The complete guide to setting up your sales pipeline

How to properly set up your sales pipeline

A well-structured sales pipeline is the backbone of a successful business. It serves as a guiding framework that not only organizes your sales process but also ensures alignment across your entire go-to-market team.

But why exactly is a robust sales pipeline and why is it so crucial?

What is a sales pipeline?

Far too often we come across businesses who think they have a sales pipeline but they don’t, they just have data in a CRM system.

A sales pipeline should illustrate your entire sales process, allowing your team to monitor customers as they move through the stages (listed below). Your sales pipeline should include the number of deals being handled, their status in the sales cycle, and the value of that deal.

Understanding the importance of a sales pipeline

A sales pipeline is crucial to understanding and growing your business. There are 3 main benefits of a sales pipeline:

A single source of truth to align teams

Your sales pipeline should act as a single source of truth for your team, fostering alignment on lead qualification criteria and reducing conflicts.

When not aligned you get problems with lead attribution, internal silos, finger pointing, churn etc. Remember, your sales pipeline should be an alignment tool.

An accountability tool

Your sales pipeline should hold everyone accountable. That means, everyone needs to understand the stages clearly so they know their role and how they can contribute to moving prospects down the funnel. It should hold everyone accountable, providing clear metrics that leave no room for ambiguity.

There is no hiding behind the numbers here. Everything should be aligned on lead qualification criteria, as well as the targets you’re aiming for.

Historical analyses and customer journey tracking  

If properly set up, your pipeline should allow you to forecast your revenue properly, and analyze and track where your customers and prospects are. This allows you to gain a deeper understanding of customer journeys to identify areas for improvement in your sales process. You should look at metrics like introductory call to meeting follow up rate, proposal to closed won rate, average sales cycle by customer type, and more.

Historical analyses also give you a clear picture of any gaps in the sales funnel and why people might not be converting at a certain stage. For example, why do X people drop off after X stage? Could you benefit from more or better sales collateral? What might you have to address to improve?

Different stages in a sales pipeline

The sales pipeline is the lifeline of any organization, guiding prospects through a series of carefully orchestrated stages before culminating in a successful deal. Each stage is a crucial stepping stone, and understanding the key components of a sales pipeline is paramount for any business aiming to thrive in today's competitive landscape.

Before we jump into the stages, it’s important that you and your teams are aligned on lead scoring. This allows you to prioritize your leads based on a scoring system you set–which involves defining which criteria each contact needs to meet at each stage of the funnel. Lead scoring includes things like demographics, company info, online behavior, website or email engagement etc.

Here are the typical stages for a sales-led business.

Lead generation: The first encounter

The journey begins with lead generation – the process of identifying potential customers who show interest in your product or service. This stage often involves various marketing efforts to create awareness and attract potential clients. The initial touchpoint is crucial, as it sets the tone for the entire relationship. At this stage, the focus is on quickly evaluating if the prospects align with your offering and if there is a potential for a mutually beneficial partnership.

Qualification: Sorting the good from the not so good

After the initial contact, it's time to separate the serious contenders from those who may not be the right fit. Introductory calls help in qualifying leads by understanding their needs, challenges, and whether your solution is the right match. This stage is about efficiency – ensuring that your resources are dedicated to prospects with a genuine interest and the potential for conversion.

Proposal: Understanding needs and setting expectations

Scoping meetings come into play at this juncture. It's time to delve deeper into the prospects' problems and needs, discussing timelines, budgets, and potential solutions. Crafting a tailored proposal that addresses these specifics is crucial for progressing to the next stage. Clear communication and alignment of expectations become paramount to move the deal forward.

Solution presentations: Engaging the stakeholders

Once the proposal is on the table, the focus shifts to engaging key stakeholders. Solution presentations involve showcasing your product or service, addressing concerns, and gauging the level of interest. At this point, understanding the prospects' willingness to invest and whether your offering aligns with their objectives is crucial. This stage often involves less marketing involvement and more direct interaction with decision-makers.

