A company’s method of guiding clients through the sales process, from generating and qualifying leads to closing deals and following up with clients after they make a purchase, is known as its sales pipeline. In terms of which transactions are most likely to close and where sales teams should focus their efforts, a sales pipeline also shows where the best prospects are.

You can monitor the progress of your clients and remain informed about potential problems in the sales process, like a poor conversion rate or neglecting to follow up with warm leads, by having a robust sales pipeline. In the end, a sales pipeline can help you achieve your sales targets and forecast future revenue more easily.

Concepts like the customer journey and sales funnel are related to a sales pipeline. Every one of the three ideas addresses what clients are doing and going through at a certain point. The following are some crucial distinctions to remember:

Sales pipeline	Sales funnel	Customer journey
The process sales teams use to lead prospects toward a purchase.	The path prospects follow toward becoming customers.	Encompasses a customer’s engagement with a brand at every touchpoint.
Stages include generating leads, qualifying leads, nurturing leads, closing deals, etc.	Stages include awareness, consideration, purchase, and loyalty.	A customer journey can be mapped using the stages of a sales funnel.
Focuses on the sales team’s process of closing deals	Focuses on customers’ decision-making about your brand or product	Focuses on customers’ experiences with your brand

Sales pipeline stages 

You may find that sales pipeline stages vary from company to company, depending on their specific needs, customer base, and processes. Some sales pipeline stages may be common to all businesses, as explored below: 

• Prospecting: Actions you might take to reach out to potential buyers and generate leads 
• Qualifying: Process of determining which leads meet the requirements for making a purchase
• Contacting: The moment a sales team member contacts a qualified lead to understand their needs. This might involve scheduling a sales call or product demo.
• Nurturing relationships: Developing and strengthening relationships with prospects at every stage in their journey  
• Offering a proposal: Pitching products or services  
• Negotiating: Strategic conversation between the sales team and a customer to determine the exact price, services rendered, and other details of the deal 
• Closing the sale: The moment when a customer commits and makes the purchase  
• Offering a post-purchase experience: Efforts to engage customers and offer support after they’ve made a purchase   
• Following up with cold leads: Reaching out to unresponsive leads to re-engage them and gauge their level of interest in making a purchase  

Which is The Best Way to Generate Sales Pipeline?

You’ll need information on your target market, customer personas, products and prices, and sales staff before you start developing a sales pipeline. To stay up to date on the most recent information about your company, review and update your business documents, such as your marketing plan, brand strategy, and business plan.

Then, to create a sales pipeline, adhere to the instructions below.

1. Identify prospective buyers.

Review your customer relationship management (CRM) system, as well as social media, email inbox, and other places where you might store customer information. Identify prospects—people who have shown interest in your products or services—and label them according to where they might be in their customer journey. 

In addition, review your buyer personas. The specific problems or pain points your typical customer experiences may determine how you segment and position them along your sales pipeline. For example, you may have customers who are adults with and without children. Both personas may consider different factors when purchasing products and services. 

2. List the stages of your pipeline. 

With your prospective buyer information handy, begin listing every stage of your sales pipeline, using the list of stages above as a guide. Be mindful of the specific needs of your business. For example, selling clothing through an e-commerce website may not need to include proposal and negotiating stages. Or, you may have several components of a nurture sequence that you’ll need to list in your pipeline.

Then, refine your prospective buyer labels to match the stages you identified and begin filling the sales pipeline with prospects. 

3. Identify and assign tasks for each stage.

Work with your sales team to identify the specific tasks and actions to complete at each stage. For example, during the prospecting stage, tasks might include asking current customers for referrals, reviewing your list of followers on social media, or emailing potential buyers.

Then, assign tasks to members of your sales team according to their strengths and experiences. 

4. Determine the sales cycle length.

The time it typically takes to close a sale is an important factor when building a sales pipeline. Consider past sales, the skills of your sales team, the complexity and price of your products, and any other factors that affect the sales cycle length. 

Read Also: How do You Forecast Sales Pipeline?

Then, refine your pipeline stages and list of tasks to accommodate the sales cycle. For example, you may need more time and additional tasks in the negotiation phase for high-priced products purchased by more than one stakeholder. 

5. Define sales pipeline metrics. 

To evaluate the effectiveness of your sales pipeline, you’ll need to identify which metrics you’ll be monitoring. These might include: 

• The number of deals in your pipeline at a given moment 
• Which stages of the pipeline have the most deals
• The number of qualified leads
• Average win rate (the number of qualified leads who become customers) 
• The customer acquisition cost 

5 Important Sales Pipeline Metrics to Track

“Which sales metrics should I track?” is a huge question. But regarding the pipeline, here are five key metrics worth keeping tabs on. They’re all directly relevant to measuring the health of your sales pipeline, giving you info about how well it is (or isn’t) performing.

1. Total number of qualified leads: How many new leads are entering your pipeline?
   • When you apply other formulas to this metric (like the sales pipeline value calculation in the next section), you can use your total number of qualified leads as a basis for forecasting revenue in the near future.
2. MQL to SQL conversion rate: How many marketing qualified leads convert into sales qualified leads.
   • Low MQL to SQL conversion rate? Put your head together with your marketing team to see how to better qualify your leads.
3. Average deal cycle length: How long it takes for a lead to pass all the way through your sales cycle to become a closed deal.
   • Knowing your average deal cycle length lets you spot when deals are moving slower than they should be. You can take action to get them moving or elect to let them go in favor of fresher, faster-moving opportunities.
4. Close rate: How many prospects are ultimately converting into deals.
   • Close rate too low? Explore ways to increase conversions. Close rate looking high? That’s good—but it’s also a sign that this is a good time to start bringing in more leads.
5. Average deal size: The average value of each deal you close.
   • When you know your average deal size, you can spot large deals (i.e., ones worth prioritizing) and small deals (i.e., ones worth dropping if they prove too troublesome).

How to Build a Sales Pipeline from Scratch

So how does one create an effective sales pipeline? The following four actions can help you create a pipeline that attracts deals at a rapid pace:

Step 1: Design Your Sales Cycle

A sales cycle is the buyer journey you create, from awareness and education to negotiation and sale.

According to a study from Vantage Point Performance, the greatest indicator of year-over-year revenue growth is a well-defined sales cycle. The study found a 15% difference in revenue growth between companies with a formal/defined sales process versus those without one.

You probably already have a solid sales cycle, but we’ll outline the five essential stages below so you can compare them to your own.

• Stage 1: Engagement

Sales reps connect with a buyer who shows interest by connecting via prospecting emails (or videos!) or having them come in as inbound leads. Sales then qualify that lead by connecting the buyer with useful content, warming them up, and getting them ready to talk seriously about what your product can do for them.

• Stage 2: Meeting

Your reps schedule and run a brief discovery meeting with the buyer. They’ll discuss the buyer’s pain points, show how your product can solve those issues, and maybe take the buyer through a quick live or pre-recorded demo to show them how it works.

• Stage 3: Education

Teach the buyer more about your product’s features using educational videos, in-depth content, or case studies. The goal is to make the buyer feel informed about the product and personally engaged with the sales rep. (Video selling is a great way to do both. You can explain complex topics in just a minute or two on camera; plus, seeing a sales rep on video makes buyers feel like they’re engaged in a real conversation, not impersonal email back-and-forths.)

• Stage 4: Proposal

It’s time to nail down the scope of your solution, lay out the exact terms of the deal, and write up a contract for the buyer to sign. Video is a great tool here to introduce or walk buyers through the sales proposal. Quick videos can clarify the scope and answer buyers’ questions, all in a format that can be easily shared with other stakeholders.

• Stage 5: Close

Deal signed! Now to fulfill the product they bought. This is also where you’ll pass your shiny new customer off for post-purchase activities like product onboarding.

Step 2: Identify Your Ideal Customers and Target Accounts

Sit down with your sales team and identify the list of potential companies your business could sell to. Characteristics of your ideal target customers will render the total number of customers your business is able to sell to based on your sales strategy. This list is organic—you should update it as often as possible.

The Pareto Principle notes that the top 20% of your customers are responsible for 80% of your revenue, so it’s important to tier your accounts in order to devote the right amount of energy on the front end to identify which prospects will be both efficient and revenue-generating.

Step 3: Find Internal Contacts at Those Target Accounts

Salespeople don’t talk to companies—they talk to humans. The best salespeople are the ones who build authentic relationships. That’s why locating specific internal contacts or gatekeepers within a company is important. Get their names, do your research, and find out who or what you have in common. Be genuinely curious about their businesses and help them create value.

Don’t overlook video’s power to build human relationships while prospecting. A 30-second intro video is all you need to build an authentic connection from the very first touch. The buyer gets to experience you being “there,” putting you ahead of all the other salespeople that they only know through email sign-offs and LinkedIn profiles.

Step 4: Move Qualified Leads Through the Sales Cycle

Divide and conquer! Work as a team to reach out to your prospects and walk them through the process and the journey you’ve created.

Collaborate with your marketing team to create videos, webpages, blogs, demos, and other lead-generating resources that help prospects understand the value of your solution. And mix up your tactics as you go in order to find various messages that resonate and things that work.

Sales training and development are always helpful, even for sales veterans…sometimes, especially for sales veterans.

Closing Words

In short, your sales pipeline should look like a funnel. The top, where leads enter, should be wide. The bottom, where deals close, should be narrow.

However, you might find that your pipeline doesn’t quite fit this shape.

• Too wide in the middle: Deals are stalling mid-funnel. This has knock-on effects for your entire sales pipeline. If your team is spending too much time and effort trying to push those stuck deals along, they aren’t spending enough time gathering new opportunities or closing the deals that are moving.
• Too wide at the bottom: You need to spend more hands-on effort to guide those almost-done deals across the finish line.
• Too wide at the top: Your lead generation is too bloated, meaning that too many leads are coming into the funnel. Your reps might not have enough time to chase every lead. Alternatively, those leads may not be sufficiently qualified enough to make it through the middle and bottom stages.