In this article, we’ll compare a sales pipeline and a sales funnel, explore the 7 stages and 4 metrics of the sales pipeline. We’ll also uncover ways to make your sales pipeline better.
Why is a sales pipeline important?
Having a clear sales pipeline is crucial for every business. Users with different intentions browse your website in search of solutions. Some look through the best possible options, and others are ready to interact and convert into consumers. To keep track of prospects who can become your consumers, you need a sales pipeline. Your sales representatives will lead your potential customers from the start until deals close, increase conversions, and boost profits.
A sales pipeline guides your sales reps to reach key business objectives. They can monitor all deals and make sales forecasts. If a company succeeds in implementing a comprehensive sales pipeline, it’ll have a clear picture of the brand’s health and sales progress. After categorizing deals in the pipeline, sales managers can increase their work efficiency. They identify deals with higher conversion rates and work with them first to increase profits. When a business uses a CRM, it can transfer and store the necessary information on the cloud and reduce manual work. As a result, the company's team will close deals faster.
Now that you know why a sales pipeline is important, let’s uncover the difference between a sales pipeline and a sales funnel.
Sales Pipeline vs Sales Funnel
People often use the two terms interchangeably to define prospects’ place in the sales process. Yet these concepts indicate different things. We’ll review the sales pipeline and sales funnel in more detail to show you this difference.
A sales pipeline is a visualization of prospects’ position in the sales process. The stages include prospecting, lead qualification, demo, proposal, negotiation, closed deal, and post-purchase. A sales pipeline represents the sales process from the perspective of sales reps and describes the actions a sales manager makes to move a lead toward a successful deal.
A sales funnel is a marketing model that represents a journey a lead goes through from becoming aware of the product until the act of the purchase. The stages include awareness, interest, decision, and action. A sales funnel focuses on the decision-making process of customers.
The difference is clear, so it’s time to proceed to the next section to review the 7 stages of the sales pipeline.
7 Stages of Sales Pipeline
A sales pipeline consists of seven stages sales representatives take control of. We’ve prepared a list for you to consider when you decide to develop a sales pipeline for your business. Let’s dive in.
- Lead generation. At this stage, marketers take a closer look at creating accurate customer profiles. Focus on customers who brought your company's biggest profits to find out the similar characteristics. Align the work of your marketing and sales team to deliver the right content to people. Use brainstorming of the two teams to find the best ideas for the content of your website, email campaigns, web push, pay-per-click ads, etc. This will help you gather insights and create valuable and informative blog posts, videos, and infographics for visitors. Besides, consider implementing referral marketing since it helps bring in qualified leads that are more likely to convert into customers.
- Prospecting. At the prospecting stage, consider a personal approach to your leads. Use industry events as a moment to communicate with your audience and establish trusting relationships with them. You can raise relevant topics to show your company’s expertise and make a positive first impression. Before selling your product, show your expertise to establish trust and credibility. People should know about the company they buy from and its experts.
- Lead qualification. According to statistics, 61% of marketers consider lead qualification their main challenge. Brands qualify prospects to avoid wasting their time and money on attracting leads who have no interest in their solutions. For this reason, you need to make sure that the prospective customers you’ve identified are a good fit for your business. Leverage the BANT (budget, authority, needs, and timeline) method, at the qualification stage. After using this technique, you’ll get to know the main customer insights critical for your company. Then create a list of companies that compete for the same customers’ attention and offer a similar product. Figure out what these prospects like and dislike about other vendors’ products and decide whether these people fit your description.
- Contact. Now that you have your highly qualified leads identified, it’s time to contact people likely to purchase from you. Use a phone call, video meeting, email, demo, physical meeting, or even messenger. There are several things to consider when conducting a meeting or a call. Before setting it up, select the people involved. Decide who will represent shareholders and decision-makers. Secondly, get ready with the agenda. Although you might have some questions from potential customers when you speak about your product, you still need to have a plan to run the meeting smoothly. Webinars, data sets, and case studies will come in handy when discussing results.
- Proposal. Outline the prospect’s pain points, the solution that addresses these problems, pricing information, and terms. To win customers, personalize your offer to meet their needs and requirements. Make every customer feel special and delight them with your solution. Communicate the benefits your potential customers will obtain once they use your product. Make sure to include some accurate data and statistics about the results your solution brings. Besides, ensure that your proposal encompasses FAQs to prevent leads from having no answer to some common questions.
- Negotiations. At this stage, sales reps and marketers answer some last questions and sign the contract. The parties of the deal discuss the scope of work and expectations and adjust pricing. These steps are necessary to develop a beneficial partnership for both a business and a customer. Digital signing will simplify the process and help avoid several problems.
