To build and manage a sales pipeline, start by documenting your current sales process.
Break down your process into the major steps your leads take. What do you need your lead to do at each stage to move them towards closing the sale? This could be clicking on an ad, submitting a web form, or calling your sales team, for example.
If your existing process differs from this outline, that could be a sign that you need to add or change it.
You may have a more detailed pipeline with additional stages. But the basic ones above will get you started to manage a sales pipeline effectively!
Pipeline management tools
For most teams, the core tool to manage a sales pipeline is a CRM, or customer relationship management application.
A CRM is a central repository for the data you collect about your prospects. Plus, it helps you track the contacts your team has had with those leads.
Very small teams may be able to manage a sales pipeline with generic tools like a spreadsheet app or Trello. But in order to grow, you’ll probably need some kind of CRM. There are countless CRMs on the market. Choosing the right one for your team depends on your size, budget, industry, and more.
You want to be able to document your leads’ progress through your pipeline by tagging them somehow. Looking at any given lead in your CRM, you should be able to quickly determine where they are in the pipeline. By the same token, you need to be able to look at a pipeline stage and quickly generate a list of leads at that stage. If you can do these things reliably and efficiently, you’re in good shape.
Use the pipeline to plan your sales activities
Your sales pipeline isn’t just a fancy visualization. It can also be a sophisticated planning and forecasting tool.
Each stage is a milestone on the buyer’s journey. You can calculate the conversion rate of each stage—the percentage of leads who advance to the next step. You can then work backwards from your sales target to spot where your attention is needed.
As a simple example, let’s say your goal is 100 sales a month. Your initial lead generation stage gets 1000 prospects a month. So far, so good.
Maybe that initial stage has a 7% conversion rate. Uh oh—that only leaves 70 prospects advancing to your next step. That means nothing you do after that really matters. You can’t turn 70 prospects into 100 customers, no matter how good your sales pitch is.
You either need to generate more leads at the beginning (increase the 1000) or boost your conversion rate for that stage (increase the 7%) to have a chance to meet your goal.
Depending on your situation, the trouble spot may be earlier or later in the pipeline. By examining each stage, you know where to focus.
Key pipeline metrics
Your pipeline is a tool to help you prioritize your time and effort. Here are some metrics that help you stay on top of things.
How many people are in the pipeline?
How much is each prospect worth to your business, on average?
How much are all those leads worth together?
How fast is your pipeline?
What’s your close ratio (the % of deals you close)?
Things to look out for
Keep the pipeline healthy. This means you can be proactive rather than reactive. A sales pipeline can go wrong in a variety of ways. Here are a few common issues:
At any given time, each stage of your pipeline should have leads in it.
If any stage is empty, this is a signal that you may need to work on the conversion rate of the previous stage.
Or, the problem may be earlier in the pipeline. In any case, the empty stage tips you off that you have some work to do to keep your leads flowing towards conversion.
Pipeline is not being replenished
You need to continually add new deals to the pipeline, as you close others.
Sometimes, your pipeline shrinks because you have focused on closing existing deals to the exclusion of generating new leads. In short, your sales team may be doing its job, but your marketing is ineffective.
Focusing on edge cases
Spend most of your time and energy on the core prospects—the ones moving smoothly through your pipeline.
Of course, micro-optimizations are great if you have time to work on them. But most teams don’t. If you find yourself getting into the weeds trying to address uncommon buyer personas or situations, take a moment to reset.
Lack of standard process
Keeping your sales and marketing teams on the same page can be a challenge. Individual team members may have their own approaches—processes they believe are the most effective. That’s fine, but make sure everything you do is driven by and validated by data and measurement.
At the end of the pipeline, when your salesperson is closing the deal, personalization can be appropriate and even necessary. To resolve your prospect’s last few objections, you need a deep knowledge of their situation and challenges.
At the beginning of the pipeline, though, automation and standardization are your friends. Develop your core message, and especially your value proposition. You can gradually get more personal as leads progress through your pipeline, steering them to information focused on their industry or location, for example
Keep your pipeline clean
It can be hard to take bad leads out of your system, or even to admit to yourself that they are bad. The reality is, not everyone who responds to your marketing is ready to buy—especially if they didn’t show strong interest in the first place.
Make a point of checking your pipeline regularly for leads who have gone “radio silent” or who have been stuck at one particular stage for a long time. When leads have been in your pipeline significantly longer than your average sales cycle, the chance of them converting dwindles.
You don’t have to delete their contact info completely, but you also don’t want to spend too much time on them. Focus on the prospects who are most likely to buy.
You can send these leads a “break up” email, giving them one last chance to respond to you—for now. Set their contact information aside and consider reaching out in a year or so, when their situation may have changed.
If your pipeline is clogged with bad leads, it can become difficult to analyze accurately. Your forecasts won’t be as valuable.