Sales pipelines — what they are, what they’re not, and how to drive revenue

Even with a standardized sales process, many companies see sales quotas fall short of their targets. It’s easy for leads to get stale or lost at any point of the process.

A sales pipeline gives teams the visibility they need to track and nurture prospects toward the sale. But building a sales pipeline from the ground up — or overhauling your current one — may seem like a daunting task. Every sales team is already using a variety of strategies and tools, but an efficient sales pipeline cannot be left out.

This post will cover everything you need to know to build and optimize your sales pipeline, including:

• What is a sales pipeline?
• Sales funnel vs. sales pipeline
• What to do before building a pipeline
• How to build a sales pipeline

What is a sales pipeline?

A sales pipeline is a visual representation of your potential business deals and the steps your sales team takes to start and close them. It provides insight into which sales are likely to close, their potential value, and the performance of your sales team.

A pipeline can break the sales process down into specific phases and individual tasks, making the whole process easier to manage. It can also help you identify points of failure in your sales process and steps that need improvement. You’ll know if team members are reaching their quotas, identify which deals are most likely to succeed, and determine precisely where deals are stuck.

Sales funnel vs. sales pipeline

The terms sales funnel and sales pipeline are often used interchangeably, but they refer to two different strategies.

• A sales funnel visualizes the customer journey from a customer’s perspective. It maps the progress that buyers make from identifying their need, to investigating solutions, to comparing solutions, to making a purchase. It’s usually used for marketing purposes, although sales teams always come in at least at the bottom of the funnel.
• A sales pipeline visualizes the buyer journey from a sales operations perspective. It maps the steps that a sales team should take from identifying prospective leads, to investigating those opportunities, to meeting leads, and closing deals. It’s used exclusively by sales teams.

What to consider before building a pipeline

Before building or overhauling your sales pipeline, gather some specific information about your target audiences and your company’s goals. The necessary details will vary depending on your market or industry but there are three basic prerequisites to constructing a meaningful sales pipeline.

• Know your prospects. Start by collecting information about your target audience and updating or building buyer personas. Your top customer is a good place to start. Include hard data like the company industry, size, and market share as well as soft data such as pain points and unique challenges they’ve expressed. The more specific and granular you can make your buyer personas, the more detailed and functional you can make your sales pipeline. Make as many buyer personas as you need to represent your entire target audience.
• Set targets and goals. Your sales pipelines must include targets and goals for the team and individual members. These will reflect the overall ambitions of the company. Establishing clear targets for your pipeline enables you to track productivity across your team and identify any points of failure throughout your sales process. Without them you lack benchmarks to measure success or accountability.
• Coordinate with teammates. Open up the process of building your sales pipeline to your team. Making the process collaborative provides critical insights to help design a pipeline that aligns with the unique factors of your process. Giving everyone in your sales team a voice in the pipeline structure makes it an effective tool for collaboration, communication, and deal management.

How to build a sales pipeline

Every company's sales pipeline will look a little different. Start with a good foundation and adjust it — through rounds of feedback and review — to the specific conversion path your customers will take.

1. Define your pipeline stages

Determine the distinct stages each prospect moves through from awareness to purchase and the sales work required of each step. The stages of a sales pipeline generally coordinate with the stages of a sales funnel, so reviewing your funnel model can be a good place to start.

Your sales pipeline’s specific stages will depend on what types of customers you serve and the products or services you offer, but a basic outline usually includes at least five pipeline stages.

Lead generation

Finding leads is always the first step — also sometimes called prospecting or discovery. This pipeline stage aligns with the attention stage of your sales and marketing funnel, and marketing teams are generally hard at work here. Some companies also have dedicated lead gen strategies and teams, separate from the sales team.

But sales reps can be involved in lead generation too. Work with the marketing and lead gen teams to review how they are sourcing new leads, and try to identify gaps in the strategy. Bring the sales team’s ideal customer profile (ICP) to the conversation and look for opportunities to reach out to audiences and personas that the marketing team doesn’t have a plan for.