- Retention. Once you close the deal, your work isn’t finished. It’s equally important to retain this client. So you need to keep in touch with customers and keep them updated on your products and news.
Now that you know the stages, let’s jump into the next section to unveil how to build an effective sales pipeline.
How to build an effective sales pipeline?
Your business needs an effective sales pipeline to win customers and close more deals. That’s why we’ve prepared a short step-by-step guide on how to do it.
- Determine the stages of a sales cycle. Make sure that the stages you define match the nature of your business. They should encompass the way customers make their decisions and feedback from different company departments, including marketing.
- Identify goals for each stage. Each sales cycle stage needs to have its objectives since sales reps are highly target-driven. You should identify the number of customers to win to reach the goals. Make sure to analyze the time the sales team spends on sales and non-sales activities to distribute time to perform specific tasks correctly.
- Develop a sales process. If you create a sales process from scratch, you need to define the activities to do at each stage of your sales pipeline. The stage of the sales process determines the tasks your team should perform. For instance, you focus on adjusting the budget, approving it, and composing a proposal document at the proposal stage.
- Create a database of prospects. Sales managers have a list of leads, prospective customers, and clients in front of them. It keeps them updated on the actions they should take to reach these people. Creating a database in CRM enables you to store all necessary data, track interactions, and plan. Your sales reps can always access the software and update data. They can add new leads, tasks, and other marks so that every department knows about the progress of the deals.
- Train your sales team. Your sales representatives should be strong communicators who understand customers' needs. That’s why consider conducting training to educate your team on how to communicate with leads and customers to win their love. Make sure that your sales managers know your product, have a strong pitch, and are confident in their own words.
The process of building an effective sales pipeline is clear, so let’s jump into the 4 key metrics to consider.
4 Key Sales Pipeline Metrics
You need to keep an eye on the most critical metrics to make sure that you go through the sales cycle smoothly. We’ve prepared a list of the key indicators for you to track and stay updated about your business health.
- Customer lifetime value. LTV enables companies to predict the revenue they will generate over the entire relationship with a specific customer. With its help, marketers estimate the profitability of a customer and assess the potential of a business for further growth.
- Win rate. This measure shows the number of prospects a brand managed to turn into customers. Entrepreneurs track the measure over specific periods to see the changes. If the win rate is low, marketers change the strategy, train sales reps, and leverage new marketing tools. If the win rate is high yet your total sales don’t meet your expectations, revise your marketing strategy and tools.
- Average sales cycle. This metric shows the period a company needs to close the deal. After identifying the length of an average sales cycle, marketers find out what deals have longer sales cycles. With this information, you’ll be able to figure out the problems in these deals and find the solution to manage them. Automate the process with CRM to shorten the sales cycle. Often, it’s a human factor that causes the slowing down of the sales process. SendPulse offers business owners to make use of its CRM for free. You can control all your deals and facilitate communication with leads through various channels on one platform.
- Customer acquisition cost. The measure indicates the cost a company spends to win a new customer. After calculating CAC, brands gauge how much they spend on marketing, salaries, and other efforts to bring a new consumer. It helps marketers evaluate the effectiveness of customer acquisition strategy and make some changes to improve it.
Now that you know the metrics, let’s explore the ways to make your sales pipeline better.
3 Ways to Improve Your Sales Pipeline
In this section, we’ll review the three ways to improve your sales pipeline. Let’s explore them in detail.
- Provide users with guides, eBooks, and white papers. To build a list of leads, you should gather their contacts. To do it, you need to ensure your website visitors with valuable materials. Ask users to provide their contact information in exchange for your guides, eBooks, and white papers. Once you receive their contacts, you can send an email campaign that contains the additional information this person was interested in.
- Interact with prospects on social media platforms. Now, when many people worldwide spend their free time on social media networks, businesses need to develop their accounts on these platforms. Sales reps should communicate with leads to establish relationships with them and encourage prospects to convert into customers. Marketers should provide relevant content that might come in handy for visitors, deliver the right message to the followers about the brand’s product, and implement various programs to show users the benefits they can obtain.
- Leverage a CRM. CRM will help you keep the information about all your deals, customers, and leads in one place. With its help, you’ll avoid losing any essential data about your prospects and consumers and keep track of your sales progress. Check out our CRM to figure out how it can help you manage your business.
Congrats, you know how to build an effective sales pipeline, and we hope you’ll do it soon. Make use of our tips to make it perfect and close deals faster
- This article unveils how to build a sales pipeline.
- In this article, you’ll find the difference between a sales pipeline and a sales cycle.
- This article provides the seven stages of a sales pipeline.
Last Updated: 19.04.2022