your sales process before getting closed and being converted to a customer. The sales pipeline will help you track the prospect through the different stages.
The visual representation gives you a very clear picture of what is happening. Using a sales CRM software will help you to get a precise picture of the sales pipeline. The advantage of using a CRM tool is that you just need to enter the data once and update the progress. The software will generate the sales pipeline for you and help you to track it at every stage.
Also read: Do You Know How to Load Your Sales Pipeline
Studies have shown that 72% of managers hold sales pipeline meetings with their teams but 63% say that they are not doing a good job of managing the pipeline. This just goes to show the importance of the sales pipeline and how companies need to put in more effort to improve their process. Harvard Business Review in one of its studies states that companies that followed a well-defined sales process had 18% more revenue than others. This highlights the importance of a good sales process and shows how a sales pipeline could help companies track their prospects and forecast sales performance.
Building the pipeline
When you have a well-defined process for your sales function in place, it is very easy to build a sales pipeline. Firstly you need to identify how many prospects usually go ahead to the next stage in the process. Then based on your goal, calculate how many opportunities you need at each stage of your sales process, so that you can achieve your target. For each stage, identify the action taken by your sales team and the response of the prospect. This helps you to build a robust process for your sales pipeline. If you are using a best CRM tool, then it becomes all the more easy to manage.
The stages of the sales pipeline would vary from organization to organization depending on the process they follow. An ideal sales pipeline though would include the following stages:
Contact: This is the first stage where contact is made with the lead through email, phone, visiting the website, attending an exhibition, etc.
Qualification: This is where the sales team has to qualify the lead and evaluate if it is worthy enough to pursue. The lead after this stage becomes an opportunity.
Meeting: Once the lead is considered as good, a meeting would be arranged where the salesperson would meet and engage, explain the product features, shows demos, etc.
Proposal: At this stage, a proposal is sent with details of the product/service offered, prices and terms. The prospect then evaluates the proposal.
Close: This is the last stage where the salesperson needs to convince the prospect to buy and become a customer.
Loading the sales pipeline
When you evaluate the pipeline, you should be able to predict when you can close the deal. This will help you to forecast how many orders you will get per week or month. The key here is the qualification stage. Leads can come from many sources, most of the leads may not have any interest in your product. Qualifying the lead to determine interest level is a very important step. If you fail to qualify the lead properly then unqualified leads enter your pipeline and your overall conversion rate will fall.
Your sales performance will depend not just on the quantity or number of leads, but also on the quality, i.e.: whether they are qualified leads worth pursuing. So, if you want the best result from your sales pipeline, ensure that you have a sufficient number of leads and then qualify the leads so that you have quality leads which will help you enhance your sales pipeline.
Clean the pipeline
Just as a real pipeline needs cleaning, your sales pipeline also needs to be cleaned. Once you know your average cycle time, check out if any leads remain in your pipeline who are older than the average. They could be disinterested leads who are just clogging your pipeline. You can remove then after evaluating if they can still be tapped. Many prospects would be stuck at the last stage, make a genuine effort to convert them before sending them a final mail, after which you can take them out of the pipeline. Most importantly, keep the data in your sales pipeline update. If the data is not updated, you may not be getting the correct picture and maybe making wrong forecasts. Ensure regular checks to see if data is up to date.
A sales pipeline helps you to keep track of all your leads and prospects and helps you to make business forecasts easily. To load your sales pipeline, make sure you have quality leads that have been qualified and can enhance your revenue.