Qualification

Qualifying leads is a sales process that reviews leads in the pipeline to make an early determination about which ones are likely to convert and which are not worth pursuing. Qualification in the sales pipeline generally aligns with the interest stage in the sale funnel.

For example, some leads may have a higher customer lifetime value (CLV) than others or require much more effort to convert. Create a lead qualification process that ranks and prioritizes leads according to criteria that are important to your sales process, including:

• Potential CLV
• Decision-making power
• Position in the buyer’s journey

With a lead qualification process, your sales team can focus its efforts on those prospects that show the most promise for the least investment. This can help your team meet or even exceed its sales quotas.

Consultation

The consultation stage represents contact between the lead and the sales team. This pipeline stage often aligns with the desire stage of a sales funnel.

Since many buyers and leads prefer to self-educate through the first part of the funnel, the consultation is often initiated when a lead expresses purchase intent. Some businesses use lead scoring to determine when a marketing-qualified lead (MQL) has been nurtured sufficiently to be considered sales-qualified.

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The consultation stage may require a single conversation or months of relationship-building. You may decide to split consultation into distinct contact, meeting, and demo stages if you have a high volume of leads or if they require several meetings to come to a decision.

The end goal is to get the prospect to take an action that leads to a commitment. This could be scheduling a product demo, another meeting, or requesting whatever additional information your potential customer needs when considering your product or service.

Negotiation

The negotiation stage of a sales pipeline is when the sales team finalizes the terms of a deal with a lead. Negotiation generally aligns with the desire or action stages of a sales funnel.

Negotiation may be as simple as sending a few emails or may require several meetings to complete. The lead may request a more flexible payment schedule, discounts for buying in volume, or other concessions.

Create specific criteria to determine if a deal is viable and what is a reasonable time frame for negotiations. Establish a concrete signal for your sales team to know which terms cannot be compromised so they know when to stop negotiating and pursue a new lead. Without these rules, negotiations can stretch for too long and may cause a prospect to lose interest or your sales team may also pursue a deal that consumes too many resources.

Closing

The closing stage in the pipeline usually starts with a proposal — with all the negotiations of the deal included — and ends with new client onboarding. This pipeline stage aligns with the action stage of the sales funnel.

Sales teams need to define several processes for all the potential developments that can happen during the closing stage.

• Review period. Give the client time to review the proposal — especially if there are multiple stakeholders involved who need to provide approval.
• Successful closing and transition. Once a proposal is accepted there should be a smooth process in place to move the new client to the internal team that will be fulfilling the terms of the service or providing the product.
• Rejection. Even after negotiations, proposals are sometimes still rejected. The sales team needs a clear process to follow when this happens. That might include steps like seeking clarification on why the proposal was rejected, gathering updated needs from the lead, and renegotiating.
• Cold leads. A lead can go cold at any time. If this happens after a proposal is sent, the sales team needs a process for moving them back into an early stage of your sales pipeline or exiting them from the pipeline so further resources aren’t used on a dead end.

2. Identify targets and ideal buyers

Once you know your sales pipeline stages, identify the people and companies you want to target. Use your buyer personas to identify ideal customers in your target markets. This should give you a list of prospects who can fill your pipeline immediately.

Take stock of how many potential leads you have and how likely they are to convert. You can then place them appropriately within your pipeline. Once your sales team knows how to handle your current prospects, use your buyer personas to find new ones.

As you identify possible leads, categorize the best way to reach each one. Some people prefer to speak over the phone, while others want to communicate via email or text messages. Keep track of these insights, as you may lose touch with promising leads if you try to reach them through the wrong channels.

3. Define metrics and collect data

Establish the metrics you’ll use for each stage of your sales pipeline. Use them to learn when a prospect is ready to move to another stage and to measure your team’s progress toward their sales goals. These metrics can also help you focus your data collection and analysis efforts on the more important information.

