26 September 2022
You could say that the sales pipeline is a big brother of the sales funnel. Well, both tools are designed to provide planning and measuring a company’s performance. However, they are still different from each other. Typically, the sales funnel focuses on conversion, while the pipeline is a set of stories of how a lead is turned into a deal.
Statistically, 61% of sales managers admit that selling has become harder or much harder than it was five years ago. Deals are not some kind of “magic” where a customer suddenly decides to buy. In a B2B environment, the customer needs to go through certain decision-making stages before the deal is confirmed.
For example, a company that discusses specific delivery details and contract wording is certainly much closer to finishing the deal than a company that says your offer sounds interesting and they will definitely think about it.
The more steps the client goes through, the more likely it becomes ready to close the deal. The task of the pipeline is precisely to keep track of the stages on the deals and the dynamics of those stages.
The distinctive feature of the pipelines is that they are leading indicators, not lagging ones, like the sum of all deals already closed. That’s why the management of the pipelines is, in fact, the key sales management tool.
Here is a partial list of questions that pipelining can provide answers to:
- Are there enough deals being managed by the team to meet the plan?
- Are we attracting the customers we want to work with and are we selling what we have planned?
- Is our prospecting process correct and what online prospecting tools are we using?
- At what stages of the sale are we having problems?
- Do we have enough time to properly manage each sale?
- How much revenue can we predict by the end of the month/quarter?
The purpose of pipeline is to measure the quality, process, progress and quantity of all deals here and now.
In order to estimate sales results objectively, you need to divide your sales pipeline into several stages.
Phases of Pipeline
Pipeline can and should be divided into stages:
1. Planning phase – in this phase, managers and supervisors evaluate the progress of sales and forecast the deals. This is necessary in order to reasonably delegate tasks and to focus on what needs to be completed soon.
2. Action phase – in accordance with the plan, the manager and supervisor move on to work with clients from the pipeline. For example, during the planning phase, it becomes clear that three clients have not yet been scheduled for meeting. The probability of success in closing the deal is estimated at 70%. Then employees are instructed to close these clients as soon as possible.
3. Analysis stage – the results of the working day are summed up, supervisors evaluate the managers and make reports. Satisfied with the results, managers go home, and supervisors think about further improvement of the indicators to be worked on. This completes the circle – they return to the planning phase.
The advantages of pipeline sales management
There are several advantages to manage sales with pipelines:
- Pipeline helps to predict sales volumes, the outcome of deals and the performance of the entire department. It is useful for an average employee as well as for the executive manager;
- It indicates the stages where objections, rejections and conversions are the highest. This allows you to work on your mistakes, adjust your sales techniques and improve your results;
- The pipeline gives you a detailed picture of your sales in real time;
- An excellent alternative to the CRM system, if such system is not yet integrated into the business processes;
- The competent allocation of the department’s resources. It is easier to plan working hours, days and even weeks;
- Pipeline requires constant updating, which means it teaches employees and their managers discipline and effective management;
- Pipeline is versatile: it can be used for both reporting and planning.
How to create a Pipeline
The process of creating a pipeline consists of several steps:
1. Collecting information
Before you can create your pipeline, you need to identify the following important indicators:
- The main contact channel. You need to understand how potential customers learn about your product (online prospecting, visibility, e-mailing, other marketing methods).
- Industry and target audience. Your product has good features and is well positioned for lots of customers. However, it is more appealing to some specific categories of consumers. They are the ones you need to target in your work. To segment your B2B audience, you should use digital tools to generate a list of qualified leads.
- Decision makers. A company needs to pay attention to the number of contacts from the customer side that they need to keep in touch with. Strategies when interacting with a CEO, an IT professional or a finance officer make a significant difference.
- Transaction volume. Some clients are prepared to make a purchase for 5000 euros, whilst others are ready to purchase for no more than 500 euros. Accordingly, based on these amounts, customers need to be segmented as well as personalized in presenting your product.
- Probability of completing a deal. Even if you have a large number of potential customers, your sales staff won’t be able to close deals with everyone. You need to estimate the probability of each lead moving from potential to actual customers. This analysis can be done from call center conversations or sales exchanges.
2. A list of potential customers
The first thing you need to work with is a list of customers who want to buy your product or, at the very least, a list of prospects as detailed as possible. In the case of B2B, the list should include the name of the company, the names and positions of the decision makers and their contacts.
One of the ways to create such lists is using online-prospecting tools, like EasyBusiness – they allow not only to generate lists of potential buyers by your criteria, but also to share them and export their data into an Excel file, then this information can be integrated into your CRM system or, in the case of EasyBusiness, those companies could be turned into accounts and assigned to different sales managers, that can follow up and manage the sales process directly on the tool thanks to its Add-on Solution called Sales Accelerator.
3. The sales process
The sales process is a step-by-step sales formula with a clear structure. Each step is described in detail, refining the actions that lead to the successful completion of the deal. Ideally, employees will be able to sell simply by following instructions.
It’s necessary to have a description of the sales process, with clear criteria for moving from one stage to the next. What’s more, if a team doesn’t have a good understanding of the sales process, it is not clear who and how can manage what in such a team – it is estimated that around two thirds of sales managers do not follow the sales process.
You need to know which actions the team performs most often have a significant impact on sales. This is what will help to create the stages in the pipeline.
4. Targeted income
Pipeline is a tool, the use of which will help you meet your revenue targets. In order to create an effective sales process, you will need accurate figures showing information on the number of transactions that need to be added to the pipeline in order to meet the plan. Information on the number of customers moving from potential to actual buyers will help predict the number of deals needed at each stage of the pipeline.
Pipeline is a tool that everybody in your company really needs. You have to make it available not only to the sales and marketing staff, but also to other responsible employees.
It is important that each employee understands exactly his or her place and role in each phase of the pipeline. In addition, it is sometimes vital to look at the process of a particular deal and overall sales from a different angle. An outsider’s view helps to see possible shortcomings in the plan before and during its implementation.
6. Planning stages
No two companies are identical. Therefore, each company makes its own plan. The number of stages in any pipeline depends on the following factors: product, visibility, quality of leads and how you contact potential customers.
For example, in SaaS, product presentation is highlighted as a separate stage. Car dealers give the first place to test driving, realtors give priority to an apartment show.
It is rare for a pipeline to work perfectly on the very first try. It can take time to figure out which steps are right for your business and which could be excluded from the pipeline.
Pipeline is one of the proven tools for controlling all business processes of a company. Use the principles of Pipeline Management in business and marketing to improve your sales performance.
How to organize online prospecting? How can you regularly generate qualified leads for your pipeline? Contact us and we will help you make your Sales Pipeline an effective sales boosting tool.