If you’re starting out in your first sales role, you’re probably realising that there are a lot of terms and processes to get your head around.
One of the most important things to familiarise yourself with, is your company’s sales pipeline.
Being able to see where different prospects are in the buying process is crucial if you want to start smashing your sales targets.
But what on earth does ‘sales pipeline’ even mean? We’re going to talk you through:
- What a sales pipeline is
- The difference between a sales pipeline and a sales funnel
- What the steps in a sales pipeline
What is a sales pipeline?
A sales pipeline describes the steps of your sales process - from qualifying leads to closing deals.
It provides sales teams with a visual way of seeing where their prospects are in the sales process and what activity has occurred so far.
It also demonstrates which prospects are stuck in a particular stage, which have become lost leads and which sales activities are the best for conversion.
As sales prospecting occurs, leads are qualified and then start to move down the process with the aim of converting as many of these leads to paying customers.
It’s important to move deals along the pipeline as they progress, as sales managers use the pipeline as a way of predicting revenue and estimating the number of deals that will be closed in any given month - this is normally based on what stage deals are in the pipeline and the general lead time it takes for your typical customer to convert.
It also allows sales teams to see how many opportunities they actually have at each stage and whether there is enough of a balance between each stage to ensure deals are consistently being closed.
Are sales pipeline and sales funnel the same thing?
Often the term “sales pipeline” is used interchangeably with “sales funnel”. Although they are both working towards the same goal, they serve two separate purposes.
The sales pipeline is what determines what actions the sales team must take for each prospect at that particular time and shows which stage individual prospects are in.
The sales funnel, on the other hand, is all about the metrics and is a lot more general. It shows an overview of the number of leads to pass through each stage in the funnel and often the conversion rate of each stage. It is more about the number of opportunities moving through the flow rather than what stage each individual is at.
Hence the shape, the sales funnel has lots of leads at the top (in the contact stage as you’ll see below), and as you progress past awareness and into qualification, the number of leads will lessen as unqualified or lost leads are removed from the pipeline and so conversion rate should then start to improve.
In summary, a pipeline reflects what actions the sales rep does at each stage at the funnel to try and convert each individual lead and a funnel measures the conversion rate through the customer journey.
What does a sales pipeline look like?
Working hand-in-hand, here’s what you could expect a sales funnel and the stages of the sales pipeline to look like:
The diagram shows the most common stages pipelines and funnels tend to use. And is a good starting point if you’re building these things from scratch, but as you learn more about your customer journey and successful sales tactics, this will be adapted depending on your own business requirements.
The stages of the sales pipeline
Let’s dig into what each of the stages of the sales pipeline actually does:
This is part of the awareness stage of the sales model. It is where your new leads first learn about your product or service. Contact with potential customers can be done either by sales or marketing.
The marketing team will carry out mass-lead generation activities to try and create brand awareness and get in front of as many opportunities as possible. Activities like keeping the business website up-to-date, paid advertising, social media and events will be used during this time with the goal being to increase customers sign ups to your product or service or express some interest via a contact form or online chat so that enough information is gathered to pass onto the sales team to prospect.
Alongside this activity, many sales teams do outbound selling at this point too. Cold calling, networking events and cold emails are examples of this. This is known as sales prospecting.
As leads sign up to, or show interest in, your product or service, it’s important to qualify them. This is the job of a sales development rep.
Lead qualification is also part of the sales prospecting process and involves researching each individual lead to understand who they are, what they do and what their business needs and goals are. Once you have done your research, you can base the information you find on deciding whether they’re a good fit for your business.
Qualification questions may include things like:
- Would they benefit from your product or service?
- Do they have the budget to purchase?
- Is it a good time for them to buy?
Knowing this information is very important as it gives the sales team an opportunity to best-guess whether a lead is a good fit for the business and are likely to eventually convert into a paying customer before even picking up the phone to give them a call.
If done properly, it can result in less time-wasting conversations as you are not putting energy in trying to convert a lead that isn’t going to be interested.
Once you start to qualify prospects, it’s a good idea to prioritise them so you know who to reach out to first.
A bad sales rep will contact a lead cold and try and sell within the first 10 seconds.
A good sales rep will build relationships with opportunities. This may include connecting on social media, reaching out with something of interest to the lead or their industry, or just making an introduction, showing interest in what they’re doing. This is where the research that is done during sales prospecting comes in handy. It gives you the base to strike up a conversation with relevant news or information that is useful for that one client personally.
By building rapport you build trust. By building trust, your leads are much more likely to give you the time when it comes to you trying to convince them to buy your product or service. As, by this point, you have proven to them that you have a keen interest in what they’re doing and understand their needs and requirements.
This stage tends to be completed by the more senior member of the sales team. This is where you have pitched your product and are asking the lead to become a paying customer.
The proposal you give them will outline a contract for your product and services - this will include information on what they will receive when they buy from you, how the product or service will benefit them and provide a solution to the problem you’re advising your business will solve and the price of what you’re offering.
By this stage, you will find you will have relatively low numbers of leads in the pipeline but the good news is, the customer has got high intention to buy from you and are likely to convert.
The final step in the initial sales process is closing the deal. Won/lost is how you’d categorise your lead based on whether they ended up signing the proposal you sent them and became a customer or not.
As the terminology suggests, “won” leads are those who have become a customer, “lost” leads are those who decided that your product or service wasn’t right for them.
You may also find that some leads go completely silent at this stage. They do not sign on the dotted line, nor do they contact you to let you know that they’ve decided against buying your product or service.
If you try, but fail, to get in touch with these people then it may be that they’re just not ready to buy yet, but aren’t totally lost leads. I’d suggest marking these as cold and perhaps re-engaging them with some marketing content in the meantime before trying to get back in touch with them directly at a later time.
One of the things that often falls to the wayside in sales teams is retention. The focus is so heavily put on closing the deal, that many businesses forget about actually needing to keep them.
But having retained customers is just important as getting them to buy the first time with 65% of a company’s business coming from existing customers.
Therefore its imperative that Retention has its own stage in your sales pipeline
How retention works depends on your business model. For physical one-off purchases, you would try and upsell to customers. For Saas products, this would include providing a clean onboarding process that helps to convince them your tool is perfect for their requirements and then selling upgrades and additional features.
So, that’s it. That’s the basics of what a sales pipeline looks like. It differs for every business but the premise always remains the same. To get leads from finding your product or service and leading them on a journey to turn them into a paying customer.
At Ricochet, we help you throughout the sales pipeline. Our browser extension provides you with the information you need to be able to research and qualify a lead in just one click, while you’re browsing their website. This includes a business overview, social media links, the latest press and blog articles and business competitors in similar markets.
Ricochet is completely free for you and your sales team. You can download it in the Chrome store here today to make sales prospecting easier and quicker than ever before.