Your sales pipeline is the specific sequence of actions your team takes to convert sales leads into closed sales. This includes every tactic used from sales outreach to negotiation, and hopefully ends with a signed contract.
Without a clearly-defined sales pipeline, you run the risk of missing opportunities to support valuable leads and convert them into long-term, repeat customers. From lead generation to closing deals, a sales pipeline keeps your business on track at all times.
By setting up your preferred sales pipeline stages in a CRM, reps can quickly update opportunities as they progress. They can also easily identify which deals are closest to closing so they can focus their time and effort accordingly.
As leads show more interest in becoming customers in their conversations with your salespeople, you can reflect this in your sales pipeline. From there, you can adjust your marketing approach to focus more on those hotter leads, by sending personalized emails for instance.
By monitoring every sale from start to finish in a centralized system, you can measure your conversion rates at different stages and use this data as a guide to refine your sales and marketing strategy. You get total visibility of all the factors affecting your sales, all in one place.
1. Prospecting: Identify the interest level for your product or service
This first stage involves identifying potential customers who may be interested in your product or service. Lead generation can be achieved via marketing campaigns that leverage email marketing, social media, and paid advertising.
Every organization prospects differently, depending on its clients, products and organizational structure.
Regardless of how you go about it, the first stage in any pipeline is always the same: finding prospective buyers who need what you’re selling.
2. Qualification: Qualify your leads to determine value
Qualification of your sales leads is the next stage of the pipeline management process.
You will need to use certain criteria to identify which prospects are most likely to make a purchase and therefore should be pursued further. The lead’s interest level and marketing persona alignment (as determined in the previous sales pipeline stage) are important criteria. Other key items to look at include budget, need, and timeline for purchasing.
Qualifying (also called “research”) in lead pipelines is all about finding prospects who are the right fit for what you’re selling. Occasionally, lead qualification comes later in the process, after a rep has made contact with a potential new customer.
Lead qualification is an invaluable step, because you don’t want your sales professionals wasting their time on leads who can’t or won’t buy your product, or who might be the wrong fit and cause problems down the line. In this step, you’ll analyze fit via lead scoring and separate hot sales qualified leads from cold opportunities.
Qualifying leads is all about answering the following questions:
- Does your prospect have the budget for your product?
- Can the prospect actually make the decision to purchase, or do they need to convince someone else?
- Do they truly need your product?
- Do they seem ready to buy now?
If you get one or more negative responses, that lead might not be a good fit for your product or service. In other words, they’re probably cold.
There’s nothing wrong with cold leads, you just don’t want to keep them in your pipeline. Instead, save their contact information (or move them to another category if you’re using a CRM with multiple pipelines) and move on.
Approximately 20% of your leads are going to provide 80% of your revenue (according to the Pareto Principle). If you find a prospect who has been clogging your pipeline up for longer than your typical sales cycle, put the prospect in a different category, such as a future pipeline or a future callback list, and set a reminder to follow-up down the line to see if circumstances have changed.
3. Initial Contact
At this stage, you’ve strategically filtered out leads that are not ready to buy, and are zeroing in on those that are. This is when you start to go in for a sale. Schedule a meeting to discuss product solutions to customer pain points. Make sure everyone involved understands the goal of this meeting; having an agenda prepared ahead of time will help keep everything on track. Keep in mind: This is an opportunity to build a business case demonstrating how your product will help your prospect achieve their goals.
At the needs analysis stage, sales reps need to take a step back and look at their products and services from the customer’s perspective. At this point, you should ask yourself: Where is the customer coming from and what problems are they trying to solve?
The goal here is to assess exactly how your company’s offerings can resolve certain pain points. And if the answer is that they can’t, that’s okay too. It’s better to realize this early on than to try to force a sale that won’t benefit the buyer.
4. Value proposition: Assess the value of your product or service
The fourth sales pipeline stage relates to your value proposition. This stage gives sales reps a chance to assess the value of their offerings in the scenario at hand.
Using the information gathered in your needs analysis, you must determine how valuable a customer would find your products or services, based on their pain points. Our findings show that this will improve your ability to promote your products or services in a way that speaks directly to the buyer, rather than simply stating the specs.
5. Negotiation and Closing
During this stage, sales reps negotiate with the prospect to reach an agreement on pricing and other terms. Once both parties agree, the deal is closed.
