In sales, the more prepared businesses and salespeople are, the higher the chances of winning and retaining customers — it’s fairly straight forward.
Success doesn’t come walking to you. It starts with orchestrating a compelling sales story to sell your product or service, which greatly helps building a robust sales pipeline.
Next, you need to focus on managing your sales pipeline and all the opportunities you have worked hard to create.
Your sales pipeline activities directly reflect your mindset and skillset. The idea here is pretty simple: without a skill set, pipeline management is troublesome. Finding a nice spot for a prospective customer on your sales pipeline relies on putting in more effort than just cold calling or sending an email.
Let’s find out more about the sales pipeline, its different stages, and common sales mistakes that businesses and individuals make that prevent them from closing more sales.
A sales pipeline is an organized way of viewing the overall number of opportunities created and managed over time as they move through multiple sales stages until they are closed as won or lost.
Businesses and salespeople employ a number of sales strategies that will earn them a handful of affirmative responses. Each minor consent on the prospective customer’s part drives the customers forward in the sales pipeline.
Every positive response gets a business closer to closing the sale. Like any other things in life, if the pipeline is managed well, success will be the business ally; if not, the business will likely struggle.
A sales pipeline helps businesses figure out the following:
The number of leads/opportunities and their value
The status of each lead/opportunity and what actions need to be taken to move them to the next sales stage (e.x., when to schedule meetings and when to follow up)
Whether the relationship will last or not and how fast the whole sales process goes
How long it will take to close a sale right from the initial stages
The sales pipeline offers a glimpse into the sales opportunities and peers under the hoods into the health, profitability, and growth of a business.
A healthy pipeline shows how fast each opportunity is moving through each sales process stage, whether they close as won or lost. Pipeline velocity is a key metric for retaining a resilient pipeline.
Importantly, a sales pipeline enables business leaders to assess how a business is performing, make revenue growth forecasts, analyze process efficiencies, and plan corrective measures.
Furthermore, it provides an instant evaluation not only of the business short-term performance but also of the skillset and productivity of the business leaders and salespeople. It enables them to determine how fast they should take action, on which deals to focus on, and where they need to put more effort.
Certainly, the deal size and pipeline balance might change depending on the quarter of the year. Yet, planning a certain amount of time around a sales stage every day helps retain a well-balanced pipeline.
For example, salespeople need to focus on activities that will help build the pipeline when there is a decline in a certain sales stage. Conversely, when the deal size on a certain stage is overwhelming, they might need to evaluate which opportunities present more value and move them forward to the pipeline.
Therefore, the sales pipeline renders a sales team more efficient and effective with the time they spend in each stage. It also makes it easier for them to schedule regular follow-ups with the potential new customer because they know which stages need more pushing.
Generally, a pipeline full of qualified opportunities at any moment in time sets up the success of a business. To this end, sales reps must converge their efforts and attention on pipeline-building activities.
Managing an empty pipeline is an obvious concern, especially when focus is placed on activities unrelated to sales.
Sales pipeline stages refer to the steps and actions that businesses need to make to turn a lead into a customer. Depending on the industry, the offered product or service, customer, and other factors, different businesses have different pipeline stages.
Determining the right sales pipeline stages enables businesses to close more deals, faster.
Below, we list the common sales pipeline stages:
This stage is the foundation of the entire pipeline, which involves the collection of leads and the recording of their contact information. Depending on the marketing budget, businesses can gather leads through social media ads, Google ads, Youtube marketing, traditional printed media, or organic content like blogging.
An important thing to bear in mind is that this stage is not about finding potential customers but helping them find you. To this end, businesses must have an explicit understanding of their ideal buyer personas. Pain points can be minimized by filtering out cold leads as quickly as possible.
Defining the daily, weekly, or monthly numbers around lead generation is critical for building a solid sales pipeline. Setting low- and mid-level revenue goals helps retain consistency and ultimately achieve high-level goals.
Let’s assume a business has set a daily lead generation target of $250. Let’s do some math and evaluate how healthy the pipeline will be in half a year if the salespeople stick to the plan. If they search for leads worth $250 a day, the pipeline will be worth $7,500 by the end of the month and $4,5000 after six months.
Consistent lead generation is a challenge but offers strength to focus on the present moment rather than expecting when a certain lead will make a move.
Once a business has captured the interest of an individual, it has to determine whether the lead is a good fit for the product or service. Lead qualification boosts the efficiency of a sales team as focus is placed on quality rather than volume.
Based on the information a business gathers about their leads, they can assign values to each one to indicate how interested they are in the product or service.
To determine the interest level, they often analyze the contact data submitted. These include demographic details (age, gender, location), things related to the lead’s business (if any), behavior (like visiting the pricing page or requesting a demo), and level of engagement (like clicks on email links or likes, retweets, shares in social media).
There are also many qualification frameworks to qualify a lead, such as the BANT standing for budget, authority, need, and time. This framework asks how much budget does the prospective client need to allocate to address their need and whether they have the authority to make a purchasing decision.
Furthermore, it investigates whether there is any need that the offered product or service can address and when is the lead looking to purchase.
After narrowing down the prospective customers to the most highly qualified ones, businesses are left with those who are interested and may buy the product.
The first sales outreach might be done over the phone, via email, through social media, or an in-person/virtual meeting. Whichever method is chosen, this is the stage where a business presents its solution in detail, highlights the benefits of purchasing it, and schedules a presentation or demonstration.
If a service is being provided, it is preferable to offer at least three price options. Multiple price options give the appearance of choice to customers.
Once more information about the product or service being offered is provided, if all goes well, the business crafts a proposal. Elaborating on a detailed and personalized proposal will better reflect the needs and wants of a customer.
A detailed quote should outline the following:
A summary of the potential new customer’s problems
The solution being offered (with specifications)
Clear pricing details
Length of contract
Exact terms and conditions
Businesses have higher chances of winning a customer if they create a strong sense of urgency by identifying all the problems correctly, highlighting the impact of the problems on the customer’s business and quantifying the impact in terms of value. Sharing an incident to highlight what happened with other customers is a powerful way to create a sense of urgency.
This is the most important sales pipeline stage. At this stage, businesses may respond to discount inquiries, negotiate some terms, and then leave it up to the customers to make the decision.
If everything goes well, the customer signs a contract, makes a purchase, or signs up for a subscription.
However, independently of whether the sales process is a win or loss, each scenario triggers its own set of automated follow-up actions. All leads are worth a follow-up, like a series of welcome emails for a new customer, or a three-/six-month check-in email for a lead who didn’t end up buying.
Once the deal has been sealed and the contract has been signed, businesses need to assist customers with post-sales queries and maintain a high standard of customer service via CRM or other approaches. Furthermore, the business can sell related or complementary products to the existing customer or sell their premium solutions.
Effective sales pipeline management can significantly improve the sales and revenue growth of a business. Below we take a look at some common sales mistakes salespeople make. It is necessary for a business to know them in advance so it doesn’t fall for them.
Spending no time on searching for new leads
Most businesses or sales reps fail because they leave prospecting, namely the process of finding potential buyers, to whenever they have time. And guess what? They may never have sufficient time.
Some other sales reps underestimate the importance of prospecting, feeling that they’re too experienced or too sophisticated for this task. But sooner or later they come to realize that in order for the business to survive they should find some room for prospecting and not leave it when they finish other tasks at hand.
Finding new customers is a task that needs to be booked on the daily or weekly calendar and be treated with a high priority. It may be hard as it requires proactivity and dedication to do it consistently. But eventually it pays off by creating new opportunities and preventing a pipeline shrink.
Retaining unqualified leads in the pipeline
Meeting the leading generation target might be not possible sometimes for one reason or another, but this doesn’t mean that junk needs to be added to the pipeline. Retaining the pipeline healthy doesn’t rely only on the number of leads but also on the quality.
In a previous section, we mentioned the existence of lead qualification frameworks that a business can use to determine which leads might become customers. However, such frameworks do not always serve as a guide for lead qualification.
For example, budget is not an issue when a customer wants to address a severe problem affecting their business. Somehow, they will find the money to fix the issue.
Similarly, businesses do not have to sell a need, but rather identify the problems that are not visible to the customers and address them. Also, time is no concern when a prospective customer sees how a solution addresses the problems their business faces.
Therefore, all salespeople have to do is ask themselves questions along the lines of:
Is there any problem that the offered solution can help tackle?
Is there any opportunity that the offered solution can provide?
Does the prospective customer agree that there is a pain point to reduce or an opportunity to leverage?
If the answers to the above questions are affirmative, then these leads deserve to be in the pipeline. They save time and money and increase the likelihood of closing sales compared to unqualified leads.
Losing focus on pipeline balance
Inexperienced salespeople tend to get excited when they have a big pipeline, deeming the more extensive it is, the better. But fat doesn’t necessarily translate to a healthy or balanced pipeline. Generating leads is one thing but moving them forward in the pipeline is another task.
Damping trash in the pipeline and not establishing a process to get the pipeline flowing will eventually cause a large number of leads to get stuck in a certain stage, which will upset the pipeline balance. Having an empty pipeline is awkward but adding more opportunities that can be handled is not recommended because focusing on everything is just as bad as focusing on nothing.
Once a business has laid out its pipeline stages, it needs to consider which factors or variables will help moving leads from one stage to another. This could be sending a proposal, scheduling a demo, securing the commitment of customers to collaborate, reach consensus, invest, or close the deal. All these critical activities should not be skipped.
Here are a few more questions that a business needs to answer:
What is the threshold for each stage in the sales cycle?
How many days can the leads stay there and when should they be considered stalled?
Ideally, spending a certain amount of time each day to advance the leads until they get closed is a good strategy. Another approach is to focus activity for a couple of days on retaining pipeline balance.
This focused activity offers businesses the opportunity to reflect what holds leads back in the pipeline and establish a process that supports them. It also enables businesses to better investigate what leads need at every stage and adapt their communication strategy accordingly.
Afraid of letting highly qualified leads go
After spending a lot of time and effort on generating leads, it might be hard to push them out of the pipeline when they don’t show any intent of purchasing a product or service. Clinging to the leads that won’t convert into new customers doesn’t help foster relationships with other high-value potential customers.
That is what sales is all about. A business might win many qualified contacts but at the same time lose a few of them.
Leads turn cold and sales are lost for various reasons. As mentioned earlier, allocating little time for moving leads forward in the pipeline is an important problem. Furthermore, without a lead-scoring strategy in place, a business might waste time on the wrong leads.
A business that does not keep up to its promises – scheduling follow-up calls or emails, or request for information in a timely manner – is another reason why leads drop out of the sales cycle.
Losing leads is not only a sales problem. The official business website might be slow or not be optimized for mobile users. There might be no visible testaments from happy customers. Also, the leads’ interaction with the business's social media may go unresponded.
Not tracking data
Without a strong process for managing opportunities, sales teams will have a hard time sifting through data sets and understanding the value of intent data. Sales might be lost and key opportunities might slip through the cracks.
Data visualization platforms benefit small businesses in many ways, greatly helping take away the stress and pressure that come with sales. They enable sales teams to take quick and confident decisions that will raise the chances of converting opportunities into sales.
There are many great data visualization tools out there. Take for example Tableau, whose sales pipeline dashboard sheds further insight into the health and status of a sales pipeline. By slicing the data and viewing the pipeline by opportunity stages, KPIs, size buckets, timeline, and sales representatives, it helps spot opportunities that require pivoting quickly, if necessary.
