If you start a career in selling or work in a sales-related field, it won't take long until you come across the term Sales Pipeline.
Salespeople will talk about filling their pipeline, getting leads into the pipeline, or working customers through their pipeline.
Sales managers might want to know how your pipeline works, how you can increase the leads coming into your pipeline, or how fast you can fill your pipeline.
While all of this might be confusing at first, this is more than just fancy jargon from the sales industry. This pipeline is in fact one of the most important tools and most useful metrics to use when working in sales for managers and sales reps alike.
It helps us to gain valuable insights into how effective our sales process works, where it needs improvement, and demonstrates where deals are at a given moment.
In this article, we will explain clearly what a sales pipeline is, how you can build one for yourself or your business, and why it can dramatically help you to increase your success if you do it right.
Difference between the Customer Journey and Sales Pipeline
Let’s start with the definition.
Simply put:
Your sales pipeline is a visual representation of the entire process a customer goes through when they interact with you and ultimately buy from you.
It helps us with tracking and working with potential buyers along specified steps during the sales process.
The pipeline starts with the first time somebody hears from our company and ends with the final sale when they buy our product.
In between, there are various steps, depending on the complexity of our products and our sales process. Invariably, many prospects will also drop out during this process.
A sales pipeline can represent the entire cycle of how people will be attracted to our business, how they will get their information from us and our team, and how they will be treated and finally sold.
Therefore, our sales pipeline includes all the steps that are necessary to make a sale.
This is contrary to the customer journey, which is used to map out all interactions from interest and awareness to conversion ultimately, the sales pipeline is aimed to make people buy.
The customer journey also includes not directly sales-related efforts such as PR, customer reviews, or your newsletter.
These tasks are not directly related to making a sale. Sure we will also explain our benefits along the customer journey, but the focus here lies on generating awareness and leading customers along the different steps you provided for them.
Every interaction, even if not at all sales-related will be part of our customer journey.
The sales pipeline by contrast is only focused on those activities that are specifically taken to sell customers our products.
Difference between Sales Pipeline and Sales Funnel
Both have become very important buzzwords in recent years and it is important to tell them apart. There are some areas where a sales pipeline and a sales funnel overlap, but still there is a clear distinction.
The Sales Funnel is the process of moving people along various steps to a sale.
With every additional step more and more people drop out of the process.
Sales Funnels are most frequently used in the online marketing world.
You drive traffic to a landing page, describe your offering, and a few percent out of 100 visitors will convert into buying customers.
All of this works fine in the digital world and has become a go-to choice for many marketers worldwide.
However, as the name already suggests the funnel is shaped differently and works differently than a pipeline. A funnel will need way more people coming into our door that hear, read, or see what we have to offer to take them through the process than a well-structured pipeline does.
The Funnel is also often used to generate leads for a sales team.
Used in this context, a funnel could be a part of our sales pipeline. Funnels can also be used to create sales if the product can be sold completely online such as in E-commerce industries or for digital products.
However, most B2B products that need multiple phases in the buying process or that need a lot of explanation cannot be sold through a funnel alone. Funnel are good to generate leads but cannot sell complex products. In such cases, an additional pipeline for the business will be needed even if we have a sales funnel in place.
The sales pipeline itself is a little more complex because it is more focused on selling directly.
A pipeline is what sales managers or sales representatives use to track their daily activities like calling prospects, while the sales funnel is more related to the world of digital marketing to track metrics such as the click-through rate of our website.
The sales pipeline involves a direct conversation with the customer, being on the phone with prospects, and often also physical appointments. It is the tool that is centered on the activity of sales reps or the business and what they have to do to move prospects through the process.
On the other hand, a funnel would be focused on the activities of a customer and delivering information that suits their needs. To take customers through a sales funnel, a sequence of e-mails and landing pages can be sufficient, there is no real person needed to sell a product.
Both the pipeline and funnel are often confused with each other.
They share the same principle that customers are moved from one step to the next and should be more and more prepared for the final sale along the way.
