What is a sales pipeline? How to build and analyze a health pipeline
A healthy sales pipeline is critical to boosting sales and building strong customer relationships. Dive into the sales pipeline and how to use it effectively.
Published June 4, 2019
Last updated June 28, 2022
Prospecting. Qualifying leads. Negotiating. Closing deals. As a sales agent, you know how hard it is to juggle all those steps. It’s tempting to throw your hands up in the air and focus on just one aspect of the sales process—closing.
But doing so means neglecting other parts of the process, which in turn makes your leads dry up. How can you avoid this outcome? By building and growing a sales pipeline.
A sales pipeline helps you keep track of all opportunities so that you maintain a healthy number of leads and are reminded to nurture existing customer relationships. Read on to learn everything you need to know about sales pipelines, including:
- The definition of a sales pipeline
- The sales pipeline stages
- How to build a sales pipeline
- How to manage a sales pipeline
- How to analyze a sales pipeline
- How sales pipeline software helps
What is a sales pipeline?
A sales pipeline is a visual illustration of how customers move through the sales process stages—from prospecting for leads to making the final sale. It provides valuable insights into each deal, allowing your agents to track their progress, identify any gaps in their process, and form strategies to hit their sales targets.
Not all sales teams create a pipeline that visualizes their opportunities. This often leads to a number of issues:
- Sales teams have no idea if their processes are working.
- Sales teams struggle to understand how many leads they need to hit their sales goals.
- Sales managers are unable to track performance and determine internal bottlenecks in the pipeline.
The best way to gain full visibility into your sales pipeline is to get a customer relationship management (CRM) system. A CRM helps you track interactions with your customers so you can better understand where leads are in the pipeline, what’s working, and how to prioritize ongoing communication.
If you can’t afford a CRM or have a small sales operation, a robust sales pipeline template may hold down the fort until you’re ready to purchase a CRM.
Sales pipeline vs. sales funnel
Sales pipelines are commonly mistaken for sales funnels. Although these terms seem similar, they are different concepts and have different functions.
A sales pipeline refers to the visual representation of the specific steps a prospect takes as they progress from a lead to a customer. It illustrates exactly where potential customers are in the sales process—whether they’re at the qualification stage or the closing stage. Pipelines help teams track sales activities and boost conversion rates.
A sales funnel (or similarly, a lead funnel) takes a more customer-focused approach and shows every step of the customer journey. It generally includes a top-of-funnel phase (known as the “Awareness” stage) and then narrows down as you get to the bottom of the funnel (called the “Purchase” stage). Sales funnels (and sales funnel software) allow sales agents to develop a better understanding of their leads and provide insights into how to continue moving them through the customer journey.
What are the sales pipeline stages?
The stages within your sales pipeline are like stops on the road as you make your way toward your final destination. Clearly defined stages help your sales reps know the exact steps they need to take to close a deal. Each of the sales stages requires maintenance and a customer-centric strategy.
The exact stages of a sales pipeline may differ from business to business, but in general, a standard sales pipeline follows the steps outlined below.
Prospecting is when sales agents use methods such as cold calling, emailing, and sending mail to contact potential leads and introduce them to a brand, product, or service.
Once you collect prospects, you’ll want to identify which ones match your buyer personas with lead qualification.
At the next stage in the sales pipeline, agents evaluate leads to determine whether they’re likely to become paying customers. Filtering out leads who aren’t a good fit for your product or service does reduce the total number of potential customers. But removing unqualified leads also ensures agents aren’t wasting time on leads who will never purchase your product or service.
High-value leads worth pursuing are called Sales Qualified Leads (SQLs). These leads have shown interest in your product or service and are ready to speak with a sales agent. Sales teams identify SQLs using lead scoring—the process of assigning point values to prospects based on various factors (such as the industry they work in or their level of interest) that indicate the likelihood they’ll make a purchase.
In the qualification stage, it’s helpful to target decision-makers who can sign off on deals and people who have problems that your product or service can solve.
After meeting with the prospect and winning them over with a great sales pitch, agents discuss the terms and price of the deal with the potential customer. This stage in the pipeline brings the prospect one step closer to converting and should be handled with care.
Find out what the prospect wants and customize your offering to suit their unique needs. Use the prospect’s insights to create a killer proposal—call out specific things they mentioned and address the top concerns they noted in previous conversations.
The close is a make-or-break moment in the sales pipeline, so it’s important to employ the best sales closing techniques to seal the deal.
One effective tactic is to create a sense of urgency by making the potential customer an offer that lasts for a short period of time. For instance, you might offer a 20-percent discount if they make a purchase within a week. This limited-time deal could motivate them to take the plunge.
When closing, focus on helping the prospect solve their pain points rather than simply making the sale. In this way, sales reps won’t appear pushy and scare away prospects. Practice active listening, ask relevant questions, and follow up as needed. Tutorials and product demos can also be helpful.
