As a sales leader, pipeline management is one of the most challenging aspects of your job.
In the past, communication only took place through phone, snail mail and in-person meetings. Cold-calling was the strongest tool in your sales arsenal.
In 2007, sales pros could reach prospects one the phone in about one out of four attempts. Today, it takes about eight tries to get a potential client on the phone, and sales cycles are longer.
Your role as a sales leader is vital, but it means you don't usually hear from prospects until they're almost ready to buy. It takes heaps of patience & organization to keep track of potential leads.
Not only that, but the vocabulary of the industry has become more complex.
In this post, we'll review the concepts you need to know to understand sales pipeline and offer specific strategies on how to manage sales pipeline effectively.
Sales terms you need to know
Sales jargon can be confusing.
Before we dive into what a sales pipeline is in more detail, let's cover some commonly misused sales terms.
Though the following terms are related, there is a difference between the terms sales pipeline, sales funnel and sales process.
- Sales pipeline: Traditionally, this meant the stages a prospect moves through in their journey from stranger to customer. The sales rep moves this process along. Sales pros also use the term sales pipeline in another way. They often refer to their "pipeline" as the dollar value of current leads they are moving through the stages of a pipeline. While it's fine to use this term, sales forecasting is a more accurate way to refer to the amount of potential revenue in your pipeline.
- Sales funnel: The stages a prospect moves through in their journey from stranger to customer. As mentioned, this is often confused with sales pipeline. The stages in the funnel are different than the pipeline, and the prospect is the one in control of how they move through those stages.
- Sales process: What the sales rep/team does to help prospects through the pipeline. These are specific actions, not stages as in the pipeline. Sales process & sales pipeline are often used interchangeably, even though they have different meanings.
Because different teams use these concepts to refer to different things, it's important to clearly communicate what you mean by these terms and how you expect them to be used on the floor.
Do sales pipelines fit into inbound marketing?
Inbound marketing is a bit of a buzzword these days. Specifically, it's a marketing process pioneered by HubSpot as a way to convert prospects digitally, using content to attract them.
What is inbound marketing? Inbound marketing uses a sales funnel that prospects move through on their own. The traditional sales pipeline is a function of outbound marketing, though it may be adapted to work well in an inbound marketing process.
As the internet became an integral part of our everyday lives, companies dived into the bottomless ocean of inbound marketing – sometimes hastily. Many abandoned traditional sales techniques (a.k.a. outbound marketing) altogether. The sales pipeline was ignored because it didn't fit with the inbound marketing model.
What followed was an explosion of content: blog posts, landing pages & email newsletters galore. Back in 2014, business expert Mark Schaefer saw the writing on the wall and we entered the age of content shock.
Today, thankfully, many businesses take a more balanced approach. This raises the question, though: does inbound marketing with content still work?
Of course it does.
But, there are certain situations where traditional outbound marketing techniques often work better. This is where sales pipeline management becomes a critical skill for sales leaders to have. Some examples where outbound is more appropriate include:
- High-ticket consumer goods with five- to six-figure price tags
- B2B services with long-term contracts
- Service-based businesses like home contractors, etc.
Inbound marketing & outbound sales are the perfect pair in omnichannel marketing strategies. This combines traditional outbound techniques like TV ads and cold-calling with inbound marketing techniques like landing pages and educational content.
Stages of the sales pipeline
Sales pipelines are structured in stages based on how close a prospect is to converting from a stranger to customer.
Sales pipeline stages can look very different depending on a variety of factors, including:
- Businesses that rely on one-off projects or services
- Subscription-based business models (software subscriptions, web hosting, service contracts)
- How many sales are needed to achieve company revenue goals for a specified time period (monthly, quarterly & yearly are the most common).
A business that relies on one-off projects will need more prospects in the pipeline than a subscription-based model because the length of the relationship is usually shorter.
Here's a basic pipeline that works across all business models. The length of time each prospect stays in a specific stage (and the number of leads needed in each stage at any given time) vary greatly.
- Prospecting – the process of finding potential buyers for your product or service. 40% of sales pros say prospecting is the hardest part of the job.
- Qualification – when you determine the prospect is a good fit. This can happen via meeting, phone call, email, or some other method.
- Proposal – After qualification, you present a proposal to a prospect. This can be verbal, delivered via a formal document (most common in high-ticket sales), or even sent as a price list.
- Sale – If the prospect accepts your proposal and buys, they are now a customer.
CRM (customer relationship management) software is a great sales tool to help determine where your prospects are in your sales pipeline. It can also help you analyze the prospects who didn't make it to the end of the pipeline.
Sales forecasting: How pipeline value is calculated
Pipeline reports provide a dollar value of all deals currently in a salesperson's pipeline. Most CRMs automatically calculate this amount.
We mentioned before that sales forecasting is a better way to talk about what's in your pipeline. There's no 100% guarantee that all those prospects will become customers, so it's important to keep filling your pipeline with prospects to continue closing deals.
Experienced sales leaders can often predict (not 100%, but often) which leads are likely to turn into customers quickly (hot leads), which will take more hand-holding (warm leads), and which are likely to fizzle out. Over time, you will develop and refine this sense as well.
Tools of the sales leader's trade: CRMs & sales collateral
Both newer technology and "old school" techniques play a crucial role in sales. Here are two of the most important sales tools to master.
The more leads you have in your pipeline at the same time, the more likely it is you'll need to use a tool like a CRM to keep track of all your customers & deals.
Software programs like Salesforce harness the power of technology to keep you organized without a secretary. You can track all emails, calls & meetings with particular prospects or client companies.
CRMs provide huge benefits to those who deal with a high volume of leads, because you can:
- create pipeline reports
- see percentage of deals won versus lost
- automate follow-up and check in with your leads via drip emails
- attach branded materials like brochures & sales sheets to emails
When used efficiently, CRMs eliminate the tedious work of keeping track of which lead is in what stage of the sales pipeline. CRMs like HubSpot Sales have mobile apps that connect to phones so you can record conversations.
Before the internet was around, sales collateral (like brochures & business cards) was mailed, handed out or left behind at in-person meetings.
Now, meetings take place both in person and virtually. But, that doesn't printed sales collateral is dead. Far from it.
If a prospect is meeting with you, they are probably interviewing several potential vendors at once. Since companies often provide a lot of information (like flyers) about different products & services, the prospect needs an easy way to keep everything organized.
Because information is exchanged both in person and via email, all your company's sales collateral should match so the prospect knows which flyer belongs to what company. This way, they can make an informed decision using all of your information. If you email them a plain Word document but hand them a colorful flyer that looks completely different, they might mix up or throw away critical information and you lose the sale.
That's why Lucidpress is a stellar sales tool for your entire organization. It gives your entire team flexible access to branded sales & marketing templates.
Though you likely won't be involved in designing the documents, sales reps on your team can use Lucidpress to provide prospects with the same documents digitally and in print. They can also personalize everything they hand out, so prospects feel seen and know how to get in touch quickly & easily.
With branded templates, you don't even have to worry about whether colors, logos & fonts are being used properly – those assets are already present & locked down, so everything stays consistent.
Sales pipeline management tips & tricks
Ready to learn some pro tips for managing your sales pipeline? Check out these six strategic ideas to master the process.
- Don't use a CRM if you don't need to. If you're responsible for managing only a few leads at a time, a CRM may be overkill. You can often get away with using a free CRM like Streak – or even a spreadsheet.
- Know your numbers. Even if you don't use a CRM, you should still measure your average sales cycle, average dollars per deal, average lifetime value of a customer, and retention rate.
- Use your numbers. Take advantage of the data you uncovered to make decisions regarding how much time you should spend working with prospects, how often to follow up, and when to give up on an unresponsive lead.
- Keep accurate records. Your team has to keep track of who they're working with and what's been discussed, especially if they're working with multiple people at the same company.
- Cold-calling is your friend. It's not as scary as people make it out to be. If you get a prospect's voicemail, keep your message between 8 and 14 seconds.
- It's okay to use your personal phone. These days, most people have consolidated to one phone with one number. If you plan to use your personal mobile for business, record a professional voicemail greeting.
Managing your sales pipeline can be complicated, but it isn't impossible. Here are some key points to remember as you tackle this month's quota:
- Understand the difference between pipeline & funnel, and make sure your team understands how you're using these terms.
- Mastery of sales tools like CRMs & sales collateral make it a lot easier to close deals.
- Follow best practices to manage your pipeline – they really work!