4 Steps to Build a Strong Sales Pipeline
All sales pipelines are custom to a company, but they all largely follow a similar core structure. A contact in the pipeline is moved from stage to stage until they either fall off the pipeline or are closed and become a customer.
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Before we start...
Are you using a CRM to manage your pipeline?
Are you using a spreadsheet?
Either way, this article will help you structure your sales process. But you will really get the maximum out of this article if you have a CRM in place. If you don't HubSpot has a great free CRM. We highly recommend it.
Modern CRMs display the sales pipeline in a visual roadmap for you and your sales team. This makes it easy to see in which stage of your buyer's journey a prospect is, at any point in time.
Below is an example of one of our client's pipelines. They financial sell software.
This client only has four stages in their pipeline. But its works really well for them. Sales are fast-paced and decisions are made quickly.
Lead Validated > Demo Completed > Closed Won > Closed Lost
A clear pipeline allows salespeople and managers to create realistic revenue forecasts.
It enables them to see how many opportunities are pending, what probability of closing they have, estimated monthly revenue, and how many of those deals might close in a given timeframe.
Not all opportunities will move through every stage in the sales pipeline.
For example, referrals tend to jump a couple of pipeline stages because they enter the pipeline pre-qualified. They don’t need to go through the Prospecting stage because they have proactively sought your business out. They can move directly to the Qualifying stage.
Opportunities in any sales pipeline will all have a range of interest, urgency and context about your company, products or services. A flexible point of entry into your pipeline is a must.
4 steps to building a strong sales pipeline:
Step 1: Define the stages of your sales pipeline
The stages of your sales pipeline (also called your sales cycle) will depend on multiple factors including, your business model, sales strategy, sales process and your products and services.
Some businesses might have a sales pipeline for each department, some might have a pipeline for each product or service, and for some businesses just a single pipeline for the entire business is adequate.
Image source: Salesforce.com
The most common stages of a sales pipeline include:
Prospect > Connect > Qualify Lead > Present Offer > Closed Won > Closed Lost
But it can also look like this:
Prospect > Connect > Appointment > Qualify Lead > Product Demo > Solution Design > Present Offer > Closed Won > Closed Lost
Or this (This is our own ‘New business’ pipeline),
Prospecting > Appointment Scheduled > Needs Analysis > Qualified to Buy > Presentation Schedules > Decision Maker Bought In > Quotation Presented > Signaled Intent to Sign > Closed Won > Closed Lost
Your pipeline needs to reflect your sales process’s unique requirements.
Step 2: Figure out your sales funnel metrics
Figure out how many opportunities move to the next pipeline stage. If you have 100 opportunities in ‘Prospecting’ how many typically move onto a ‘Connect call’? 30%?
Image source: HubSpot.com
Not every opportunity will move to the next sales pipeline stage. Some opportunities are simply not a great fit. Some may not have the required budget, and some might only want to purchase next year.
Working backwards, calculate the number of opportunities needed at every stage of your pipeline to hit your revenue goals.
You need to establish a clear baseline of how many opportunities generally move from one pipeline stage to the next. This analysis will give you a solid idea of how many opportunities you need to target in each stage to hit your revenue number.
If you generally close 1 in 10 opportunities, and your monthly target is 5 deals per month. You must have at least 50 new opportunities enter your pipeline every month to hit your target of 5 closed won deals.
Step 3: Look for patterns of success
Analyse the commonalities that convert opportunities from stage to stage in your pipeline. Are there common triggers like a demo or a particular follow up email?
(For the people using spreadsheets, you can't do this... Sign up for HubSpot CRM!)
If you can understand these metrics, you can start to understand what makes your opportunities convert.
Having a defined process enables you to see the patterns, and if you can see the patterns you can improve the process to optimise ROI on your sales efforts.
Step 4: Evolve your sales process
Create a sales process or adapt your existing one around these new numbers and patterns of success. Now that you have data-driven information at your hands, it’s time to create a rock-solid sales pipeline.
Just remember that the best sales processes are ones that can evolve over time and adapt to the demands of the business, sales team and particular industry.
By keeping your eye on the numbers and breaking your sales cycle up into stages in your sales pipeline - you can constantly monitor the success of each stage and have the ability to consistently tweak your sales process.
We are always surprised to see how many companies manage their sales process on multiple spreadsheets. Some of these companies run highly profitable sales teams - imagine what their performance could be if they could dig into and remove the bottlenecks in their sales process.
Have you got a sales team or process that you’d like to optimise? Give us a call we love sharing our thoughts.
Interested in how we do it at MO? Download this guide: