The complete guide to building a sales pipeline

Understand what a sales pipeline is and how it can help your business

What is a sales pipeline?

A sales pipeline is a visual representation of your sales process. It’s an organized image that allows your team to track buyers as they progress through the stages in the purchasing process. A pipeline shows you the number of deals your team is working on, where they are in the sales process, and how much each deal is worth.

Why is this important? Visibility into your sales process is critical when it comes to hitting revenue targets and managing your sales team. Without a sales pipeline, your sales reps are flying blind.

Sales funnel vs sales pipeline

The terms “sales pipeline” and “sales funnel” are often used interchangeably, but they are not the same.

  • A sales pipeline is about deals: A pipeline refers to the steps in your sales process a sales rep takes while moving a deal from initial contact to close.

  • A sales funnel is about leads: The funnel includes the stages in the buying process your potential buyers move through before becoming customers.

Your go-to guide to understanding the sales funnel

Learn more

6 Stages of a sales pipeline

There’s no one way to build a sales pipeline; depending on the company and the industry, some processes have fewer stages while others have more.

“We follow a low-touch sales model.,” says Waqar Azeem, founder of ContentStudio. “A deal enters the sales pipeline either through trial sign-up or directly booking the demo meeting. We have six pipeline stages in our sales pipeline including trial sign-ups, sales qualified leads, demo scheduled, on-hold, ready to purchase, and deal won/lost.”

It’s important to design the pipeline that works best for your individual business. However, any business that follows a typical B2B sales process, is likely to have the following sales pipeline stages:

Lead generation

Before you can sell to them, potential customers need to know your business exists. There are many ways to generate leads for your business; these include paid and non-paid campaigns on social media, research through online searches and LinkedIn, cold calling or cold emailing, or inbound marketing strategies. Typically, sales leaders create an ideal customer profile with certain set parameters, and try to reach prospects who fit this profile. 

Let's say you're running a digital marketing agency that specializes in helping small businesses improve their online presence. Your goal is to find potential clients who are interested in your services. To generate leads, you might employ the following strategy:

Content marketing: Create high-quality blog posts, videos, and infographics related to topics relevant to small business owners, such as "Top 10 Ways to Boost Your Website Traffic" or "Social Media Strategies for Local Businesses." These pieces of content provide value and showcase your expertise.

Opt-In offers: Created free gated content, like an e-book or downloadable guide. Visitors can access this valuable resource by providing their contact information.

Email marketing: Send out regular newsletters containing valuable insights, tips, and updates related to digital marketing. Include calls-to-action (CTAs) that encourage readers to learn more about your services or request a consultation.

Paid advertising: Run targeted online ads through platforms like Google Ads or social media. Direct these ads to specific landing pages optimized for lead generation.

Referral programs: Implement a referral program where existing clients can refer potential leads to your business in exchange for discounts on your services or other incentives.

Search engine optimization (SEO): Optimize your content for relevant keywords that potential clients might search for. When your website appears in search results, it attracts organic traffic and generates leads.

Cold outreach: Reach out to potential leads directly via email or social media. Personalize your outreach to demonstrate that you've done your research on their business and understand their needs.

Lead qualification

Qualifying a lead is another way of “finding out if a potential customer will buy.” This is a crucial step in the sales process; you don’t want your salespeople wasting time and energy on a sales prospect who is unlikely to buy. To find the right buyer, you’ll need to find out a few things:

  • Can your product solve the buyer’s pain points?

  • Can your prospect actually afford your solution?

  • Does your contact have purchasing power, or should you be talking to their boss?

A couple of the most common examples of lead qualification methods include lead scoring and the BANT framework: 

  • Lead scoring: You assign a lead score to each potential lead based on their interactions with your content. For example, you might give higher scores to leads who have visited your pricing page, watched a product demo video, and signed up for your newsletter.

  • BANT criteria: You use the BANT framework (Budget, Authority, Need, Timeline) to assess the quality of each lead:

    • Budget: You determine whether the lead has the financial capacity to purchase your software.

    • Authority: You find out if the lead has the authority to make purchasing decisions within their organization.

    • Need: You identify whether the lead's needs align with the features and benefits of your project management software.

    • Timeline: You inquire about the lead's timeline for implementing a new project management solution.

If the prospect isn’t a good fit, that’s ok. Move on to a prospect who is more likely to make a purchase.

Initiate contact

 At this point in the sales process, the sales rep attempts to contact the lead in order to better understand their needs.

Depending on your lead generation methods, this can look different. Here are some examples: 

  • Cold calling or emailing: After researching prospects on LinkedIn, your team may make contact with the most promising looking potential customers by calling, emailing, or messaging them on social media. 

  • Warm calling or emailing: Using the information from inbound lead generation, your team contacts the prospects using information gathered  when the prospects signed up for a gated asset or webinar. 

Such an email might look like this: 

Subject: Exploring Opportunities for Your Business's Online Presence

Hi Alex,

I hope this email finds you well. My name is Stacy and I'm a representative at Web Design, Inc. I noticed that you've been exploring ways to enhance your business's online presence, and I believe we can help you achieve your goals.

We specialize in creating modern and user-friendly websites that not only showcase your brand but also drive results. I've taken a look at your current website and your business's online presence, and I'm excited about the potential we see.

We understand that every business is unique, so our approach is tailored to your specific needs. Whether you're looking to revamp your existing website, optimize it for better search engine visibility, or create an entirely new online platform, we have the expertise to make it happen.

I'd love to learn more about your business's objectives and how we can support you in achieving them. Are you available for a brief call sometime this week? During our conversation, we can discuss your goals, challenges, and any specific features you have in mind for your website.

Feel free to reply to this email with your availability.  I'm looking forward to the opportunity to connect and explore how we can work together to take your business to the next level.

Best regards,

Stacy

The nurturing stage helps you map your business services against the lead’s needs, but it also serves as a way to start building the customer relationship. The nurturing process begins here.

Schedule meeting or demo

After your initial conversation, if the customer is interested in your services, a sales rep might schedule a demo or a meeting with the main decision maker. These steps will help you negotiate the deal and further sell the prospect on your product.

Traditionally, this meant reps would travel to a prospect’s office to demo a product in person, but these days it’s much more common for SaaS products to be demonstrated online. For example, a CRM might be shown to a client during a video conference so the client can see all the new features. There might also be a product expert on the call to answer technical questions about integrations and system requirements.

Negotiation

The lead has expressed interest, they’re a good fit, and the decision maker is willing to purchase from you. Now it’s time to negotiate the deal. During this stage, your team works out the details, including price, services, conditions, and anything else that needs to happen to make the deal work for all parties. During this phase, you might connect the buyer with your help desk to work out software requirements, integrations, and whatever else is needed to make the product work for the client.

This step involves conversation with a decision maker who has the authority to make purchasing decisions. It may also involve working with a decision-maker on your end who can authorize deals, discounts or other incentives. 

Closing the deal

This is what you’ve been working toward: the final stage in your sales process. It’s time for your rep to ask for the sale. 

If the customer isn’t yet ready to buy, don’t write them off just yet. Instead, mark them as ‘nurture’ and check back later. They may be ready in a few months.

Lead management starts with knowing your leads

Manage leads better

How to build your sales pipeline in 6 easy steps

1. Identify list of prospective buyers and stages

As a first step, consolidate all your potential customers into your sales pipeline, and place them in different deal stages, depending on where they are in the buyer’s journey:

  • If a salesperson has sent out a promotional mailer to a prospect, that deal is in the initiate contact stage of your pipeline.

  • If a prospect has requested a demo of your product, the deal is in the schedule demo stage.

  • If a prospect has shown a willingness to buy, has responded to your emails, met your salesperson, and is discussing, that deal is in the closing the deal stage.

Identifying which stages each deals are in helps you visually categorize your sales opportunities.

2. Assign sales activities for each stage

Do you know which sales activities are likely to move your deals to the next stage of the pipeline?

Sales activities are the specific actions taken by your salespeople to make a sale. These include

  • Sending emails

  • Making calls

  • Tracking email metrics

  • Following up with a lead

Sales activities are most effective when they are done during a specific stage of the sales process , but many sales teams scatter their activities across different stages of the pipeline.

Organize your activities by assigning them to certain reps at different stages of the sales process. That way every salesperson knows exactly what they are supposed to be doing at every stage of a deal.

3. Define sales cycle length 

Your sales pipeline is heavily dependent on your sales cycle and how quickly your salespeople close deals. The length of a sales cycle depends on a number of factors, and often varies, based on the following factors:

  • Complexity of the product- The more complex your product is, the longer the sales cycle tends to be. With complex products, multiple people and teams are often involved in the sales process in order to help the prospect understand the product.

  • Customization: If your product requires customization, the deal will likely take longer because your team will have to tailor the product to your customer’s requirements.

  • Source of leads- What’s your sales strategy? If you rely on outbound sales techniques, like cold calling and email marketing, your sales cycle will typically be longer than a company that relies on inbound leads.

 By fine-tuning your product delivery, lead sources, and sales engagement, you can control your average sales cycle length. 

4. Decide ideal pipeline size

Knowing how many deals are in your pipeline (and finding the ideal pipeline size) is critical for achieving your sales targets and meeting your team’s revenue goals for the year.

You can determine your ideal pipeline size by working backwards: figure out how many deals your team needs to close for the year to hit your target. (Going after the target is not enough, as many deals rot over time, and may not convert to a sale. In fact, an estimated 24% of forecasted deals go dark.)

This might look something like this:

  • Your team needs 50 deals to close every month in order to hit your revenue targets.

  • For every 50 deals your salespeople pursue in a month, 10 or 12 deals may become stagnant over time.

  • Therefore your team should pursue 70 deals every month instead of 50 to realize your sales goals. 

You can use that information to determine monthly or quarterly sales targets for all your salespeople by dividing quarterly revenue by average deal size.

5. Remove stagnant deals from the pipeline

Unlike wine, deals don’t age well. As time passes, the likelihood of winning a deal diminishes, and the deal is likely to rot in your pipeline.

A pipeline full of rotten deals can distract your team from the opportunities that are likely to close. For this reason, you should keep track of the age of your deals; any stagnant deal that exceeds your sales cycle length should be on your radar. Check in with the prospect one last time, and then remove it from the pipeline.

This process will help you clean up your sales pipeline by getting rid of old deals that are unlikely to convert. It helps to have a CRM that automatically alerts your team to stagnating deals.

6. Define your sales pipeline metrics 

Sales pipelines are great visual aids for sales managers to track and monitor their salespeople. 

Pipelines constantly change, however. Monitoring specific sales metrics can help track the health of your pipeline on a regular basis. Tracking sales pipeline metrics on a regular basis will help you identify how many deals your team needs to bring in to meet targets and earn profits for the year.

What sales pipeline metrics should you track?

There are three different types of knowledge to gather:

Number of deals in pipeline

At any given time, you need visibility into the number of deals being pursued by your sales team. Knowing the number of deals in your pipeline gives you visibility into your team’s workload and a way to predict revenue.

Number of deals in pipeline = Number of qualified opportunities in the pipeline

Average deal value 

Every lead in the pipeline is worth a certain amount of business. While a deal’s value may change over time, an approximate deal value will help predict revenue. 

Don’t just focus on the biggest deals. Focus on deals where the prospect shows interest in your product and is willing to invest. Sometimes, a series of small wins is more profitable than one big win.

Average deal value = Sum of value of all deals won/number of deals won

Average win rate

Many opportunities find their way into the sales funnel, but how many actually convert into a sale? Tracking the average win rate for your team and individual sales reps will help you gauge this metric. The win rate is an important tool for a sales manager; it will show you which salespeople need more support to improve their performance.

Average win rate = Qualified leads/opportunities

Conversion rate or lead to opportunity ratio

Opportunities may be won or lost, but is your sales team able to convert them into leads? This metric is a way of showing how hard your team is working to develop leads.

A word of caution, however: While opportunity conversion rate is a good metric to track, it might give you the whole picture. If a salesperson is focused on bringing in new leads for next month, but their conversion rate for the current month is low, you may not realize how many valuable leads are in their pipeline. For this reason, conversion rate is a long-term metric, rather than a short-term one. 

Lead to opportunity ratio = Closed deals / total deals in pipeline

Sales cycle length

Sales cycle length refers to the amount of time it takes for a lead to move from initial contact to a sale.

For smaller deals, a typical B2B sales cycle is around 3 months. For larger and more substantial sales, a B2B sales cycle is more likely to fall between 6 and 9 months. Typically, your sales cycle length will be shorter if you’re selling to SMBs and longer if you’re selling to enterprises because of the number of gatekeepers and processes involved.

Pipeline value

The sum total of all deals in the sales pipeline refers to pipeline value. Pipeline value helps you predict revenue in the coming months and plan your bootstrap strategy. 

Pipeline value = Total value of all deals in the pipeline

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How to manage your pipeline 

1. Conduct sales pipeline review meetings

Your pipeline is constantly changing. Analyzing your pipeline through regular review meetings helps you understand:

  • The status of deals

  • Additional deals needed to reach revenue goals

  • The effectiveness of your team

Pipeline reviews enable you to forecast revenue for the month/quarter/year (for senior leadership) and gauge the depth of prospecting in every account (for first line managers). 

It is a good practice to inspect your pipeline every month and meet weekly with your salespeople to talk about real opportunities moving through the pipeline, and about where your process is stagnating.

Learn more about nuances of sales pipeline review meetings

2. Use a CRM to track your deals 

Stay on top of all the deals in your pipeline with the help of CRM software, or customer relationship management software. A CRM can help you track the customer journey as well as sales activities.

For example, if you’re in your CRM’s Pipeline View and notice that a rep missed following up on a deal, you can remind them to email or call the lead - which they can do right from the CRM. This functionality keeps your reps in one app, instead of wasting their time trying to manage more than one tool.

By having an efficient, free sales CRM as part of your pipeline strategy, you can do away with manual tasks that eat away your salespeople’s precious time. Sales teams can send out reminder emails, set up calls and schedule demos automatically.

3. A word about spreadsheets

Many small businesses track their pipeline using spreadsheets. Unfortunately, while this may seem like a simple way to track sales, this approach can get complicated fast. Salespeople may make copies of trackers, forget to update them, or ignore them altogether.

A CRM is a single source of sales truth: your team performs sales activities, conducts outreach, and manages deals directly from the CRM tool, which provides color-coded insights to you at a glance so that you know how efficiently each salesperson is closing deals and meeting business targets. 

Learn how to track deals in your sales pipeline

4. Encourage collaboration 

A sales pipeline is not just for the sales team; the entire organization needs to be in sync in order for deals to close. For your organization to collaborate well, several teams should have visibility into the sales pipeline, such as:

  • inbound and outbound sales

  • marketing

  • product

  • finance

  • C-level leadership

Learn more about all-in-one CRMs 

5. Create sales pipeline reports

Your pipeline can get stagnant if you don’t gauge your sales metrics and take corrective action on a regular basis.

 A pipeline report will help you track how quickly a deal is moving through the pipeline, help you take corrective measures to keep it moving if it is stagnant, and help close deals for the quarter quickly.

Create sales pipeline reports automatically using a CRM that provides custom templates. This can help you crunch numbers quickly, estimate incoming cash flow, and consolidate your pipeline strategy accordingly. 

Create pipeline reports

6. Avoid manual tasks

According to Forrester, automating workflow can help save 90% of costs while increasing the efficiency and productivity of your team. A CRM can help automate manual tasks in the pipeline, so your salespeople can do what they do best: close deals.

With CRM software, you can:

  • prioritize and score leads based on a lead’s job title, industry type, and company size

  • automate emails, pick from existing email templates, and even customize bulk emails

  • assign leads by geography, industry type, company size, and deal value so sales rep can get in touch with prospects quickly and easily

Learn more about CRM here

7. Customize multiple sales pipelines

If you have multiple sales teams, sell several products, or target more than one market you need to expand your sales processes as well.

Rather than trying to expand one sales process for every product or market, create multiple sales pipelines with their own specific deal stages. A sales pipeline management system lets you customize the stages in several sales pipelines based on your business needs and internal structure.

“Our sales pipeline typically starts with an agency reaching out to us and then going into the discovery phase (demo call, questions about our agency program, etc.) but once we close a new agency — that’s actually when the real work begins,” says Raul Galera, partner manager at Candy Bar.  "As those agencies bring new customers to our business, a new sales pipeline starts all over again."

Get multiple sales pipelines for your business

6 Common sales pipeline mistakes 

1. Letting the pipeline go dry 

If you don’t understand your win rate, sales pipelines can be deceptive. It might look like you have a lot of deals in your pipeline for this month, but many may not convert immediately.

To prevent your pipeline from running dry, always ensure your salespeople have more deals than their target. If the target is four deals a quarter, they should have at least six to eight deals in their pipeline for four to convert.

"Lack of lead generation often leads to drying up of the funnel. You need to focus on having long-term constant lead generation processes in place to ensure you have enough deals in the sales pipeline.”

Naveed Ahmer, Product Marketing Manager, Keka

2. Long sales cycle 

A long sales cycle isn’t good for customer experience. If a customer has to jump through a lot of hoops to buy your product, they might go elsewhere. Shorten your sales cycle and ensure there aren’t any hurdles in your sales pipeline.

A shorter sales cycle also means your team is closing deals faster month-on-month, bringing in more money as well as achieving sales targets.

3. Lack of coordination 

Your prospect may have to interact with different departments in your company in their buying journey. Hand-offs are a delicate time, because there is a potential for error during those transitions.

“Mistakes with the highest impact on value of deals closed usually happen during hand-offs. From the marketing team to SDRs and from SDRs to AEs, deals are passed on from hand-to-hand, often without context. Deals can be lost or followed up late and this often leads to a lost deal.”