Negotiation, due diligence, or verbal commitment: Navigating the complexities

For enterprise products or larger deals, the process may involve negotiation, due diligence, or securing verbal commitments. This stage is where hurdles like legal and IT considerations may come into play. Understanding the intricacies of the prospects' organizational structure, contracts, and potential roadblocks is vital for a smooth transition to the final stages of the pipeline.

Closing the deal: Bringing it home

The ultimate goal of any sales pipeline is, of course, closing the deal. Whether it's a formal contract signing or a verbal commitment, this stage marks the successful conversion of a prospect into a customer. It's the culmination of the efforts invested in understanding, addressing, and fulfilling the needs of the prospect.

While the outlined stages provide a general framework, it's essential to recognize that the specifics may vary based on the business model, sales cycle, and customer interactions. For instance, a product-led business might have a distinct pipeline, featuring stages such as a free trial, activation phase, and ongoing usage monitoring.

Understanding your business's unique requirements and tailoring the sales pipeline accordingly is key to optimizing the entire process. Whether you're dealing with enterprise-level negotiations or navigating a product-led pipeline, aligning your stages with your business model ensures a more efficient and effective journey from first touch to success.

As a reminder, a quick summary of a general sales pipeline includes:

• Introductory calls to quickly evaluate to see if you’re a good fit
• Scoping meetings to try to understand their problems and what they’re looking for - possibly also talk timeline and budget
• Solution presentations with stakeholders to find out how much they are willing to pay and whether or not they like what you’re offering
• Negotiation, due diligence or verbal commitment for when you have to go through IT or legal or customer reference calls etc.

Sales pipeline vs. Funnel stages

The sales pipeline and sales funnel stages are both essential frameworks in the sales process, but with distinct purposes. The sales funnel represents the entire journey that potential customers take, starting from the initial awareness stage and narrowing down to the final purchase. It encompasses the broader spectrum of prospects entering the sales process and gradually filtering down to a smaller subset of actual buyers.

In contrast, the sales pipeline focuses on specific deals or opportunities within the sales funnel. It visualizes and tracks individual prospects as they progress through defined stages of the buying process, such as lead qualification, meetings, proposals, and closing. The pipeline offers a detailed view of where each deal stands at any given time, providing insights into the current status, potential value, and actions needed to move prospects toward closure.

While the sales funnel concentrates on the overall customer journey, from awareness to purchase, the sales pipeline zooms in on the finer details of individual deals, offering a more granular perspective that aids in efficient management and tracking of specific sales opportunities. Both frameworks complement each other, with the funnel providing a holistic view, and the pipeline offering a more focused, actionable approach to managing sales activities.

8 steps to building an effective sales pipeline

Building an effective sales pipeline is not just about managing contacts, it's about orchestrating a strategic journey that leads from initial engagement to successful closure. A structured Customer Relationship Management (CRM) system serves as the backbone of this process, offering a real-time view of interactions and deal progress at each stage. Here's a quick guide on the steps to build an effective sales pipeline:

1. Identify Ideal Customer Profile (ICP) and target prospects: Effective lead generation begins with a precise understanding of your Ideal Customer Profile. Identify the characteristics that make a prospect an ideal fit for your offering.
2. Define your sales cycle and stages: The foundation of a successful pipeline lies in a clear understanding of your sales cycle. Define the stages that a prospect traverses from initial contact to deal closure. Recognize the pivotal moments in your process and establish a roadmap that guides your team through each stage. For example, how do lead hand-offs happen and who do they go to? There should be a clear outline of roles so you can move prospects quickly.
3. Documentation: Before embarking on constructing your pipeline, document your sales process meticulously. Detail each step involved, ensuring that every team member comprehends their role in the overall process. This documentation not only fosters clarity but also sets the stage for continuous improvement. (Note: It’s a good idea to have a signed SLA so nothing falls through the cracks.)
4. Move leads through the sales cycle: Once leads are in the pipeline, employ strategies and campaigns to guide them seamlessly through each stage of the sales cycle. This involves consistent communication, addressing concerns, and understanding evolving needs to ensure a smooth progression towards deal closure.
5. Manage the pipeline: Proactive pipeline management is crucial for identifying and resolving bottlenecks. Regularly review the status of deals at each stage, allocating resources strategically to push stalled deals forward and guide almost-done deals to closure. You can even re nurture cold leads back into the pipeline to see exactly where you're losing.
6. Identify and assign tasks for each stage: Assign specific tasks and responsibilities for each stage of the pipeline. This ensures accountability and clarity within your sales team, preventing tasks from falling through the cracks and contributing to a more streamlined process.
7. Define & track sales pipeline metrics: Leverage your CRM to define and track key metrics that provide insights into your pipeline's health. Monitor metrics such as the number of Qualified Leads (QLs), MQL to SQL conversion rate, average deal cycle length, and close rate. These metrics offer a quantitative assessment of your pipeline's performance.
   • Calculate the value of your sales pipeline:
   • (Number of deals in your sales pipeline) x (Your average deal size)
   • If you can accurately calculate your sales pipeline value, you can confidently set revenue goals for this month, this quarter, or this year.
8. Evaluate pipeline shape: Analyze the shape of your sales pipeline, which ideally resembles a funnel – wide at the top and narrow at the bottom. Deviations from this shape can indicate specific challenges:
   
   • Too wide in the middle: Address stalling deals mid-funnel to maintain a smooth flow.
   • Too wide at the bottom: Provide additional support to guide deals across the finish line.
   • Too wide at the top: Optimize lead generation to ensure a manageable influx of qualified leads.

By following these steps and continuously refining your approach based on metrics and insights, you can construct and maintain a sales pipeline that not only captures leads but efficiently transforms them into satisfied customers.

Common challenges of sales pipelines

There are several challenges you might encounter when building your pipeline.

• Defining and aligning entry and exit criteria: A successful sales pipeline hinges on having clear entry and exit criteria that everyone understands. When these criteria aren't aligned, problems like finger-pointing and lead attribution arise. To avoid this, ensure consistency across all teams, fostering a collaborative environment.
• Leakage and bottlenecks: Leakage, where potential deals slip away, and bottlenecks, where deals get stuck, are common issues. Identifying and addressing these problems promptly is crucial. Regular reviews and smart resource allocation help plug leaks and keep the pipeline flowing smoothly.
• Lead quality or quantity: The quality and quantity of leads impact pipeline efficiency. Challenges may arise with too many unqualified leads or too few high-quality ones. Finding the right balance requires continuous monitoring and fine-tuning of lead generation strategies.
• Long sales cycles: Extended sales cycles can dampen team morale. Developing strategies like targeted nurturing campaigns and regular communication helps keep the team motivated and focused during lengthier sales processes.
• Misalignment of sales and marketing efforts: Ensuring alignment between sales and marketing is an ongoing challenge. Miscommunication, redundant efforts, and missed opportunities can result from a disjointed approach. Foster collaboration, set shared goals, and maintain open communication to bridge the gap.
• Overcomplicating the pipeline: There's a risk of overcomplicating the pipeline with too many stages. This can lead to confusion and frustration among the team. Simplify the pipeline, ensure each stage serves a specific purpose, and avoid unnecessary complexity to keep things running smoothly.

Successfully tackling these challenges requires strategic thinking, ongoing evaluation, and a commitment to a transparent sales environment. By addressing these hurdles head-on, businesses can ensure their sales pipeline remains a powerful tool for alignment and success, steering clear of discord and maintaining a straightforward and effective sales process.

Best practices for building your sales pipeline

There are several best practices for building your sales pipeline. The first cornerstone in building a robust sales pipeline is the art of simplicity. By simplifying stages, businesses create a clear roadmap for their teams, ensuring that everyone is on the same page. Avoid unnecessary complexities that can lead to confusion, delays, and frustration. A streamlined pipeline allows for more efficient navigation, enhancing overall productivity.

