How to Build a Sales Pipeline
It is safe to say we all know that:
Consistently closing deals is impossible without a system in place.
Worse of all, it feels like you are accomplishing nothing because the metrics are not tracked.
Organizing thoughts without structure doesn’t help anyone, that’s why learning how to build a sales pipeline is a necessity for any sales team.
So if you want to increase your revenue, then keep on reading.
What Is A Sales Pipeline?
The goal of a sales pipeline is to increase revenue by tracking the buyer’s journey. This is effective because you can cater your efforts to best match which stage a lead is in during your sales process.
This pipeline allows you to see where each lead is within the stages of your sales process, and track every relevant metric. Knowing where deals are slowing down and which actions are bringing in the most revenue is the only sure way to increase the bottom line.
Another advantage of a sales pipeline is to be able to breakdown goals into smaller manageable chunks. This allows reps to have daily goals that are the building blocks of larger goals.
Different companies have their unique sales process, and their pipelines reflect that. It is common for a single company to keep track of multiple pipelines for each different product or service they sell.
Common Sales Pipeline Stages
Each industry has its own standards for what is common and can produce the best results.
To provide a consistent and quality experience, practice taking each and every lead through the stages of your pipeline. Although on infrequent occasions, a prospect will jump ahead some stages. If this happens, make sure to cater to the prospect. If they are hungry for your offer do not make them wait.
Here are the most common stages that I see time and time again.
Prospecting (the stage before pipeline stages)
Before a deal is added to your pipeline it will be in a prospecting stage. This is where marketing and sales will be working to build interest in your product or service. To do this, you are going to need a prospecting sequence. This allows you (or your SDR team) to focus on the most effective activities by prioritizing them. This is super helpful for prospecting across multiple channels.
(If you don’t already have a prospecting sequence, check out our ultimate sequencing guide)
Note: Prospecting is separate from your sales pipeline stages. It's what I call "pre-pipeline."
Now that we have differentiated, lets get into the common sales pipeline stages.
This stage is for when there is an initial meeting is meant to learn more about the prospects needs, and give them a high-level overview of what your product/service can help them with.
This is a great stage to do s deeper qualification for each lead. This way you know if they are a good fit before going through the entire sales process.
Operations: A deal should be created and put in the Discovery stage when a discovery meeting is scheduled.
This next stage is when there is a scheduled meeting to show the prospect the capabilities of your offering. If you are selling software, you’ll want to give them a demo over Zoom that showcases how your product/service can help them.
(Depending on your product/service, you can combine the discovery and demo meetings)
Pay attention to your client's pain points and what is most interesting to them.
Operations: A deal should be put in the Demo stage when a demo is scheduled.
Provide your client with a plan to address the price and implementation method of your offer.
Powerful proposals are created around how your company can aid your potential client’s problems. This can be done by comparing your price to the amount of value the potential client will receive. It should also answer this question: "Why will your offering be better than the other vendors your client has seen recently?"
Operations: A deal should be put in the Proposal stage when a proposal meeting has taken place.
The negotiation stage is useful if you sell a more complex product that requires back and forth negotiations on contract terms, services, and price.
Operations: A deal should be put in the Negotiation stage when the prospect indicates intent to move forward and has brought up potential changes in the original proposal or a contract has been sent.
Congratulations! Now it’s time to complete your side of the deal. (and of course, send over a contract that reflects the negotiated deal.)
Operations: A deal should be put in the Closed Won stage when the contract is signed.
Don’t worry if this happens, it is inevitable to have some lost deals. Ask for a referral from everyone, regardless if they buy or not!
This stage is important because it will give you information on why a deal didn't close which you can use to improve the product, or your process. For this, make sure you have a "closed lost reason" field where the sales rep indicates why a deal was lost.
Operations: A deal should be put in the Closed lost stage when the prospect tells the sales rep they are not going to move forward.
How To Build A Sales Pipeline From Scratch
Define the stages of your pipeline
The key is to start out simple and not overthink things. Once you have collected data you can finetune your pipeline.
At this point, action is more important than planning too far ahead into the unknown.
To start out, use the stages I gave you in the previous example or study the pipeline stages of other companies within your industry that closely resembles what you want to become. This is better than starting from a blank doc, because the other companies will have the knowledge and experience that you do not have.
Action Step: Study the pipeline stages of companies within your industry to determine your own stages.
Define your target market and set goals for your company.
What does your pipeline need to look like to have a healthy revenue flow? This is so you can start to build your goals out backward.
Narrow down what your target market looks like to be able to provide the best experience for them.
In the beginning, this might be a little bit of a shot in the dark because too many variables are unknown (like your close rate). That’s ok, but as time goes on you will be able to perfect your goal setting, so it is important to start now.
Action Step: Define your target market and set long-term goals that are tied to daily activities.
Keep activity consistent
The fact of the matter is that when you are learning how to build a sales pipeline from the ground up, you are going to have to do a lot of activities.
At these early stages in your business’s sales process, it is crucial to build momentum by keeping your sales activity consistent.
The top three revenue increasing activities are cold calling, cold emailing, and LinkedIn outreach.
Once again, I cannot emphasize enough the importance of tracking everything that is going on in your sales efforts. This is the only sure way to learn how to build a sales pipeline that is outstanding.
In another article, I cover the best sales development metrics to be tracking.
Action Step: Keep your sales activities consistent and track every metric.
Perfecting Your Sales Pipeline
Once you have a nice track record of deals closed, it is time to analyze your metrics to understand what your most important priorities are, and what priorities are less urgent.
Analyzing your metrics is without a doubt the best way to increase your sales pipeline.
The quick rule of thumb is the revenue goal divided by the close rate.
For example, if you have a $1M quota and a 10% close rate you need $10M in the pipeline.
A common problem I see is when a sales rep (or team) slows down the actions at the beginning of the pipeline (prospecting, inbound lead conversion). This typically happens when a sales team is busy closing deals. The team will have a great month followed by a slow month because new pipeline dried up.
Without engaging with new prospects, there will be fewer leads coming in to close.
Action Step: Analyze your metrics to understand how to perfect your sales pipeline.
Hire more people
Scaling, scaling, scaling. The three buzz words of today!
But here’s the thing, hiring at the wrong time can be detrimental.
Hiring too late can seriously slow down the growth rate of your business. Hiring too soon can take your business into debt.
You should seriously consider hiring your first sales rep when:
- You close at least 10 deals, each with at least a LTV of $5k
- You have been handling all of the sales yourself successfully for 90-180 days
- You have a clear sales process that is working
Implement tools to boost your team's productivity.
A CRM is a must for any sales team. Not only that, but your team will need a stack of tools while striving for maximum productivity.
It is hard to recommend tools without knowing the full situation of your company because each team is a different size with unique problems across an array of industries.
But the most popular CRM’s around are Salesforce and Hubspot.
Action Step Summary
1. Study the pipeline stages of companies within your industry to determine your own stages.
2. Define your target market and set long-term goals that are tied to daily activities.
3. Keep your sales activities consistent and track every metric.
4. Analyze your metrics to understand how to perfect your sales pipeline.
That’s a Wrap!
If this post helped you learn how to build a sales pipeline, let me know!
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