As a rule of thumb:
The more complex a product is and the more explanation from a salesperson is needed, you will have to use a sales pipeline.
The simpler a product is and can be sold online through ads instead of sales reps, the more you can be working with a sales funnel.
How a Sales Pipeline works
Maybe you already use a sales pipeline but have never thought of it that way.
If you have a working sales process that brings customers into the business every month and generates repeat business over and over again, you already have a sales pipeline.
What we now need to do is to visually represent this process and define the individual stages that are necessary to get a customer to buy.
There are always several such steps along the way in every sales pipeline that will require a certain activity.
Each of these steps leads the customer a little or a lot closer to the final decision to buy.
With each step further along the pipeline, some of the customers you initially had in the pipeline will drop out. This is perfectly normal and to be expected.
There are a few common steps along every sales pipeline. The important thing is that every one of these stages further contributes to moving a person through the sales process. Usually, these steps include:
1. Prospecting
The first step will always be to make contact with the potential customer. This stage can also include lead generation.
If this part is done right, these contacts should also be pre-selected people who need our products. However, merely gathering some phone numbers or e-mail addresses is not enough to move on to the next stage.
It also includes reaching out to these prospective customers first. Or it could also mean creating a more precise lead from this initial contact, such as a customer requesting a quote for example.
As it is the first part of the process, it is also the most important of our pipeline.
With this stage, we fill our pipeline and all subsequent activities will be easier or harder for us depending on how well this will be executed.
2. Qualifying
When we reach out to a new prospect, we first have to determine whether or not we can provide an adequate solution for that person with our products.
Therefore we will ask a series of questions to make sure the prospects need what we offer, and also prepare them for our presentation by raising curiosity, for example.
We will have to determine at which stage of the buying process the prospect is and what their current level of information is.
Based on this information we can then decide at which phase of the pipeline to put the prospect and how to proceed. Some prospects might have never heard about our product and will need a lot of explaining before we can move to a sale, while others might have read every blog post, watched every youtube video and will be ready to buy from us right away.
This is sort of “taking their temperature” to see how “hot” they are for buying or not.
Depending on their answers, you should then decide what the best way would be to proceed in the sales pipeline.
3. Building a relationship
Once we know the prospect is in our market and has a need for what we offer, we can proceed to build rapport with them.
Today it takes more than just pushing people into buying something with hard-selling and tough closes.
People want to feel heard and understood.
If they have a problem that needs to be solved, then listen to them. As most products will solve some kind of problem for the buyer, chances are high that our prospects will first want to hear about how our product can help them in their situation.
In this stage, we meet the prospect directly, are on the phone with customers, go to lunch with them, or at least communicate via e-mail.
As we move people along the pipeline, the relationship usually gets stronger between the sales rep and the customer. After this stage has passed, the prospect should be ready to make the sales decision.
4. Closing / Drop Out
With every stage along the pipeline, customers will either be moving further toward closing the sale or will drop out somewhere along the way. It is thus characteristically that with every additional step in the process, the number of customers remaining in the pipeline will be smaller.
While in most cases it will be a yes or no answer, sometimes the deal can also be on hold and be postponed. In this case, the sales rep has to take notice of the exact reasons why right now is not the time to move forward and make sure the relationship will remain.
Often another attempt can be started in the following quarter or year.
If things went wrong, this is an important stage to analyze what has happened, what was said, and how it could be improved.
Therefore it is very important to document as many details as possible from the first to the last stage of our pipeline.
Example of a Sales Pipeline
We start with a marketing campaign that generates leads.
Next, we qualify our leads on the phone.
After the customer has been qualified we have our first meeting where we ask a lot of pre-planned questions and take notes of the situation.
For our next meeting, we prepare a solution based on the products we offer.
Finally, we have an appointment with the customer, and they (hopefully) buy.
Each of these steps along the pipeline leads a little or a lot closer to the final selling decision.
As not everybody will be the right fit to buy our products right away, some of the customers we had in the pipeline will drop out with each step further along the pipeline.
