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Sales Pipeline: All the Stages Step-by-Step to Build One

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Sales Pipeline: All the Stages Step-by-Step to Build One

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To optimise the sales performance of your company, you'll need to organise the sales cycle. One of the most popular techniques to streamline and organise your sales activities is through a sales pipeline. The sales pipeline helps sales teams visualise the flow of leads, keep track of their sales cadences, and emphasises the idea of keeping the pipeline full and flowing.

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For a better understanding of what a sales pipeline is, how to put a sales pipeline in place, and its benefits, continue reading!

What is a sales pipeline?

A sales pipeline is a visual way to track potential buyers through the sales tunnel (also known as a sales funnel). Like a sales tunnel, the sales pipeline helps sales representatives organise their activity and track where each lead is in the sales tunnel. 

The difference between a sales tunnel and a sales pipeline is a matter of scale. The sales pipeline defines the specific steps salespeople will take to shepherd a lead from first contact with a salesperson to final conversion. It's a “shorter” or more limited process in comparison to the sales tunnel, which tracks the prospect from when they first become aware of the company–awareness which may or may not include a first contact. A sales pipeline can include actions like a prospect responding to a cold email, or agreeing to a sales demo. Often the actions of a sales pipeline can include a sales cadence or automated outreach through a sales prospecting tool.

Sales pipelines help the sales teams to break down prospecting responsibilities into easily digestible and traceable tasks. Thanks to the sales pipeline, the sales team will know if the lead is qualified, what actions the lead has already taken, and minimise the risk of a lead falling through the cracks.

What are the stages of a sales pipeline?

A sales pipeline can vary tremendously from business to business, including in the number of stages included. A small business may have only a few stages, while a business with a complex sales process may have as many as eight or nine stages in their sales pipeline. The specific needs of the business will determine what stages comprise the sales pipeline. For example, if you sell a SaaS, a live demo will most likely be a key stage in the sales pipeline. In the same vein, a real estate agent will need to show prospects a property, either in-person or remotely.

However, there are certain moments in the sales pipeline that are commonly included, regardless of the business size or industry, which we have listed below. These common steps provide a basic structure for businesses who are just putting in place a sales pipeline and need a starting point. Eventually, as your pipeline becomes more mature and you experiment with it to improve performance, you'll tweak this basic formula to create a sales pipeline that serves your business's specific needs.

Prospecting

Prospecting is the process of finding potential buyers who have a need for your service or product. The prospecting stage of the sales pipeline varies tremendously depending on the products and services, its current operational infrastructure, and the client base targeted. For example, if you know your client base is often on a specific social media channel, running digital marketing campaigns on that channel could be a useful prospecting channel.

Lead qualification

Lead qualification is when a prospect is verified to have certain qualifications which confirm they would be able and willing to purchase your product or service. Qualification is a key step in the sales pipeline because it ensures a baseline level of efficiency for your sales pipeline. After all, it wouldn't make sense for sales representatives to spend time pursuing a contact who wouldn't have decision-making power, or who has indicated they don't currently have the budget to commit to your service.

Compiling the criteria for a qualified lead goes far in organising this step of the sales pipeline. You can ask the most common questions, which we've listed below, but it's definitely worth keeping an eye on this step of the sales pipeline. For example, if you find that converting customers have a common characteristic, you may want to start checking for it during the qualification process. If the lead has that characteristic, you will know it's worth prioritising them.

  • Is there a budget available to invest in your product/service?
  • Is my contact a decision maker?
  • Will your product resolve an obstacle or product they face?

Meeting Proposal

The title of this sales pipeline step is self-explanatory. But while it may be straightforward, it is not simple. You can use multichannel outreach to schedule a meeting to maximise the chances of reaching the lead on the right channel, at the right time. And be persistent!! Though one cold call can lead to success, persistence is usually what makes the difference between a won or lost deal.