Not all prospects who make it to the closure stage will buy your product or service. Whatever the result may be, it’s important to use the last stage of the sales pipeline to evaluate what made you win or lose the deal. Holding a sales postmortem—a meeting to discuss and evaluate what went well (or what didn’t)—can help your team avoid future mistakes.
Note that not all sales pipelines look the same. The customer journey, the sales process, and many other elements will determine how yours is shaped. Think of the stages we outlined as a framework you can use to build your own sales pipeline and not as a rigid structure.
Think of a sales pipeline as moving prospects down a pipe—the ultimate goal being to get them to the end of the pipe and converted into customers.
How to build a sales pipeline
A definitive sales pipeline adds structure to sales reps’ day-to-day processes, making their jobs simpler to execute and easier to analyze. When a sales pipeline is clear, personalized, and efficient, your agents are far more likely to hit quota, reduce pipeline churn, and identify where things need to be tweaked in the future.
Essentially, a strong sales pipeline combined with a robust lead management framework will set your sales team up for success.
While a well-structured pipeline is crucial, you shouldn’t rush into developing one without first understanding what will work for your business and customer base. A sales pipeline that is perfectly suited for other companies may not be right for you.
So how do you build a pipeline suited to your team?
1. Personalize your prospecting
This is where sales and marketing need to work most closely together. Identify and define your top buyer personas, then determine the best lead sources from which qualified leads tend to be gathered.
Customer behavior and marketing trends can shift quickly, so it’s vital to use a CRM with prospecting tools, as well as lead source analytics.
By tracking the success of various lead sources, you can tweak your prospecting techniques to produce the most leads with the highest potential. You may combine inbound marketing techniques like lead magnet ebooks, social media posts, and high-value blogs with outbound tactics like cold-calling and reaching out on LinkedIn. It simply depends on what the data is telling you.
2. Agree on the qualification process
You don’t want unpromising leads wedged in your pipeline, wasting sales reps’ valuable time and throwing off sales projections. It’s vital to assess lead value and find out which MQLs (Marketing Qualified Leads) are worth pursuing further.
Finding a system that accurately qualifies promising leads is extremely important. It is the difference between wasting time on prospects that will lead nowhere and converting interest into sales. A quality lead scoring process that is unique to your business allows your sales reps to put their focus in the right place. You want reps to spend their time converting potential customers, not chasing leads that don’t have any interest or buying power.
Standard lead scoring questions include:
- Does this lead need our product?
Does this lead have a budget for the purchase?
Is this lead in a position where they are the purchase decision-maker?
When qualifying leads, quality always beats quantity. Less wasted time and more well-qualified leads means a higher return on time invested.
When qualifying leads, quality always beats quantity. Less wasted time and more well-qualified leads means a higher return on time invested.
3. Narrow down your smart nurturing tactics
Lead nurturing is essential to keep leads flowing smoothly through your pipeline, and the right tactics will make potential customers feel confident and secure enough to buy.
Consistent communication is critical. Sales reps should be following up with leads regularly to ensure they remain interested and aware of your brand. Personalized email campaigns sent at a regular cadence are a great way to help qualified leads learn more about your company while establishing trust and thought leadership.
It’s also important to think beyond email and reach out to your audience wherever they are, on multiple channels. Marketing automation, social media, dynamic online content, and direct sales outreach are additional nurturing tactics you should provide for your sales reps and encourage them to use. But again—it depends on the research you’ve done about your leads and what will appeal to and convince them.
It’s also smart to utilize sales force automation technology to decrease the number of banal administrative tasks sales reps have to deal with. This technology allows reps to focus on lead nurturing while reducing human error and boosting efficiency.
4. Stay consistent on conversions
If you’ve qualified and nurtured your leads well, you’ll naturally end up with a high rate of sales conversion. You’re also aiming for a high rate of sales velocity, with leads moving through your pipeline quickly.
Providing your sales reps with consistent and practiced sales conversion tools is vital. Consider giving reps leeway to offer one-time incentives or discounts to help inspire leads to move forward with your company. Ensure your sales team has access to high-value sales collateral, such as data sheets, white papers, and webinars, in order to convert bottom-funnel prospects into buyers.
Regardless of which tools you use, remember that establishing a proven strategy is key. Your sales pipeline is only as effective as the methods you’ve developed to keep it running, and all team members must work together to fulfill that strategy. Having clearly defined goals is the first step towards meeting your quotas and KPIs.
And remember: once you’re ready to begin, it’s smart to create and customize your sales pipeline with a CRM like Zendesk Sell. If you run a large organization and have different customers with unique sales processes, CRM tools allow you to build multiple pipelines to suit each one.