• Number of deals is the number of potential deals currently in your pipeline. This tells you how many qualified opportunities you have, giving your team greater visibility into whether they are on track to meet the company’s targets.
• Win rate is the percentage of prospects converting into customers. This number tells you how many deals you need in your pipeline to hit sales goals related to the number of new deals closed. It can also help measure the performance of individual team members.
• Average deal value is the average value of a sale. This metric tells you how many deals you need in the sales pipeline in order to hit the business’s overall revenue goals.
• Conversion rate to next stage represents the percentage of leads moving from one pipeline stage to the next. Use this metric to identify which stages of the pipeline are working well and which ones need review.

These are good baseline metrics, but you may prioritize others, depending on your needs. Any sales pipeline metric you use should help identify what parts of the pipeline are working well and whether the team is on pace to meet goals.

4. Begin moving prospects through the pipeline

Carefully sort existing deals into the appropriate stages on your sales pipeline — not all prospects should be placed at the beginning. Leads that have already been nurtured or that are closer to making a purchase may bypass the early stages and enter at the consultation or even the closing phase.

Then, focus your sales team on deals in the consultation stage first. This is where you’ll do most of the work necessary to prove your value to a prospect. Build relationships through your interactions with leads and gather the information you need to segment leads.

Segmenting your leads will help your team address clients based on specific needs, budgets, or other shared attributes. Splitting potential customers into different segments lets your sales associates apply personalized approaches to consultation and negotiation and increase the likelihood of successfully closing deals.

5. Refine and optimize your pipeline

Collecting data to refine your sales pipeline is an ongoing process. Add, adjust, and remove stages as needed, and streamline tasks to reflect the path to conversion better. Use customer data to create standard follow up procedures that keep deals moving and prevent any from becoming lost or neglected.

If you have a long sales pipeline or a lot of leads within it, you will need a way to record, organize, and utilize the vast amount of data you’ll be collecting. A good customer relationship management (CRM) software can store, analyze, and access this information in real time. It will also allow sales reps to track the status of deals and work on them, even if they are new to the account.

Consistently refill your sales pipeline with new leads. Schedule regular reports and meetings about the health of your pipeline to detect issues early and make changes as needed. You may want to run sales pipeline reviews and collect feedback from each sales rep to help them meet their quotas.

6. Periodically clean out your pipeline

Avoid bloat by periodically cleaning out deals that have gone cold and gotten stuck in your pipeline. The length of stagnant time required for removing a deal will depend on your company’s goals and historical data related to elapsed time between contact on lost deals. Be sure to follow up with a prospect before removing them from your pipeline to make sure you leave them with a positive impression.

Treat the cleaning process as an opportunity to improve your sales pipeline. By removing stalled deals, you can keep it running smoothly and will have a better view of its overall health. You’ll also have clearer insight into your sales team’s performance. This can help you identify successes and opportunities for improvement. You can also create more accurate sales forecasts with better data from your pipeline.

This will be more straightforward if you build your pipeline with a CRM that can prioritize deals for you. With a CRM, your team can record every client interaction and access these notes anytime. You may also discover that some cold deals are more likely to restart than others and can move them to the correct pipeline stages.

Getting started with your sales pipeline

Give your sales team the insight they need to successfully close deals, and make adjustments to meet company targets by building and maintaining a robust sales pipeline. Start by creating ideal customer profiles so that you don’t waste time on leads that misalign with your solutions. Then make sure you have clearly defined stages and processes for moving prospects seamlessly to the next one so that no one gets lost along the way.

When you’re ready to truly optimize your sales pipeline, Adobe Marketo Engage can help. Marketo Engage automates standard marketing and sales processes to align your teams and give them the time they need for nurturing sales relationships. Build account lists in seconds with artificial intelligence, nurture leads with real time lead scoring, and connect data from every touch point.

Watch an overview or take a free interactive tour to learn how Adobe Marketo Engage can help build and manage a sales pipeline that empowers your team to meet goals and drive revenue.