Negotiation

During the negotiation period, you build a relationship with the lead so you have better insight into their needs and how to manage the negotiation. Focus on establishing a healthy back-and-forth with the prospect–using an omnichannel communication strategy is very helpful during this step. If you leverage an omnichannel approach, you can reach the lead on their preferred communication channels at a time that's optimised to capture their attention. This helps to build the lead's awareness of your business's products and services so they can visualise how it might transform their daily life. 

Additionally, the conversations you'll have during this step will reveal the lead's priorities, the obstacles they face, and other practical considerations like budgets, onboarding, and the right timing to implement a new product or solution.In short, these exchanges will help you finetune your final negotiations.

Deal won or lost

This last stage in the sales pipeline is related to the sales closing. Once you've finalised the negotiations in the previous step and the terms of the deal have been agreed upon, now is the time to prepare the contract and finalise the sale. In an ideal world, the transition from the negotiation step to the sales closing would be smooth. However, the reality isn't always so straightforward.The lead could demand last-minute concessions, or even just disappear entirely. If they demand concessions, it's up to the sales representative to work with the lead and other stakeholders to find a deal that works for everyone. But if the customer disappears, don't lose all hope. You can reach out a few times to restart the conversation, then let them know they can always contact you at their convenience to finalise the sale.

How to build a sales pipeline

Building a sales pipeline can seem like a daunting, time-consuming task. That's why it's best to split the process into steps. This organises the process of building a sales pipeline and helps give you an understanding of how much time and how many resources will be necessary to get a pipeline in place.

1. Compile a list of your prospects

This is a great place to start building your sales pipeline. By making a list of your current prospects, you'll be able to place them in the correct sales pipeline stage by grouping them together based on commonalities. If you've already begun organising your sales pipeline, this is the perfect chance to evaluate if it is still the best possible fit for your business. Understanding the sales pipeline and tailoring it to your business is an important part of creating a healthy sales funnel–we cover that in the next section, so let's dive on in.

2. Define the current sales funnel

The customer journey is complex enough that it's nearly impossible to completely outline down to the last detail. After all, you can't account for all the influences that will eventually lead a prospect to purchase your product or service. With that being said, there are operational measures (like a sales pipeline or sales funnel) which help you understand how ready a prospect is to convert and if you should invest time and resources into developing the sale. The sales funnel tracks a customer's interactions with your business from awareness to conversion and beyond, especially if customer retention is a focus of your business. A sales funnel, like a sales pipeline, is most optimised when it's personalised to your prospects. The more specific it is, the better. So to help you define and/or create your sales funnel, we've put together the following general framework.

Connect

This is a first interaction with the prospect, so you'll have proof of their interest and an avenue to begin actively discussing their needs. Though the sales funnel technically begins with the lead becoming aware of your business, the first contact is considered a key moment because if the lead interacts with your business, it's usually a sign of interest.

Appointment set

You schedule an appointment with the prospect to understand the obstacles the lead is facing, and what they would qualify as their needs.

Appointment completed

At this point, you'll know whether the prospect is a sales qualified lead or not. Now that you're able to make that determination, you can decide whether to continue spending time on the prospect. If the lead is qualified, you can take this time to review their obstacles and desires and put together a solution tailored to their needs.

Solution proposed

At this point, you can gather feedback from the lead on the solution you've offered to refine it. Being in listening mode is the best approach at this stage. The more personalised the offer you can create, the better chances of a conversion.

Proposal sent

Now that you've explored their needs and expectations, you can send the final offer and complete any negotiations necessary.

3. Calculate success rate at each stage of the sales pipeline

Looking at how well each stage of your sales pipeline converts will help you to understand which steps are working well and which need improvement. Understanding this metric will help you not only understand weaknesses in the sales pipeline, but also how long prospects spend in each stage of the sales process. This is valuable information because calculating the average time it takes for leads to complete the sales process will allow you to calculate your average sales cycle. That metric gives you insight into how you can shorten the sales cycle and increase the performance of your sales team over time.

