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Sales pipeline management is a crucial part of maximizing sales revenue. They are needed to track and manage leads effectively so reps can pick out high-value leads and hit targets quicker. Effective sales pipeline management becomes even more crucial when the sales cycles are long and reps need complete visibility throughout the pipeline.
One study by Harvard Business Review showed that companies saw an 11% increase in revenue just by spending 3 hours managing each rep's pipeline. The same study also revealed that training sales managers in sales pipeline management helped their revenue grow 9% faster.
What is a sales pipeline?
A sales pipeline is a snapshot from the perspective of the sales process's reps, showing where the prospects are in their journey. Sales pipelines have all the necessary information, which shows how many deals reps can close in a week, month or quarter. It is an effective tool that allows sales reps to organize, track and manage sales activities needed to generate revenue predictably.
Sales pipeline vs sales funnel vs sales forecast
Because the three terms involve a lot of commonalities, it is easy to confuse one for the other, especially the terms sales pipeline and sales funnel.
The sales funnel represents the journey of all prospects to the customer from their point of view. It involves stages such as awareness, interest, decision, and action. The funnel narrows at each stage, and it consists in convincing many prospects to move toward the conversion. However, only a few that enter the funnel initially make it to the bottom.
The sales pipeline is analogous to a sales funnel but represents the seller's point of view. Like the funnel, the pipeline has different prospect stages, such as lead qualification, scope, proposal, negotiation, and closing.
On the other hand, a sales forecast gives an estimate of the prospects likely to close within a given period. The forecast is based on the position of leads in the pipeline and how likely they will move to the closing stage within the defined time frame.
What is sales pipeline management?
Sales pipeline management involves organizing and tracking quotas, goals, and prospects. It also lets the reps know which deals need special attention and what stage each deal is in. With that information, sales reps can predict if there are enough deals to reach the quotas and goals. Sales pipeline management involves the following aspects:
1. Pipeline Metrics
This incorporates all the metrics used to analyze the sales process.
2. Pipeline optimization
Well-managed sales pipelines enable sales managers to evaluate and optimize the processes at every stage for accurate revenue forecasting. The optimization also ensures increased revenue at the end of the sales cycle.
3. Sales team management
Involves regular evaluation and progress tracking of the sales personnel, such as when and where they make the most of the sales process.
4. Pipeline management tools and applications
These are designed and implemented to improve the sales team's sales process and performance.
How does sales pipeline management helps leaders forecast revenue?
Since the sales pipeline allows reps to look at the prospects' stage, they can predict how many can convert within a given time frame. For example, if the pipeline has $100,000 worth in contract value and the conversion rate of prospects is 10%, then the forecast would be to achieve a $10,000 cost of business.
If the sales target is set at $20,000, then twice as many leads have to be converted, and pipeline analysis can be done to identify improvements to move prospects through the sales funnel better sooner.
How to build a sales pipeline?
Now that we know what sales pipeline management is, let's understand how to build one.
1. Identify prospective market & target companies
The first step to building the sales pipeline is knowing the Ideal Customer profile (ICP). The ICP gives you a rough estimate of the number of customers your business will be able to serve.
Crating the ICP is the C-level executives' task, such as the CEO or founding team, who will update it as the company grows, especially if it's a startup less than three years old. Target companies are derived from the ICP and include the organizations you intend to conduct business with.
2. Research your targets thoroughly
Once you have the ICP figured out, creating an internal list of target companies and building contacts is possible. The listing process usually involves finding the names of the target customers, enriching their contact with additional information, and digging deeper to find more personal information. There are two ways in which an internal list can be made:
- Buying the list
Names of companies in your niche can often be purchased from vendors with detailed information such as names, contacts, and personalized details. However, it's important to conduct your due diligence as the information may not always be high quality. As people change organizations, they take their contact with them.
- Building the list
A more labor-intensive process, building the list involves painstakingly gathering names and personal information through various sources. While it's cumbersome, the information can be high quality.
3. Reach out to targets on multiple channels
Reaching out to your channels on different channels is essential to create as many touchpoints as possible. This includes emails, messages, phone calls, or even physical meetings.
Only some prospects are receptive on the same channels, figure out the mediums they are most comfortable with to start the conversation and then proceed to get familiar.
4. Establish a communication routine
Dividing the pipeline into segments by adopting value-based selling. Train the sales reps to become good communicators who can build authentic human relationships can sustain a conversation with prospects.
It has greater value in nurturing leads and bringing back leads that went cold some time ago. Once the SQLs are moved to the account executives, you can build momentum to meet goals.
10 Best practices to boost sales revenues
In this section, we've put together 10 best practices for sales pipeline management that can boost your revenues. Although you may already have been engaging in a few, this list can quickly show you areas in which you could be deficient.
1. Follow the most qualified leads
While it's tempting to cast as wide a net as possible to take advantage of every opportunity, you are better off following your most qualified leads. If you look at the process closely, you'll see that the time spent on closing each deal remains almost the same.
One survey indicated that improper qualification of leads could result in a 67% loss in sales, which translates to a lot of wasted time and effort. Focussing on your most qualified leads instead ensures your efforts are spent on leads most likely to convert.
For example, sorting your leads by their interest and engagement from high to low can show you who has the best chance of becoming a paying customer.
2. Do regular follow-ups and prune dead leads
The top salespeople ensure that they keep following up with their leads to make that sale. However, most reps give up after 2 calls leaving all that money on the table. These days buyers have so many choices that they take a long time to make up their minds about offers that are closely placed together.
What once took 3.5 calls to close a deal a decade ago now takes 8 calls! Your competitors are hard at work trying to tip their scales, and you should be out there ensuring it tilts to your side.