And let’s assume that you have built a beautiful dashboard and other teammates would like to have access to the data the dashboard is built atop. This can be easily done if data is exported to Excel and the file is shared.
To automatically export data Tableau to Excel, you can use Coupler.io. This data integration schedules data exports from Tableau views to your workbooks stored on OneDrive so that teammates have access to the latest data used in the dashboard.
Neglecting existing customers
Acquiring new customers is vital for keeping a business growing and retaining a big pipeline but should not be done at the expense of the current customer base.
While it is a healthy mindset for a business to focus on boosting sales, it can cause them to make mistakes. For example, focusing solely on the number of new qualified leads on a daily or weekly basis could easily cause obsession with numbers.
Furthermore, it should not be neglected that acquiring a new customer is usually more expensive than retaining an existing one.
Businesses should always make sure their existing clientele is well taken care of. Introducing rewards for loyal customers is a great way to achieve this, as well as starting a referral program. As existing customers are acquainted with the offered product or service and the sales team knows the pain points of customers, the team can provide better services in the future.
Wrong metrics of sales pipeline tracking
Tracking the wrong sales metrics is one of the most common pipeline mistakes. Sales metrics are meant to help a sales team understand which activities to prioritize. But often, the sales team lacks the ability to efficiently analyze this data to determine what is relevant. This results in unrealistic sales and revenue forecasts, increased number of cold, bad, or lost leads.
Depending on the business and type of product or service offered, there are a plethora of metrics to use. Some of the most relevant ones are the following:
Average deal size: This metric indicates how much revenue closed deals generate. For example, if a business has $1,000 worth of deals, and 10 deals in total, then the average deal size is $100.
Average sales cycle length: It offers insight into how quickly sales reps move leads through the pipeline and convert prospects into a closed deal. For example, if it took 60 days to close 10 different deals, the average sales cycle length is 6 days.
Pipeline conversion rate: This refers to the number of leads that moves forward through each stage of the sales process.
Customer acquisition cost: This is the total cost of bringing someone from the beginning to the end of the sales process. For example, if the sales and marketing budget is $10000 and 100 new clients are acquired over the course of a year, then the acquisition cost is $100.
Customer lifetime value: This metric estimates the total revenue that a customer could generate over the course of their relationship with a business.
Revenue growth: This metric refers to the increase in revenue over a period of time. To calculate the monthly revenue rate, the first month revenue should be subtracted from the second month revenue. The result should be divided by the first month revenue and multiplied by 100.
Win rate: The percentage of leads that convert to sales and translate into revenue. It should not be confused with the conversion rate, which measures the percentage of leads that are converted into sales opportunities.
Sales velocity: It forecasts revenue achievement by defining the speed at which the leads move through the pipeline, whether they close as won or lost. This metric is calculated by multiplying the number of leads by the average deal size and the win rate divided by the length of the sales cycle.
Not determining the right product balance mix
If a business is built on a single product or service, sticking to what it knows best, then striking a well-balanced product mix is not an issue. But what happens when a business sells multiple products? Which one should go into the sales pipeline?
When a low number of leads occupy a certain stage in the sales pipeline the following could happen: the sales reps do not truly believe in the product, their sales story is not that good, they lack product knowledge, or are targeting the wrong customers.
If a business portfolio consists of many different products, the sales team should decide which will be their primary focus and which ones will be secondary. Naturally gravitating towards a few products which they feel more comfortable selling them indicates a skill set gap and negatively impacts the overall sales pipeline performance.
The two most important questions that need to be addressed are the following:
How many leads should be created in every product category?
How many leads should be closed in every product category?
Sales pipelines display every stage of the customer's journey toward making a purchase, helping businesses track leads and convert them into sales with ease.
It is essential that you have the right weapons to be well prepared in the market – you wouldn’t want to bring a knife to a gunfight. Once an opportunity hits the pipeline, you should leverage your pipeline management skills, avoiding common mistakes that could sabotage your activities, and the chances of closing sales will be higher.
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