4. Define any obstacles or blockages affecting performance

As you look at your sales pipeline, you'll probably stumble upon obstacles or issues that lengthen the sales pipeline or cause sales opportunities to fall through. Now is your chance to put together a plan of attack to minimise those obstacles so your sales pipeline has a good flow.

5. Calculate revenue targets

When you take a look at your sales pipeline and sales cycle length, you'll have the background information necessary to either calculate, or recalculate, your revenue targets. The idea is to take into account all the information you have compiled thus far to create goals ambitious enough to motivate the team and reasonable enough they won't get discouraged.

6. Create or adapt your sales pipeline

Now that you've gathered all this information and defined the actions to optimise your sales process, the time has come to create your sales pipeline. As mentioned previously in the article, you can use the five steps of a sales pipeline to create its structure.

  1. Prospecting
  2. Lead qualification
  3. Meeting Proposal
  4. Negotiation
  5. Deal won or lost

7. Monitor the sales pipeline's effectiveness and improve it as necessary

You've created your sales pipeline–congratulations! One of the best things about having the sales pipeline in place is that you can now track its performance. You can evaluate the steps individually and as a whole and run experiments to improve it. The best practice is to implement changes slowly and run experiments individually so you can isolate the effects of each action. By methodically running experiments, you'll be able to optimise your sales process in the short and long term.

How to improve a sales pipeline?

As we just covered, one of the most important ways to improve your sales pipeline is by monitoring it and running experiments to optimise the separate steps. You'll want to choose your experiments based on your own business's needs–but here are a few ideas to get you started.

One-to-one coaching

Improving sales performance is a complicated task, especially since at a certain point, individual coaching is necessary. Luckily, technology can ease the coaching process so you can experiment with it at scale. A sales enablement tool that uses AI-powered sentiment analysis to identify performance metrics like interruptions, monologues, and more. Plus, it will identify moments of strong emotional reaction from the prospect so you can refine your sales scripts.

Maximise revenue

There are a few ways to maximise revenue. One of them is shortening the sales cycle, as we discussed earlier, but you can also increase the deal size through cross-selling or upselling, or automate prospecting with a sales prospecting tool. Any of these methods would make a good experiment for your sales team to try out!

Streamline the sales pipeline

Sales representatives often struggle with large workloads–which is why the sales pipeline should work with them, not against them. With that in mind, making sure the sales pipeline is effective but not clogged with unnecessary tasks is key. Automating prospect outreach with sales prospecting tools like Cadence by Ringover goes far in lightening the administrative workload sales representatives face. That's in large part thanks to the possibility to automate messages and create templates the whole sales team can use.

Sales pipeline metrics

We've discussed the ways to improve your sales pipeline and manage it, but not the right way to measure its performance. Sales team feedback gives important insight into the sales pipeline success, but here are a few of the metrics you can use to evaluate your sales pipeline.

  • Number of deals in pipeline: Knowing this number will help you understand what revenue you can expect in the future.
  • Success rate at each stage of the pipeline: Understanding how efficient each stage of your sales pipeline is will help you decide if you need to adjust a certain stage. This is also a useful metric for identifying high-performing points in the sales pipeline. If you can isolate what factors are leading to that success, you may be able to replicate them at other points in the sales process.
  • Average deal value: This metric will aid with revenue predictions and deciding what deals need more of your energy. If you have a series of smaller deals that could convert quickly, those short term wins may be worth focusing on over a time-consuming but large deal.
  • Average win rate: This metric helps you pinpoint how many sales qualified leads who enter your sales pipeline actually convert. This metric sheds light on how each individual sales representative is performing, as well as the team as a whole.

How to manage a sales pipeline

Keeping a close eye on your pipeline is important. If you don't give it the proper attention, you risk it becoming more of a hindrance than a help. Plus, managing the pipeline will help you keep an eye on the sales process as a whole. Here are the 8 best practices for managing a sales pipeline.