Marek Beran, Head of Sales, Cloudtalk.io

Ensure that each team working on the sale is up-to-date with all the information related to that deal. Often, miscommunication and lack of coordination among members of different teams can result in a lost deal. Better communication and coordination between teams will help deals flow faster through the sales pipeline. 

“One of the major sales pipeline mistakes is having an uninformed team. While tracking your sales prospects is important, keeping track of what others are doing is more crucial. Imagine reaching out to a prospect after the deal has been closed by one of your team members. In one word, it's chaos. You need a CRM that provides real-time updates.” 

Pritha Bose, Senior Content Marketer, Automate.io

4. Misunderstanding customers 

Often, salespeople try to push a deal through the pipeline, without providing proper attention and care required by different prospects. Some prospects may need more hand-holding than others, while others may grasp your product relatively more quickly.

If a prospect is on the fence about your product but a salesperson assumes the prospect is interested, this is likely to clog up the sales pipeline. Have an in-depth understanding of your customers’ needs before pushing them through the sales pipeline.

“Mistakes are our most important learning tools. In the beginning, we often prioritized ‘more lucrative’ deals rather than recognizing the ‘right’ deals. We’ve learned that, although a colossal deal might seem attractive, you have to consider fulfillment requirements and if the client has synergy with your team—after all, we want partnerships, not clients.”

Vincent Bucciachio, founder of SociallyInfused Media

5. Lack of deal insights

At times, your salespeople may be flooded with work and not know which deals to prioritize. This results in a crowded pipeline and could lead to lost deals. Often, it is easy to lose sight of where deals are in the pipeline. Salespeople have to track how many days a deal has been stagnant, the level of interest, and which sales activities were conducted in the last 30 days. It’s a lot to manage.

Using a CRM with AI-powered deal insights (deal scoring, for instance) can help you determine how your deal pipeline is faring. It also predicts the next best action to take, based on past deal characteristics, to help you make better decisions and win more deals. You can also track parameters such as the frequency of sales activities in the last 30 days and the sales engagement rate. 

“Deal scoring is extremely valuable only if executed correctly. We use a scoring system where every time a user performs an action, for example, visits our website or blog, they get 5 points. Once a user can effectively score up to enough points (40) they become an MQL (marketing qualified lead), at which point we begin using a sophisticated nurturing process. That quickly brings the lead up to become an SQL (sales qualified lead) where the real conversions happen.”

Kas Andz, Founder, Kas Andz Marketing Group

6. Focusing only on one stage 

Too often, we focus on one important development at one particular stage of a deal but lose track of the deals in the sales pipeline.

“One of the most common mistakes I see is businesses over-emphasizing one of the steps at the expense of others. For example, businesses invest heavily in aggressive marketing, but once they get a customer to their website there’s no support or a lack of user friendly purchasing interface. Much like a real pipe, a sales pipeline will only flow smoothly if it’s clear of blockage along its entirety.”

Nikola Baldikov, Digital Marketing Manager at Brosix

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Is a sales pipeline necessary for my business?

A sales pipeline gives you visibility into your team’s deals. It shows your team which deals are most likely to close, which need more effort from reps, and how much money you are likely to make when each deal closes. This helps you predict revenue. A pipeline also allows you to monitor the performance of each salesperson on your team.

What is the difference between the sales funnel and a sales pipeline?

A pipeline refers to the steps in your sales process a sales rep takes while moving a deal from initial contact to close. A sales funnel, on the other hand, is about the buyer’s journey;  the stages potential buyers move through before becoming customers.

What are the stages of a typical sales pipeline?

While no two pipelines are the same, a typical pipeline includes the following steps: 

  1. Lead generation

  2. Lead qualification

  3. First contact with prospective customers

  4. A meeting or demo

  5. Negotiating the deal

  6. Closing the deal or asking for the sale

How can I improve sales pipeline management?
  • Review your pipeline often: take a look at the deals in your pipeline to ensure none are stale or rotten.

  • Encourage collaboration: make sure many teams across the organization have visibility into your pipeline.

  • Embrace technology: Automate your pipeline using tools to eliminate manual tasks.

Can you recommend any tools for sales pipeline management?

Stay on top of all the deals in your pipeline with the help of CRM software, or customer relationship management software. A CRM can help you track the customer journey as well as your team’s sales activities.

Freshsales is an intuitive CRM that empowers your team to easily track deals, nurture prospects, onboard new users, create automated chatbot conversation flows, and personalize the customer experience for your prospects.