Building a Sales Pipeline: How To and Why It's Important
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Sales pipelines are beneficial tools for many businesses and their sales departments as they help with finding potential customers and creating effective selling strategies. If you're hoping to develop a sales pipeline, it's important to understand how they can be helpful to your sales team and the best way to design and develop one. In this article, we discuss what a sales pipeline is, why it's important and how to make a sales pipeline using a list of steps and common examples.
Related: 14 Effective Selling Strategies
What is a sales pipeline?
A sales pipeline is a visual tool to help companies track customers through different stages of the purchasing process. They can come in different visual forms, such as a horizontal bar or funnel, which sales representatives can use to move customers through each buying stage as they get closer to purchasing a product or service. For example, the first stage might be to reach out to a potential sales lead. Once a sales rep contacts the lead, they can move the customer from the first stage to the second stage, which might be answering a customer's questions about the product.
Why is a sales pipeline important?
A sales pipeline is important for several reasons, including:
Manage leads: Sales pipelines are beneficial to a sales department because it helps them manage multiple leads and customers at the same time. Using a visual representation to determine the next step of the selling process allows sales representatives to perform their job duties more easily.
Collect data: When using the sales pipelines, companies can collect data on the different selling tactics they use and their effectiveness. If some selling tactics aren't working as well, companies can easily make adjustments to help improve their sales numbers and revenue.
Improve efficiency: Sales pipelines can help companies improve their efficiency by creating a consistent step-by-step plan all employees follow when securing a lead. Using a consistent plan can make training new employees easier and help individuals develop effective solutions to unique challenges and problems.
What you need for building a sales pipeline
Before building a sales pipeline, it's important to develop a few pieces of important information because it can help make building the pipeline a little easier. That information can include:
Revenue goals: Creating revenue goals is important because it allows businesses to track their progress and determine the effectiveness of their sales tactics. If a company sees that its current sales tactics won't help reach its goals, it can make adjustments to its selling strategies to fix the problem.
Target customers: Before building and enacting a sales pipeline, it's important for companies to understand their target customers. Understanding which type of customers or clients they want to sell to can help them determine the best selling strategies to use, and possibly help them create a list of potential leads.
Team members: As you're designing the stages of the pipeline and the different selling activities or strategies, consider collaborating with other sales representatives. Using a team of strong sales representatives can help you create a powerful and innovative sales pipeline because you have multiple perspectives and experiences that can contribute to its success.
Selling process: It's important to have an idea of what steps the sales pipeline will include before creating it because it can help make the pipeline's development more efficient. If your sales team already has a strong selling process, simply translate that process into steps for the pipeline to follow.
Stages of a sales pipeline
Though every company creates a sales pipeline to fit their own unique needs, there are often some similarities or common stages used in all of them. Here are some of the most common stages for a sales pipeline:
The first stage for most sales pipelines is to find potential customers and sales leads. Some companies choose to use specialized software that automatically generates potential leads, while others choose to use a team of employees to manually research and find new selling opportunities. Though finding leads through special software can help increase the efficiency of finding prospective clients, researching manually can help individuals discover potential leads outside of their target consumer base and possibly contact them more quickly.
Some companies combine manual research and automatic generation by first researching potential clients and businesses and then using the automatic generation to find important information about them, such as their finances and contact information. Having important information about their company and understanding their ability to purchase can help sales representatives know the best selling strategy to use.
Read more: How Do I Find My Target Market?
This stage refers to the initial conversation that employees have with a potential customer, helping them understand more about the product or service and how the employee can help them with the purchasing process. Sales representatives can contact customers in several unique ways, including:
Which type of system sales representatives use to contact individuals from often depends on their target consumer and chosen sales strategy. For example, if a company knows that its target consumer often uses social media, reaching out through a social media messenger can help entice the customer more effectively.
Related: What Is Cold Calling?
Building a relationship
Once a sales representative has contacted a customer, it's important for them to build a professional relationship by communicating with them about the product or service and the benefits it can provide. When building a relationship, it's helpful to discuss a problem that the customer is facing and talk about how the company can solve that challenge. If the customer feels like the company or business cares about their life and their struggles, they might feel more motivated to make a purchase or inquire more about the product or service.
Closing the deal
Closing the deal means finalizing the customer's sale. After building a relationship and answering questions about the company's products and services, sales representatives often have an easier time securing the customer's business, but it's not always a certainty. Sometimes, a customer might not be ready to make a purchase for several reasons, and they say no to the offer or ask for more time to think about it. If this occurs, the company often marks the customer as a "cold lead" because it's a lead the sales team has already pursued and wasn't able to close.
Most often, companies will save their cold leads and follow up with the customer at a later date to see if they have any more questions or if they want to reconsider their purchase. When a sales representative checks in with a customer, especially if they ask them about a specific problem or mention a personal detail, it can help customers feel wanted and possibly entice them to make the purchase.
How to build a sales pipeline
Here is a list of steps to help you build a sales pipeline:
1. Create the pipeline stages
As you develop your sales pipeline stages, it's helpful to examine your major sales activities and how they've positively affected the company in the past. Highlighting the tasks or actions that customers are already receptive to can help you establish powerful pipeline stages that could increase your sales and overall revenue. For example, if a business notices that customers are more receptive to tailor-made services instead of pre-made service packages, the company might create a sales pipeline stage where a sales rep talks with the customer to ensure the service meets their personal challenges or problems.
2. Organize your potential customers
If you made a list of potential customers or leads before developing the sales pipeline, it's beneficial to organize that list into a chart for the sales team. Creating a chart or spreadsheet of the potential customers can help employees mark important information, such as when they've contacted customers, personal details about them and if they were receptive to the initial sales pitch. Recording this kind of helpful information can allow companies to sell their products more efficiently and understand what their next steps should be or if they need to adjust their current method of contacting leads.
3. Research potential customers
Before officially enacting the pipeline, it's important to research your leads and identify the ones that are most beneficial to the sales team. Conducting thorough research can help companies determine which customers they contact are more likely to make a purchase.
For example, if a sales representative researched a potential client and noticed their financial reports from this quarter were fairly low, that client might not have enough disposable income to purchase their product or service. However, if the sales representative works for a marketing or consulting firm, it's possible that low financial reports could mean the client might be more willing to purchase their services instead to help boost their revenue.
4. Review and refine the selling process
Once you've had time to practice your sales pipeline, it's important to review the current stages you've developed and determine if there are areas of the selling process that you need to adjust or refine. Continuing to review your sales pipeline can help you create more efficient and effective selling strategies to increase customer outreach and revenue. Whether you need to add more stages to the pipeline, eliminate some or adjust how you complete them, reviewing your selling activities can help you and the sales team continue to grow and develop.
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