Customer Touchpoints along the Sales Pipeline
As we move a customer through the pipeline, we stake them step by step through our sales process. Throughout this journey, there are several interactions between our business, the brand and product we represent, and the customer.
These interactions are called customer touchpoints.
Touchpoints can be anything that a person sees, hears, or feels about our business or business product.
They are the combined measures of all marketing, sales, customer service, or product delivery activities your company does on all levels. The overall impression of our brand, our product, and our business can be strongly influenced by these touchpoints.
Altogether these touchpoints either create a favorable image of our business or an adverse image. The combined picture created by these individual interactions will be very important as they can strongly influence the sales pipeline for better or for worse.
A first touchpoint could be the marketing campaign our business is running to generate demand for the products.
The next touchpoint could be a lead form on our website that directs prospects to our products so they can request a quote.
Another touchpoint could be the sales conversation the customer then has with your sales rep, up to the final way the product gets delivered.
And the final touchpoint could be postings on our social media profile, which the customer sees the night before he meets with our sales rep.
Every single one of these touchpoints generates a different impression on the customer.
This impression can either be a good impression or a negative one.
Depending on how people liked the impressions we created, they will either move further along the pipeline or abandon it.
Even if a large part of this is not directly related to our sales pipeline, we should not neglect the influence it can have on prospects dropping out of the process if these touchpoints are not perfectly aligned with the rest of the experience.
The best way to move customers further into the pipeline is to give them something that either matches what they were looking for, or something that raises enough curiosity to create the desire to know more, across all possible touchpoints.
To get an idea of the larger picture the sales department will have to work closely together with marketing, and maybe even other areas like HR or production that could also be visible to potential customers from the outside.
How to Build a Sales Pipeline
Let’s recap for a moment:
The Sales pipeline is the visual representation of our sales process.
The better our sales process in general is, the better our sales pipeline will be.
To start with a well-designed process, we should thus have certain things in place before we can begin to build your own sales pipeline.
The most common things that are necessary are scripts for conversations, standards, and procedures on how to onboard customers and regular training to make sure your team is well-aligned in its efforts.
A pipeline where every conversation is different and every sales rep does it “their” way ends in ungovernable chaos. We thus have to make sure that there are certain rules to follow to track, measure and optimize the effectiveness of our process. A deep analysis of our products, our customer profiles, and the entire customer journey will therefore be necessary.
It will be essential to really understand every part along the way where a customer is right now, what their possible reactions could be, and how to proceed from there.
The ideal sales pipeline does more than merely sell.
It takes the customer by the hand and smoothly guides and explains every detail about the products and the benefits our solution provides which then ultimately leads to a sale.
The sales rep is becoming a consultant and expert during this process.
We thereby shift the role of the salesperson from someone trying to just sell their goods to an expert who is leading customers through the process in a helpful and beneficial manner.
While every business will have its own specifications, here are the basic ingredients you will need across all industries to build a sales pipeline:
1. A clear understanding of our sales process and the customer's buying process
To create a pipeline we will need a decent understanding of how our sales process works.
It has to be structured, organized, and one thing above everything else: repeatable
A pipeline has to work again and again day in and day out generating new sales for your business.
Your sales process thus has to be optimized and working to get customers from “I never heard about this company” to “I totally want their product NOW”.
The pipeline should present a step-by-step formula to help people connect with you along the way, and slowly but surely bring them in the direction of becoming a customer.
It does not have to work every time, but it absolutely has to work a certain percentage of the time.
For example, if 100 people go through your pipeline, there should be at least 5-10 sales coming into the business.
For these results, you do not only need to understand how your sales process works entirely but also how your customers' buying process works.
If they hear from you the first time, what are their thoughts?
Do they have doubts?
Do they believe you are credible and trustworthy?
Is the product really solving their problem?
Etc.
The more you can also express empathy and actually help people to move to the next stage of the buying process, the better results can we expect from our pipeline.
If you have not yet defined such a detailed sales process, the next steps in this article will give you clear instructions on where to get started and what to look out for.
2. Target the right prospects
At the beginning of our pipeline will have to start with the ideal customer profile that we generated for our business.
