The modern world is digital and the markets and sales are data-driven. Really a boon!! Right?
I would rather say ‘not to everyone’. When you are having the large wealth of data pool, your accountability is increasing. Hence the one who manages this data tactically with advanced planning strategies alone can successfully flourish in their industry.
The prospects/leads being the game changers, data analysis, interpretation and prediction based on the buyer journey are of great importance. Nothing better than a sales pipeline will allow you to have a clear-cut study of such aspects.
In recent studies from Harvard Business Review show that there was an 18% difference in revenue growth between companies that defined a formal sales process and companies that didn’t. It is well and good to have some basic pipeline awareness if you are new to sales pipeline building.
What is the sales pipeline?
Simply saying, it is like a location indicator in a map. You can see the position of your leads in the sales process pictorially. The sales pipeline depicts the prospect journey through a typical set of stages in the sales process before the completion of a particular sales cycle. The stages can be predetermined with the strong actions taken by the leads at each level. The salespersons get the vivid representation of this pipeline journey in the CRM.
By analysing the pipeline, they will get the current status of each lead in their business and predicts how many will turn into a customer within the given time-frame.
Discussing the different stages within a strict boundary will be difficult as the sales pipeline structuring is done according to the individual business. In a wide approach, we can consider it as a 4 stage process inside the sales cycle:
- Qualification – determination of the need and budget regarding a particular product
- Meeting – discussion about the product
- Proposal – quoting with details of services, costs, duration etc.
- Closure – contract signing and new customer declaration.
The B2B sales team can function exceptionally well with fine structured pipelining stages. Paying attention to the benefits of a typical sales pipeline can help you design different stages strategically. The sales pipeline helps you in:
- Predicting business success in each cycle
- Constructive analysis of the current sales strategies
- Successful resource management for each sale
- Progress reviewing at each fiscal
- Identifying how close you are to a sales
Sales Pipeline and funnel – Are they same?
The sales pipeline is always there amongst the most misinterpreted terminologies in sales marketing. Without knowing the basic difference, one can’t move onto the pipeline building techniques.
In a sales pipeline, the basic functioning is measured in terms of the seller. It concentrates on the seller actions like what they can do during a whole business cycle.
On the other hand, the sales funnel look after the lead generation strategies, lead volume and conversion rates. At the funnel mouth, you will receive a lot of leads and as the leads go through different stages of the pipeline the number decreases.
The sales leaders utilise the funnel to rectify their funnel marketing strategies according to the lead behaviour. And final sales predictions can also be made by inspecting current lead volume with such funnels.
Sales pipeline building
Pipeline building is easy with sales pipeline templates. But remember that the templates are not meticulously made for your business. