5 Stages of the Sales PipelinePosted August 25, 2017 | By csponline
The sales pipeline is a common tool for sales professionals. It allows them to visualize the sales process and know which specific actions to take during each stage of the buyer experience. As a visual representation of current and future sales prospects, it clues salespeople in to where clients (and potential clients) are in the sales funnel. According to TechTarget, the sales pipeline also provides “an overview of a sales rep’s account forecast and how close he is to making quota, as well as how close a sales team as a whole is to reaching quota.” It is a valuable forecasting tool that most sales teams can’t live without.
How effective, or healthy, a sales pipeline is usually depends on factors such as the following:
- The number of deals in the pipeline
- The average size of a deal in the pipeline
- The close ratio, or the average percentage of deals that have been closed
- Sales velocity, or the average amount of time it takes to close a deal
What Is the Sales Pipeline?
Creating a standardized sales process is one of the most important steps sales managers can take to maximize their team’s success. Here are five basic stages that are included in most sales pipelines.
- Lead generation: During this stage, sales representatives identify potential clients based on whether they meet buyer persona qualifications. They do this using lead bait, or “an item added to a web site to encourage a site visitor to provide their contact information … This information is used to establish contact for the purpose of generating sales,” Apogee Results explains. Marketing teams can also utilize outbound tools such as commercials, print ads and cold calls to generate potential leads.
- Qualify leads: Once the team has generated leads, the next step is to qualify them. This step determines whether or not the lead is a good fit for the product or service. Teams might consider if the lead has the right budget and enough interest in purchasing, as well as the level of commitment to being put in the sales funnel. Qualifying leads is particularly important because a bad lead ends up wasting the team’s time down the line.
- Sell to qualified leads: This stage of the sales pipeline is where high-quality sales practices come in to play. Once a lead is qualified, it’s time for the sales team members to roll out their pitch and demonstrate why their product or service is right for the potential customer. This can happen through conference calls, face-to-face meetings, video chats and more.
- Achieve a sale or deal: Of course, the ultimate goal of the sales pipeline is to close the deal. During this stage, it’s particularly important for sales representatives to figure out potential objections or roadblocks and mitigate them ahead of time. Then nothing stands in the way of the sale. In some cases, leads don’t turn into sales, but that’s to be expected. Part of being a successful sales professional is being able to handle rejection.
- Contact and client support post-sale: Just because the sale is closed doesn’t mean the work is finished. This stage is when the sales team members work to deliver on the promises they made during the previous stages of the pipeline. It’s important to create a meaningful working relationship to encourage repeat buying in the future. Maintaining contact is the best way to do this, as well as identifying potential word-of-mouth marketing opportunities.
Sales Pipeline Best Practices
While having a sales pipeline in place is a great starting point, executing it effectively requires planning and forethought. It’s important that the stages in your sales pipeline make sense for your potential clients, your industry and more.
The stages you include, along with how they are carried out, can have a real impact on prospects’ buying behavior, InsightSquared notes. “If your stages are misaligned, your sales team’s activities will be mistimed and have a negative effect on your prospects’ decision-making process as a result,” the same article explains. This means you’ll need to identify the right number of stages as well as the right type of stages. Doing so will allow your reps to accurately measure both prospect progress and their own performance.
Another best practice when building a sales pipeline is to consider both entrance criteria and exit criteria. “The sales funnel stages have to be well defined and marked by concrete, measurable activities to be effective. Otherwise, one stage blurs into another, and the sales process will no longer be a useful tool for measuring conversions,” according to InsightSquared. Knowing when to move clients on to the next stage – and when to keep them in the current one – safeguards your team from losing a sale due to poor planning.
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Here are some other best practices when executing the sales pipeline:
- Ensure customers don’t remain at any one stage for an extended period by developing and refining strategies to keep consumers moving through the pipeline.
- Keep leads organized by stage in order to optimize time spent on each lead.
- Use the stages as a guideline and be sure to further cater strategies to specific consumers and their needs.
Having an effective sales pipeline in place empowers your team to make smarter business decisions and close more sales. As one expert told Pipedrive, “Pipeline visibility is a key management tool primarily because the pipeline is what drives a lot of business decisions across the organization, not just in sales. It has ramifications for production, marketing, [and] HR.” For this reason, pipeline visibility is critical when it comes to controlling the flow of sales – one of the most core business processes for ongoing success.
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