Key takeaways
A sales pipeline is a structured and organized method represented in a visual diagram for tracking the progress of potential buyers as they traverse through different stages of the purchasing process. This article will explain the various stages of the sales pipeline and the steps to take in building an effective sales pipeline.
Read more: How to Create an Effective CRM Strategy in 2024
What is a sales pipeline?
A sales pipeline is a visual representation of potential buyers interested in purchasing a product. These potential buyers can become future customers, and the sales pipeline is used to track and continually pique the interest of potential buyers until a purchase is made or denied. The sales pipeline is a visualized horizontal bar that pictorially represents where a potential buyer is on the sales pipeline. Constantly monitoring the sales pipeline can help potential deals become sales. Each business may have its own sales pipeline, but the end goal of a sales pipeline is to turn potential prospects into future customers. The sales pipeline stages range from profile creation to successful or failed deals.
How to build a sales pipeline
A successful sales pipeline lets salespersons know where a prospect is on the pipeline and what practices have been applied at each stage to keep the potential client moving toward purchasing a product. To build an effective sales pipeline, you must have a good Ideal Customer Profile (ICP) to develop a target market. Once you have an ICP, you can define a target market. Here are the steps to building a sales pipeline:
- Identify your target market by defining the salient parameters and features of the product and the buyer personas most likely to purchase the product
- Build a targeted list of prospects based on your developed buyer persona
- Create relevant message content that piques the interest of the developed buyer persona
- Define the sales pipeline stages a potential customer will move through in the sales process
- Designate sale activities for each stage in the sales pipeline
- Specify the length of your sales cycle
- Determine an appropriate ideal pipeline size that is manageable
- Remove lethargic or stagnating deals from the pipeline
- Define your pipeline metrics
- Automate your sales pipeline
What are the stages of the sales pipeline
Each stage of the sales pipeline is used to track the progress of an initial opportunity to the end of the sales cycle. Each stage of a sales pipeline may be named differently by businesses, but the goal of the sales pipeline remains the same regardless of how each stage is named. Here is an overview of the stages of a sales pipeline:
Customer profile creation
The customer profile is created to provide essential customer identification, but more importantly, the profile also contains potential buyer traits and biases. A customer’s purchasing habits give the sales staff an inclination of the customer’s likelihood of purchasing a product, and these tendencies also let the sales staff know a prospect’s preferred industry, location, and pain points.
Prospecting and lead generation
A prospective customer asking several questions about a product or an existing customer referring a friend who likes a purchased product are examples of sales prospecting. Prospects can become potential customers in numerous ways, and specific customer-based software can help identify potential customers. Customer Relationship Management (CRM) and sales pipeline management software feature automated lead management tools, but the sales pipeline lead management module is slightly better. Lead generation specialist’s sole focus is finding potential customers and inserting them in the sales pipeline to make a purchase eventually.
Qualifying new leads
Qualifying a need is about a customer meeting specific requirements that make a business invest time and effort into a potential customer to purchase what they want. Qualifying leads is essential in the pipeline process because a dedicated sales team will invest time and effort to convince customers to buy the desired product.
There are strategies used to determine if a potential customer is in a position to make the purchase. Some of the strategies used are the following:
- BANT (Budget, Authority, Need Time)
- CHAMP (Challenges, Authority, Money, Priority)
- ANUM (Authority, Need, Urgency, Money)
Qualified leads indicate a high probability that a potential customer will become a recurring customer.
Outreach
Sales outreach involves contacting past customers who have the potential to become active and paying customers again. Outreach also involves getting new prospects and leads and introducing new products to potential customers. Sales outreach can be communicated in multiple ways, such as phone calls, emails, text messaging, or social media.
Negotiation
Negotiations are one of the more vital stages in the pipeline process. At this point, you must address all the customer’s questions and objections. You aim to negotiate terms that leave the customer satisfied and ensure both parties have a mutually beneficial agreement. Understanding customer needs and compromising without losing the sale is a win-win for both parties.
