Why is Sales Pipeline Management important?

Before properly diving into sales pipeline management, lets take a couple of steps back and remember the general sales pipeline concept. A sales pipeline is a commonly used (and very useful) concept used by a great number of sales managers, staff and business owners to quantify the demand for their product/service and properly manage their sales cycle.

It describes a specific approach to selling founded on the basic principles of the sales process – by describing all the individual steps from the initial approach to a potential customer – or prospect – to qualifying, and further developing through all the different stages until the sale is closed. All those individual sales opportunities, neatly arranged alongside each of the sales steps that make up your sales process are a sales pipeline.

What is Sales Pipeline Management?

As we’ve just said, your sales pipeline works by placing your leads, prospects and sales opportunities at the different stages/phases of the sales cycle, and then measuring their progress as they move through the pipeline, all the way from being a simple unqualified lead to a fully satisfied repeat customer.

As all things in life, your sales pipeline couldn’t be perfect – and it tends to leak (now you’re getting the pipe reference, right?). Some of those unqualified leads won’t even get through qualification, the same goes to leads becoming prospects, prospects becoming sales opportunities and then on…From point A (the entrance of the pipeline) to point B (the exit), a large number of those leads will get lost in between – and that doesn’t mean your sales pipeline management is wrong!

Keeping things really simple, sales pipeline management is nothing more than estimating incoming cash flow or, in layman terms, how much money you’ll make from the existing sales opportunities. You take a look at your existing leads, prospects and sales opportunities and, based on previous data, make some estimates of the likelihood that they’ll actually buy what we’re selling. With that information, you’ll feed the system along with their expected spend into your projections – this will allow you to make your own projections on how much your company will make (pretty awesome, right?).

It actually gets even cooler, the real power of sales pipeline management surfaces when we determine the metrics we’d like to use as reference and, even better, when we establish well defined processes in place in order to quickly respond to any changes in those metrics.

Sales Pipeline Metrics:

These are a few examples of metrics most commonly considered when dealing with sales pipeline management:

  1. Number of leads/prospects/sales opportunities/actual deals in the pipeline;
  2. Average size ($) of a deal in the pipeline;
  3. Average percentage of deals that you won (remember when we talked about leakage – these are the deals that got all the way through);
  4. Average deal lifetime before it’s won or sales speed;

How to manage the sales pipeline?

First up, let me take you back to the very first step: actually measuring all of your sales pipeline metrics in your business. Taking these  metrics as a reference, you’ll get a starting point both for the entire sales pipeline and for each stage/phase separately.

These figures are useful benchmarks for current results as well as future trends. I often recommended completing this exercise at least once a year. For instance, if your company has just seven deals in stage one, instead of the average of 13, it is pretty plain that you should quickly find at least six new opportunities to make the numbers you have achieved previously. Moreover, you also start understanding positive signs. For instance, you know that you are making good progress when the average size of your deals in the pipeline is 16,000 instead of 13,080

Manage your Sales Pipeline with Pipefy!

Pipefy’s Sales Pipeline Template is a step-by-step process, specially developed to enhance your team’s focus and productivity. It’ll guide them through all the steps of the sale: from prospecting, to properly qualifying hot and cold opportunities all the way to effectively closing the deal.

Instead of resorting to fragile spreadsheets or complex and expensive CRM systems, install Pipefy’s free sales template and run your sales pipeline smoothly and without any concerns.

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Written By

Isabelle Salemme

Head of Customer Support & Education @Pipefy. She uses her extensive Pipefy knowledge to write informative pieces teaching users to make the best of Pipefy. Besides being in charge of product knowledge, she's an avid reader, a coffee lover and a professional photographer.