What is a sales pipeline?

Every business in a capitalist society is focused on being profitable. From a generic point of view, it means that they need to sell stuff (either products or services). Without selling there’s no money coming in and, therefore, no growth.

With that in mind, it’s safe to say that every company must manage their sales pipeline to analyze their sales performance in their targeted marketed.

Few to no businesses are lucky enough to have a consistent stream of customers falling on their lap through sheer luck and no strategy.

In most cases, sales have to be managed taking many details into consideration.

One of the most significative signs of an organized business is an effective sales pipeline. Healthy businesses have high converting pipelines without blockages/bottlenecks.

Outside an ideal reality, there’s no such thing as a sales pipeline that converts 100% of the leads into customers. Even the most simple of purchase cycles is influenced by a diversity of factors. What a stronger, well structured sales process does is make sure the process is converting as well as it possibly can.

How does a sales pipeline operate?

You can look at a sales pipeline as a systematic approach to the process of enticing potential customers to walk through the front door as visitors and take all the right steps to make sure they exit the building as satisfied customers.

What’s the process? How do you get them from being curious in what you have to offer to parting with their hard earned cash? What are the steps they go through? A sales pipeline ultimately operates by showing you where the money really stands within your processes.

You’ll use your pipeline to build up common ground for where any transaction may be. This lets you see where things are going right for you and where things are possibly going wrong in the process.

Your sales pipeline allows you to identify specific points of the purchase process, such as where the largest portion of people drop off, for example. This allows you to identify any factor that may be influencing their decision to not finalize the purchase.

These data are infinitely valuable to help you refine your sales strategy to improve the parts of your sales process that are performing sub-optimally and damaging your conversion rates.

Effective sales pipeline management

Managing a sales pipeline is hard work, so don’t fool yourself into thinking it’s not. The first data you need to look at is the overall metrics of your pipeline. Analyzing this valuable helps ensure that you’re bringing as many people in as you possibly can and they’re spending as much as they can.

It’s very important, however, to start looking at the right data. Here are two very important metrics that’ll help analyze your sales pipeline’s success and boost your sales’ results.

The averages

The first thing you want to know is: what are you aiming at? What’s your ultimate goal? What are you trying to reach? The best way to define those business-oriented goals is establishing your business averages.

Whilst there are pre-defined business averages out there that you can use as a general plan to follow, replicating general average results in specific businesses can be hard due to the diversity of aspects that influence businesses.

The best way to proceed, therefore, is working out your business’ own averages and what you need to do to achieve them.

Determining your averages will be a decisive factor to guide future business improvements. Defining and focusing on the wrong averages can make it very hard to take your business any further. These are the four main metrics you need to define your business’ averages:
  • Average deal: How much people are spending in an average deal;
  • Open potential transactions: How many open potential transactions you have at any one time on average;
  • Customer conversion rate: % of customers that actually end up buying what you’re offering;
  • Time spent within the sales pipeline: Time from when they first discover you to when they make their first purchase.

Working these averages and having your metrics well sorted out is going to be vital for defining your strategies for improving your sales pipeline.

The stages of a sales pipeline

People constantly underestimate the value of knowledge and information throughout the sales pipeline. Taking your prospective customer through all necessary steps of the sales process is essential to gather essential information about them and refine your sales strategies,

These are the 5 main stages you should take your customers through:

  • Initial Contact: This is the first contact your potential customer has with your brand/product. First impressions last so this is your one and only opportunity to make a good impression and lure customers further into the sales pipeline;
  • Qualification: When the customer feels comfortable to make the next move and moves forward with the purchase process, or at least shows that he’s open to see what you have to offer in comparison to your competitors can offer;
  • Meeting: The meeting implicates having had some kind of dialogue with the client. It can be hard to identify this stage in online businesses, at the very most we can sat that it means they emailed you asking for more information about a product;
  • Proposal: This can also be hard to quantify. In offline businesses, though, it means you’ve given the customer a price and guarantee for your work. In an online business, the “proposal” would be symbolized by the shopping cart or an email service proposal. However, you need to understand that getting the “proposal” accepted is the most important part of this step;
  • Close: This is when you ‘seal the deal’. In this stage, the purchase is completed. This is the last stage that you need to get your customers through. Once they agree to the proposal, they need to pay and present the payment receipt so you can deliver what they purchase.

As you can see, managing a Sales Pipeline is all about managing each independent interaction stage your customer goes through as well as managing the metrics from the initial contact to close, passing through all steps.

The higher your conversion rates from one stage to the next, the higher your overall conversion rate is going to be. Consequently, the more effective – and profitable – your business will become in the future.

Manage your sales with Pipefy!

Pipefy's Sales Pipeline Template guides your team through all the steps of the sales process: from initial contact, to the qualification of leads to effectively closing the deal.

free sales pipeline template!

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Written by Isabelle Salemme, Product content manager at Pipefy. She uses her extensive Pipefy knowledge to write informative pieces teaching users to make the best of Pipefy. Besides being responsible for all product-related content, she's an avid reader, a coffee lover and a professional photographer.