8 best practices for sales pipeline management

  1. Follow up. Persistence pays off, but it's difficult to do. Supplying your sales team with the latest technology, like a sales prospecting tool, will help them manage the administrative load associated with following up many leads over long periods of time.
  2. Automate your sales pipeline. We've already mentioned sales prospecting tools–they're an invaluable tool to help sales teams save time and improve performance. A sales prospecting tool like Cadence by Ringover allows you to send automated outreach to leads through multiple channels. It integrates with other business software, like CRMs, and also simplifies daily life for the sales team. Each sales representative will have an automatically generated to-do list, the ability to create templates, and access individual performance analytics so they (and their manager) can understand how they are doing.
  3. Invest in the most qualified leads. Once you start tracking the conversion rate across the sales pipeline stages, you'll start to recognize the leads most likely to convert. With that knowledge on hand, you can prioritise these leads to ensure the sale goes through successfully.
  4. Drop leads when necessary. If a lead has clearly stated they're not interested in your product or service, when they have stopped responding to outreach, or if they can't progress to the next stage of the sales pipeline, it's best to cut your losses and stop investing time and resources into that lead.
  5. Keep an eye on the sales pipeline metrics. We've covered why this is important to keep your sales pipeline healthy, measure its efficacy, and successfully close the loop on experiments. But here's another reminder! Your sales pipeline will always be in flux, so checking in on metrics frequently will help you to understand how your pipeline fluctuates in the long and short term.
  6. Keep your pipeline updated. If the information in your pipeline is outdated, it's not just not helpful–it could be misleading and even detrimental. To keep the information in your pipeline accurate, the sales team could spend time on those administrative tasks. Or you can opt for a sales prospecting tool that will automatically log updates.
  7. Strive for short sales cycles. A long sales cycle is one of the biggest challenges for B2B sales representatives, as an extended sales cycle can prevent them from achieving their goals and generally distort performance metrics. Plus, the longer the sales cycle, the stronger the possibility the sale will fall through. There are many techniques to shorten the sales cycle, including contacting the lead more frequently or offering product demos earlier in the sales pipeline. The best thing to do is experiment to find what works best for your business!
  8. Standardising your sales pipeline. There are many individual preferences that can muddy a sales pipeline: the customer's preferences, the salesperson's habits, and so on. Rather than getting stuck in all these specificities, look for the commonalities. The customers who progress quickly and successfully through your sales pipeline likely share significant commonalities. And the most successful salespeople on your team probably share things in common too! So take a look at what your best leads and sales representatives have in common–you can use this information to standardise your sales pipeline. Once it's standardised, your team will scale more easily and work more effectively.

Sales Pipeline FAQ

What are the steps in a sales pipeline?

The steps in a sales pipeline vary according to the business's needs, but they usually include the following sales pipeline steps.

  1. Prospecting
  2. Lead qualification
  3. Book a meeting
  4. Propose the product or service
  5. Negotiate the deal
  6. Close the sale
  7. Retain the customer

Is a sales pipeline the same as a CRM?

A sales or CRM pipeline provides a visual representation of the sales cycle. The objective of a sales pipeline is to organise prospects and refine the sales development process. A CRM is a software that helps businesses to develop, track, and maintain relationships with leads and, eventually, customers.

What is the difference between sales funnel and sales pipeline?

A sales pipeline and sales funnel are similar, but the sales pipeline provides more detail about getting the lead from first contact to the sales closing, including deal value size and how close the lead is to converting. The sales funnel is also a visual representation of the lead's interactions with a company, but is relevant to the marketing team too. That's because it covers all the contacts between a lead and a business.

What are the five stages of a sales pipeline?

The five stages of sales pipeline are

  1. Prospecting
  2. Lead qualification
  3. Meeting Proposal
  4. Negotiation
  5. Deal won or lost

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