There are five other best practices you should consider:

1. Seamless integration with calendars and emails: Accurate activity tracking is the lifeblood of a successful sales pipeline. Ensure your pipeline integrates seamlessly with calendars and emails, providing a real-time view of interactions and engagements. This integration not only facilitates meticulous record-keeping but also enables teams to stay on top of crucial follow-ups, appointments, and deadlines.
2. Setting realistic sales goals and targets: Building a sales pipeline without clear goals is akin to sailing without a destination. Set realistic and achievable sales goals that align with your overall business objectives. Break down these goals into specific targets for each stage of the pipeline. This not only provides a roadmap for success but also motivates your sales team with clear milestones to strive for.
3. Cultivating a collaborative environment among sales and marketing teams: A cohesive and collaborative sales team is the heartbeat of a successful pipeline. Foster an environment where communication flows freely, and each team member understands their role in the process. Break down silos, encourage knowledge-sharing, and create a sense of unity. A collaborative team can navigate challenges more effectively and capitalize on opportunities with collective effort.
4. Encourage continuous improvement and adaptation: Adaptability is key to longevity. Encourage a culture of continuous improvement within your sales team. Regularly evaluate pipeline performance, gather feedback, and be open to tweaking your sales approach based on changing market dynamics. Embracing change ensures that your pipeline remains resilient and responsive to evolving customer needs.
5. Celebrating milestones and successes in the pipeline: Acknowledging achievements, both big and small, is vital for maintaining team morale and motivation. Celebrate milestones in the pipeline, whether it's securing a significant deal, surpassing a target, or achieving a record conversion rate. Recognition fosters a positive atmosphere and fuels the drive to replicate successes.

Pro Tip: Make sure every interaction is documented. Never let your marketing team pass off leads to sales with no notes on interactions or when they followed up. There needs to be a paper trail for every lead that comes in to ensure a smooth process for everyone.

Constructing an effective sales pipeline is an ongoing journey that demands a blend of strategic planning, adaptability, and a keen understanding of your business dynamics and your customers. By embracing these best practices, businesses can forge a sales pipeline that not only meets industry standards but propels them towards sustained success and growth.

Remember there’s no one-size-fits-all sales pipeline–you must tailor your pipeline to align with their unique characteristics. Product-led companies, for example, might incorporate stages like activation, usage, and churn, especially if they offer free trials. On the other hand, enterprises dealing with complex sales may need stages involving multiple stakeholders and rigorous due diligence processes. Customizing your pipeline ensures it aligns seamlessly with your business model and goals.

See more leads with an effective sales pipeline

Setting up an effective sales pipeline is not just about tracking interactions; it's about a seamless journey from prospect to closed deal. More specifically, it involves understanding your sales process, documenting it meticulously, and tailoring the pipeline to suit your business model.

Need help setting up your sales pipeline? Reach out to us.

TL;DR: Building an effective sales pipeline

A sales pipeline is the lifeline of your business, mapping out the journey from initial contact to closing the deal. It's not just about having data in a CRM; it's about a structured process that guides your team and aligns your sales efforts.

Stages of a sales pipeline:

• Lead generation: Identify potential customers
• Qualification: Separate serious prospects from the rest
• Proposal: Discuss prospects' problems, needs, timelines, and budgets
• Solution presentation: Engage key stakeholders with your offerings
• Negotiation/Due diligence: Address legal, IT, and organizational concerns
• Closing: Finalize the deal, turning prospects into customers

Steps to build a sales pipeline:

• Identify Ideal Customer Profile (ICP): Focus on targeted lead generation
• Define sales cycle and stages: Establish clear stages from contact to closure
• Document processes: Ensure clarity and accountability
• Guide leads through the cycle: Employ strategies for smooth progression
• Manage the pipeline: Regularly review and address bottlenecks
• Assign tasks: Clarify responsibilities for each stage
• Track metrics: Use CRM to monitor performance indicators
• Evaluate pipeline shape: Analyze for optimal flow and address issues
• Encourage continuous improvement: Adapt and refine strategies based on feedback

Best practices:

• Keep stages and communication simple
• Integrate your pipeline with calendars and emails for better tracking
• Set realistic sales targets
• Foster collaboration between sales and marketing
• Celebrate milestones to maintain motivation

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