If you have not yet established such an ideal customer profile, I highly recommend first checking out our article on How To Find Your Ideal Customer Profile.
The customer profile will tell us what the best buyers for our products are, what they look like, and where to find them.
We can create buyer personas to represent the (fictional) ideal customer, from market research data, or through customer segmentation.
Anything that can help to better understand the customer’s situation, wishes, or pain points is an important step in the right direction.
The more exact our data about the potential customer is, the easier can we target the right people for our pipeline.
In this phase of the process, it really pays to do our homework because the entire pipeline will work better the more clearly we have defined who gets into the pipeline in the first place.
3. Highly targeted marketing to fill the pipeline
Yes, this is a marketing topic. But it will have a great effect on our sales pipeline.
A modern sales process has to cooperate and be directly integrated into marketing activities, or vice versa.
With a clear profile of who we want to reach, we should then use the most targeted and efficient marketing strategies to reach this audience.
The world of online marketing offers us the most advanced tracking technology available with total control of who sees our ads and a clear history of where our dollars went - if we do it right.
If you're new to marketing in general and have no clear idea where to start, the best approach is to just make a number of small tests to see how your products and content perform on different platforms.
Think about the best ways to reach your audience and then try different channels to get them on board. Then, simply select the best results and scale them.
Keep constantly looking for other marketing methods that are highly focused and that might be a good fit for your products.
Maybe your audience can also be accessed cheaply through a niche magazine that targets exactly their interest. The only way to find out is to try and then see the results.
Set a certain budget of time and money when you really need to see results.
If the budget is used up and you have the feeling that this marketing channel is useless for you, then abandon this marketing tactic and look for a different one.
If you keep testing and improving, after a while you will find a number of channels where you are advertising to get in front of just the right people for your product or brand.
Once you have identified the winners, ramp up the budget and make sure there is a steady stream of leads coming into your business from now on.
4. A constant stream of new leads coming in
As a result of the previous steps, we should now have enough prospects we can actively call on or at least write them. The best situation would be to have prospects already calling us.
Even if we have a long list of prospective customers today, we have to make sure that we have a system in place to generate new leads over and over again.
Nothing is worse than building a great sales pipeline and then seeing it dry out and collapse because there is no one left for your team to call on.
New leads coming in are the lifeblood of every sales process and thus every pipeline.
The more information we have upfront about the potential client we have, the better.
We can select them by gender, occupation, past buying criteria, geography, and many more factors.
Ideally, we include as much data as we can and pre-select them based on their preferences and the stages of their buying cycle.
The more we know about them, the better we can meet prospects where they are right now and then determine where in the pipeline these leads will fit.
If we have different sources of leads coming in, we have to be aware that some might already be further down the pipeline than others.
5. Identify where customers are in the pipeline
As customers move along the sales pipeline, there will be different things going on in their heads. Some might just be curious as to what your company is about.
Others might have a real need for your product right away and want to buy immediately. Again others might just be looking around to compare prices.
Each one of these customers will need to be treated differently.
As their situation is unique, so are their thoughts, current challenges, and also their desires.
We now have to define how ready to buy the customer is, if they have a real need for our products, and how to best onboard them.
Depending on the answer, the customer will enter the pipeline at a different stage.
Each stage of the pipeline will require a different conversation, with other benefits mentioned and other questions asked from our sales reps.
Our part of the pipeline - the sales reps - will have to be prepared to handle these stages in the process uniquely for each prospect and be prepared enough to at least anticipate in which stage a customer is.
Clues could come from the opt-in form to our pipeline. Someone sending an email to our company might reveal what they are looking for immediately.
In other cases, we will need additional procedures in our process to further qualify the customer.
This means we need to have a procedure that directs our team to find out how urgent the customer wants to buy - or if she intends to buy at all.
Generally, the deeper a customer is into our sales pipeline, the higher the desire to buy from us should be.
If they are just requesting a quote from us, they are not very far in the pipeline.
While if they want to have your product delivered as soon as possible, they are basically at the end of it.