Closing
Closing is not the end of the pipeline, but when the negotiated terms are finalized, signed, and payments are collected, it indicates you have a satisfied customer. You want to make sure the customer is happy, and they made a good decision. Building a trusting relationship with a satisfied customer will make it easier to upsell new features or products as they are released.
Onboarding
Sales onboarding is a necessary step that helps new sales representatives (SR) succeed as salespersons. The new sales representatives learn new skills, tools, and the vital knowledge needed to succeed within an organization.
Upselling
Upselling involves educating a customer about upgrades to a purchased product, an add-on ancillary item, or just a better product that is more expensive. These types of upselling are more profitable for the business and add greater value to a customer’s purchase. The typical types of upselling are:
- Product or service upgrade
- Product quantities
- Product or service protection
- Product customization
- Extended service periods
Following up
The purpose of a sales follow-up communication call after initial contact is to encourage a potential customer to take additional action. A sales follow-up call is vital for building and maintaining relationships, nurturing warm or cool leads, understanding potential customer needs, and developing relationships. The general guidelines for follow-up calls are:
- Follow up three times
- Have three days between each follow-up call
- Use three different communication channels
Starting a sales pipeline from scratch
To start a sales pipeline from scratch, you’ll need a way to track and manage your sales pipeline process. A Google spreadsheet or Excel will do if your company is relatively new and you have a limited budget. You can start with a CRM or sales pipeline management software for any existing companies with money to invest. The steps to creating a sales pipeline from scratch are:
Identify a target market
By building a customer persona, you identify the type of customer you think will be interested in your products. The persona can be fictional but based on detailed research of your desired audience. The imaginary persona embodies broad characteristics such as age, location, educational history, and behavior practices. Other personal attributes can include income, motivations, lifestyle, and barriers to purchasing.
Finding and creating a list of potential leads
Cold calling may be challenging, but it can generate potential leads. Online advertising can spark a person’s interest, and they may become a potential customer, particularly if they ask questions. Attending an industry event where similar products are sold can generate customer interest by highlighting what is different about your product. The differences can be based on a lower price, enhanced features, or an extended warranty your competitors do not offer.
Qualifying leads
Qualifying a lead requires a process you can use to measure a customer’s genuine interest. Any customer asking questions about your product can be considered a good lead. Determining a customer’s interest in your product requires asking questions that generate open dialogue other than yes or no responses. Open dialogue allows you to validate the customer is on the right path and how your product can fulfill their requirement.
For example, if someone is looking for a lawnmower, you can ask what they currently have and the yard size they want to mow. With this information, you can start with your middle-price lawnmowers. When you show them the more expensive lawnmowers, you can explain how the features of the more costly lawnmowers can make the task easier. If the expensive lawnmowers are not in their price range, you can show them the least costly ones.
Nurturing leads
If the person interested in a lawnmower did not make the initial purchase, you must remain in contact with them with black Friday or holiday sales showing price reductions. If the customer was interested in one lawnmower, you could send them marketing material with discounted prices.
Read more: Best Lead Nurturing Software
Closing the deal
Nurturing your leads can undoubtedly help close the deal. In the lawnmower example, the discounted marketing material sent to an interested customer allows a salesperson to close the deal and make the sale. In this lawnmower scenario, the interested customer wanted a more expensive lawnmower, so the salesperson could close the deal when the price was reduced by 15%.
Starting a sales pipeline from scratch requires attention to detail. Define your goals clearly with concrete numbers, such as increasing sales by 10% or improving the conversion rate (i.e., number of leads converted to sales) by 10%. Tracking the progress of your sales pipeline allows you to make any necessary adjustments for continued improvement.
Choosing the right CRM for your business?
Customer Relationship Management software can impact an entire organization in multiple ways. A good CRM solution streamlines the sales cycle, which leads to faster sales revenues. An automated CRM solution can help with order processing, quote preparation, and improve financial performance. An Artificial Intelligence (AI) based CRM solution can effectively manage data, improve customer retention, and analyze and predict trends in customer behavior. A good CRM solution can also integrate with other business applications to improve performance.
Looking for the latest in CRM solutions? Read about the Best CRM Marketing Software of 2024.
Featured partnersFeatured Partners: CRM