Efficiency is about focusing your efforts on the best leads and learning to recognize when to refrain from spending energy and time on leads you know bad. Understandably, letting go of a lead you might have pursued for weeks or months is hard, but it's also important not to fall into the sunk cost fallacy.
The lead is dead when they make it clear they're not interesting, won't respond to you, or can't be contacted. Identifying these leads and pruning them to pursue high-value leads is essential.
3. Maintain engagement through great content
Sales are typically associated with contact through emails, phone calls, and meetings; however, vetting the prospects with great content they find helpful is a winning strategy. 88% of B2B marketers use content marketing as a lead generation tool, which works wonderfully.
Offering engaging content builds familiarity and trust with prospects over cold calls and emails. If they love the content you send, you already have them in a favorable position, and the numbers also agree- content marketing costs 62% less. Still, it generates three times as many leads as outbound marketing.
A robust content strategy will have you creating material for different stages of the funnel. The top of the funnel can include blogs, articles, videos, infographics, and FAQs. Mid-funnel content can be eBooks, case studies, video tutorials, and white papers, and the bottom of the funnel can be free evaluations, trials, or coupons.
4. Review, improve and update the sales pipeline regularly
One of the essential components of sales pipeline management is a regular improvement. Techniques that were effective once (such as cold calling) may not be effective anymore. The best people in sales are constantly examining the process for faults and areas of improvement.
It can be as simple as changing the sales pitch per the individual customers, follow-up times, or the specific approach- everything has scope for improvement. Running little experiments will tell you what works and shouldn't be tried again.
Updating is also important as the sales pipeline constantly changes- leads move from stage to stage, drop out, or the deals get closed. Regular housekeeping will ensure it will stay manageable, leading to inefficiencies and lost sales.
The best way can be to administer the pipeline, keep things up to date on all leads, and maintain notes for all their stages. It's an extra effort, but it pays off.
5. Standardize the sales process
Although every customer is different, and the best approach for each is tailored according to their requirements, it can become inefficient over time, and reps might lose their edge in outbound sales techniques.
Standardizing the process sets a baseline for reps to follow beyond which they can create outreach routines. When you look closely, you'll also notice that your ICPs have many shared qualities and similarities, and their underlying need for your product would be more or less similar.
This is where standardizing makes it easier for the reps to stick to a winning script and improvise when needed. It's important to mention that some of the most well-performing sales teams also follow standardized processes.
6. Monitor performance metrics
To get an accurate read on your sales pipeline, you need to monitor critical sales metrics, which include items such as:
- Total number of deals in the pipeline
- How big the deals are on an average
- Close ratio- average percentage of closed deals
- Sales velocity- how long it takes before a deal is closed
Keeping tabs on these metrics every week gives you an insight into your performance and the health of the sales pipeline. Tracking these performance indicators also indicates how the changes you've implemented or strategies you have adopted are paying off.
7. Use the right sales tools and automate
The right sales tools and the number of tools in use can make all the difference in generating leads, maintaining cycle times, or closing deals. Sales tools can save copious amounts of time wasted on administrative tasks by the reps.
They can also generate leads, assign them to the right rep, follow up on conversations and send automated responses. 67% of respondents in a GetAccept survey admitted to using between 4 and 10 sales tools, and almost all (97%) use one tool.
If you're a small outfit, a simple Excel sheet will do to track most details in the pipeline. A medium-sized organization needs a CRM to store essential data and deliver automated help to the reps to ease the sales process.
8. Keep a short sales cycle
In contrast to B2C, B2B sales cycles can be quite long. The average sales cycle length for B2B companies is 102 days. There's a simple reason why it's good to reduce that number as small as possible.
The longer you let your prospects make up their mind, the more time they have to look for alternatives. If your leads often go cold or your closure rate is low, it could be the long sales cycle.
Consider reducing the number of days wherever possible, such as follow-ups, or give them an option requiring less decision time. There's always room to innovate here to shorten the sales cycle.
9. Align sales and marketing
According to research by Forrester, only 8% of B2B organizations have a strong alignment between their marketing and sales departments. The traditional way of operating is within silos- the marketing team captures leads and hands them over to sales, and the sales call or mail the prospects to close deals.
However, this system of brute prospecting and calling needs to improve as each department works independently of the other to run a deluge of leads through the system.
Aligning the two would mean marketing captures and sends the most qualified leads to the sales for further refinement. This reduces wasted time and effort for both departments as they focus on tips most likely to convert.
The upside is clear by the numbers- companies with well-aligned marketing and sales teams have 38% higher sales win rates and 36% higher customer retention rates.
10. Give documentation and training
The sales managers and reps need to have a strong grasp of the sales pipeline and how to use the tool optimally. Regardless of how long they've worked with it, good documentation covering the fundamentals can always help.
Regular training will keep their skill sharp and give them new ideas to try out and win more deals. A well-established documentation and training regiment, especially on a sales learning tool, can make it easier to onboard new reps and have them at product selling in no time. It can also keep everyone updated on what is new and how to improve.
How does sales pipeline management helps reps plan their work better?
As we've seen in the sections earlier, sales pipeline management has numerous advantages for the sales teams. Sales reps can optimize every aspect of their work based on the information obtained to sell better.
Reps working on sales tools, even the basic ones, can save time on routine administrative tasks. Automated tools help them by aligning the reps with the most qualified leads so they can prepare their pitch in advance for the specific prospect.
Finally, by knowing the performance metrics, reps can decide to scale up their selling activities to meet falling revenue or plan a successful run for the subsequent quarter.
Conclusion
The sales pipeline is one of the most important aspects of your business, the management of which is intimately tied to your revenue. Because only 3% of your market is buying while 56% are not ready, and the rest are yet to begin, sales pipeline management becomes crucial to shift the balance of those numbers.