How to manage the sales pipeline
Maintaining your pipeline is essential to both the sales department and the company as a whole. A well-managed sales pipeline gives you insights into deals, helps you measure performance, and provides an estimate of the number of deals you can expect to close each quarter.
Feed your pipeline regularly
Sales agents often make the mistake of prioritizing closing over prospecting. But if you neglect to fill your pipeline, you’ll likely be short of prospects—forcing you to scramble to find new leads and reach sales goals.
Keep your pipeline full of leads by consistently prospecting. Make time to actively contact potential customers through emails or sales calls. You can also ask for referrals from existing customers and leverage your business’ brand advocates to reach more people.
Always follow up
The follow-up call (or email) is a critical part of sales pipeline management. It lets potential customers know that you care about providing them with a solution, and it keeps your business top of mind.
In the words of Selling Simplified author Michelle Moore, “Not following up with your prospects is the same as filling up your bathtub without first putting the stopper in the drain.” It’s an exercise in futility that’s a waste of your time and theirs.
Always set a purpose before contacting your prospects—whether it’s to thank them for their time, gauge their interest in continuing down the pipeline, or ask a question that will help you qualify them.
After connecting with them, make sure to log the conversation in your CRM and note any next steps so you don’t lose out on a promising prospect. Creating a record of the conversation also ensures that your prospects aren’t approached for redundant interactions or accidentally ghosted.
Clean out your pipeline consistently
Just like all pipes, your sales pipeline can get clogged—you don’t want yours jammed with bad leads. These are leads that you can’t convince to get on a call, haven’t expressed interest in the product or service, or haven’t moved down the pipeline.
They might bolster your numbers, but they water down the quality of your lead pool. Good sales pipeline management means always picking quality over quantity. Leads that won’t move through the pipeline only block its flow and need to be removed.
Identify leads who have spent more than the average amount of time in the sales cycle. This timeframe can vary from business to business, but generally, you don’t want leads sitting without movement for too long. Try to nudge them along with follow-ups based on your internal process. If this doesn’t work, remove them from your prospect list.
Conduct ongoing reviews
Pipeline reviews are ongoing meetings between sales agents and managers to determine how well a sales pipeline is functioning. A regular review of your pipeline will help you identify the areas to improve and the successful sales activities you should continue.
You can talk through existing deals in the pipeline, struggles, challenges, and other issues. Based on data from your CRM or pipeline software, you can also discuss which stages your deals tend to get stuck in and ways to sharpen your tactics.
How to analyze a sales pipeline
A strong sales pipeline manifests in a high conversion rate and sales velocity with a short sales cycle length. But in order to assess if your pipeline is running smoothly, you need accurate data. With the high-level CRM analytics of today, it’s easy to track just about everything in regards to your sales performance. However, simply gathering data isn’t enough.
To use the data you have most effectively, you need to intentionally choose the metrics you want to monitor and how often you want to monitor them. Using this strategic approach, it’s simple not only to glean key insights from your data, but to make powerful adjustments in response..
It’s helpful to track different sales metrics over different stages of time. Some metrics will provide clear insights after a week, while others might provide no meaningful information unless they are evaluated quarterly. Below are some important sales performance metrics and how often they should be tracked:
- Call/contact volume
- Percentage of appointments
- Lead response time
Weekly sales performance metrics
- Number of MQLs
- Account Executive (AE) capacity
- Business Development Representative (BDR) capacity
Monthly sales performance metrics
- Acquisition cost
- Lifetime Value (LTV)
- SaaS “Magic number”
Quarterly sales performance metrics
How sales pipeline software helps
Sales pipeline software is the digital tool you need to run a smooth and effective lead-to-customer pipeline. It organizes your selling process, helps you visualize all the possible opportunities in your selling cycle, and keeps your company data current and organized. Without a clear way to view and evaluate your pipeline, you risk missing out on potential opportunities and falling short of quotas.
When sales reps use robust pipeline software, they’re able to significantly reduce mundane administrative tasks. This leaves your team more time to prospect, nurture, and convert leads. Being able to monitor your company’s progress in real time safeguards against any issues that might arise and cause problems, while improved forecasting leads to increased revenue.
What does all this mean? Choosing the best sales pipeline software is a make-or-break decision for the health of your business.
Zendesk Sell is an easy-to-use, comprehensive CRM sales tool that tracks and organizes all pipeline data. Zendesk calculates your win rate, makes pipeline management simple and efficient, and provides you with the tools you need to hit your sales targets sooner.
With an intuitive, customizable interface, Zendesk makes it easy to monitor your priority metrics and meet your goals. Offering contact management tools, power dialer software, referral and email tracking, social media integration, sales dashboard, collaboration tools, and more, Zendesk is engineered to keep your pipeline healthy and your business growing.
Check out the complete guide to sales pipeline software and see how Zendesk Sell can help your business build a strong and effective sales pipeline.