We need a clear protocol for how to onboard customers for each stage of the pipeline.
For example, someone who really needs the product fast does not need to be convinced any further that our quality is good, but will rather talk about delivery options.
Compared to someone who has heard of your product for the first time today, they will first want to know what is in it for them, if they can trust your company, and so forth.
In short, give the right customer the right treatment at the right time as they are being moved through your pipeline.
6. Use scripts and procedures to improve your results
There is a high complexity resulting from the many different options of how to perfectly onboard a customer, how to qualify them, and how to lead them through the pipeline.
This can make the job very confusing, especially for younger sales reps.
As a result, mistakes will be made during the process. In sales, mistakes mean potential customers will be lost.
Businesses or sales managers have to absolutely make sure that such mistakes will be held to a minimum. We have to ensure that the freshly generated leads will be treated equally great, no matter which one of our employees will get into contact with them.
We can achieve this by setting certain standards for communication and treating our customers equally.
The easiest way to do this is to give your reps clear instructions on what to say, when to say it, and how to say it. A simple script for onboarding customers and leading through the conversation can help maximize results even for junior salespeople as it will give them a guideline based on the best practices in your business.
If you do not have experience with scripts, check out our articles on How To Use Sales Scripts and How to Create Your Own Sales Scripts.
With scripts, we can test and measure the results of our efforts at every step along the pipeline. This will help us to find out what really is the right thing to do at which step and thereby optimize the process.
For example:
Is it better to ask that question at the beginning of the pipeline or at the end?
Should you call them or send Emails first?
Should you mention the price at stage 3 or stage 5 of the pipeline?
Your scripts will show you the results and allow you to test A/B versions against each other to see what brings you the optimum performance.
After some testing periods, you can provide your team with a powerful script that helps them to use the right wording at the right time, regardless of their experience or personal qualities. This not only sets a certain quality standard for your sales pipeline, but it will also drastically improve the performance of your entire sales efforts.
7. Track metrics and performance throughout your pipeline
Our pipeline consists of repeated activities in our sales process.
As we repeat tasks again and again, patterns will show up.
These patterns can show us if customers are correctly being onboarded and guided through the pipeline, or also if our team neglects to fulfill certain tasks.
Therefore it is crucially important to track the numbers that go in, through, and out of the pipeline. These numbers will show us where most customers drop off or where our process might still need improvement. The best way to keep track of such numbers is to keep them as metrics and have your team report their numbers on a daily basis.
But a pipeline is nothing static. It will evolve and change over time, especially as digital technology, market trends, or new marketing techniques for lead generation will come up over time. To stay ahead we regularly will have to re-evaluate our pipeline and our metrics to make sure we also know what is going on and if what we are measuring actually makes sense.
For example, not every person will become our customer and sooner or later we will need a process of when to drop someone out of the pipeline. It could also mean that whole stages of the pipeline might have to be removed or added in order to improve our workflow.
We have to regularly assess the metrics we track and observe the overall workflow of our team. Close observation should be put on numbers such as conversion rate or also the time it takes for a customer to go through the entire process.
8. Build a clear procedure to close the sale
Finally, with everything else in place, we also have to have a procedure for when and how to close our sales. Closing is something a lot of sales reps have problems with, and if this part is messed up all the previous work that has been done will be wasted.
As our team brings the customer through the pipeline we should know when to ask for the sale, or when other input such as additional information is needed.
Be careful as both of these situations might look the same from the outside and are very difficult to tell apart for any sales rep!
At this point, only four things can happen:
Either the customer needs more information, buys, drops out or the deal is put on hold.
It needs a procedure to uncover readiness to buy with our prospect - again scripts will be very helpful for us and our team in this regard. We have to make sure there is meticulous follow-up for all those deals that are put on hold.
Therefore we should provide procedures and Scripts that will help our team to determine what answers they can expect during the closing stage, what questions to ask, and how to verbally navigate the conversation in the desired direction.
Ideally, we can also include test closes into all stages of the pipeline to see how ready the prospect is to buy, or if there are still objections on their mind that have to be handled first.
