What is a sales pipeline?

DSM Digital School of Marketing - sales pipeline

The term ‘sales pipeline’ gets thrown around so much, you’d be forgiven for thinking it’s a phrase that’s been made up by sales professionals. However, your sales management operations can benefit from using a sales pipeline and it could make a major difference to your bottom line. It’s not a matter of if you’ll see improvements using a sales pipeline. It’s just a matter of how significant these improvements are.

A sales pipeline is a method of monitoring the development of deals which your sales team is working on at the moment and expects to close within a realistic amount of time. The term ‘pipeline’ derives from the concept of deals travelling along a pre-defined path from the preliminary contact with your salespeople to consideration and finally to close. This pre-determined path is known as the sales process and is a vital first step for building and tracking a sales pipeline.

To put this into rands and cents terms:

  • If you currently have a pipeline that is worth R100 000 in contract value – and your conversion rate, from lead until sale, is 10% – then you can expect a close R10 000 worth of new business.
  • If your sales target is R20 000, then you will need to convert twice as many leads in order to reach this goal.

This is where pipeline analysis comes in. If you are able to identify improvements within your sales pipeline which will assist you with moving more prospects from one stage to another, then you’re going to be more effective in your job.

What are the benefits of a sales pipeline?

Having a sales pipeline in your business has a number of benefits. These are the following:

  • Improving your sales process,
  • Forecasting future business results,
  • Analysing different sales strategies for your business,
  • Managing and allocating resources in order to close or service upcoming sales,
  • Reviewing your progress for the current financial year, and

Knowing how far you are from your targets

What are the stages of the sales pipeline?

The sales pipeline has five stages these are as follows:

  • Prospecting
  • Qualification
  • Consideration
  • Decision
  • Close

Stage One: Prospecting

The first step in any sales pipeline process is to identify the businesses as well as people which are worth selling to. These contacts are characteristically identified by using your Ideal Customer Profile (ICP) or your buyer persona. The ICP is designed by looking at the characteristics of the companies which you have successfully sold to in previously.

When you have a list, your sales team goes about attempting to bring them into the sales process. This will be simpler or more difficult depending on the level of awareness that your target buyer has of you in addition to the problem you solve.

Stage Two:  Qualification

Once a new prospect has been presented to your company and made their way into your sales pipeline, it’s time to make the decision about whether or not they are a potential buyer. This stage of the sales process is described to as the qualification stage.

Stage Three: Consideration

In this phase, your prospect is cognisant of your offering and has been vetted by your sales team. They may now be beginning to evaluate their options by looking at products which are similar and determining if it is a feasible option to do nothing at all.

Stage Four: Decision

During this stage in the process, the buyer has made the decision that you have the best solution for the problem which they need to solve. You may be of the opinion that the next step is to negotiate a price and get a contract approved, however the best salespeople now get to work on identifying the final barriers to a deal.

Stage Five: Close

The final step in the sales process is invariably reserved for closed-won business. The only deals which should enter this last stage are ones which have a signed deal or contract in addition to those who do not need any more contact from sales to become a paying customer.

Get in touch with the Digital School of Marketing

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DSM Digital School of Marketing - Sales management