How to Improve a Sales Pipeline
What can we do if we have a sales pipeline in place, but it doesn't get us any results?
There are a number of ways we can improve the process.
Most of them will again require us to measure certain numbers in the process.
The higher these numbers are, the better our process will perform and the more sales we will be able to generate.
1. Increase the number and/or the quality of leads coming into the pipeline
As leads are the starting point of every sales process, the more of them we can generate, the easier it will be to create a sale afterward.
Also, the quality of the leads matters greatly. Hot leads are much easier to sell to and will generate much more revenue than cold leads who have never heard of us before.
The more, highly qualified leads we can get into the pipeline, the better the overall results will be.
2. Raise the number of deals in the pipeline
If our process is working, more leads should lead to more deals being present in the pipeline at any given moment. This again means more chances for conversions and sales.
3. Increase the deal size
While this is sort of a no-brainer, it might make sense to use a highly optimized pipeline for attracting or targeting bigger clients and bigger opportunities if we have not yet done so. Also, think about increasing deal sizes through up-sell or cross-selling opportunities.
4. Reduce the stages or increase the speed of the pipeline
The more complex a product is, the more stages your sales pipeline will have. In complex B2B sales, large deals might take up to a year, resulting in a tremendously long pipeline and processing time. To get more sales faster we can look for ways to speed up the process, help clients with decision-making, become more persuasive, etc. However, a too-long process can also mean that there are bottlenecks in our process and that there are improvements needed.
How To use a Sales Pipeline
Used as a tool for sales reps and management, it can help analyze the entire process and leave clues as to where most people abandon our site, cancel the appointments or simply give us a “no”.
Therefore it helps us optimize our sales efforts and get a clear picture of what stages in the process work well, compared to which steps don’t perform as expected.
Sales is often a mysterious process for managers if they are not directly involved in it.
By having clearly defined stages along the way we can also divide the entire mystery into easy-to-understand, manageable tasks that can individually be improved and optimized to perfection.
It makes managing our sales team easier and delegates tasks better along the way.
As a sales rep, we will always know where a deal is at that very moment when we take a look at your pipeline.
It helps us to understand what next steps we have to take, and what to watch out for in this stage the customer is currently in, and it outlines what still needs to be done before we can expect a sale.
You can even design individual sales scripts for every single step along the way to maximize performance.
Therefore a pipeline is one of the most important tools for any well-designed sales process.
Managers and sales reps alike can benefit from having the entire process documented and systematized. Together with scripts and digital tools, it can make selling much more clear, easy, and eventually even fun.
A pipeline helps to bring accountability within our sales team, define current tasks and goals and drive performance at the same time.
Done right, a well-structured pipeline will increase conversion rate and help to make your revenue more predictable and plannable.
Without a pipeline, sales can become a shoot-in-the-dark approach where success becomes synonymous with coincidence.
With a well-structured pipeline in use, our sales process will become a finely tuned machine and can dramatically help to improve revenue and achieve sales targets.
How do you know that your pipeline is working?
The answer is pretty simple.
The higher your ratio of people coming into the pipeline as strangers and leaving it as customers, the better your pipeline is working.
If a lot of people drop out, you still have some work to do.
But if the ratio of closes is getting better and better, then your sales pipeline is working just right.
In case you are unsure, compare the normal ratio of others in your industry and their sales.
Or look at what ratios you achieved without a pipeline, and compare them to now.
A well-structured pipeline should give you a much higher closing ratio than a traditional non-structured sales approach.
If the numbers are not significantly better, the pipeline itself might not be the problem at first.
Are your sales reps really executing all the steps as instructed?
Do these instructions make sense?
Is the customer journey really focused on a helpful approach to solving the problem?
Another criterion to determine the effectiveness might be speed.
Usually, the longer a sales cycle takes, the less effective it is.
However, beware that customers will need time to think over their decision for certain products.
Rushing people and pushing them to make a sale is never a good idea.
The larger the investment in your product is, the longer it will take for people to make up their minds and make a decision.
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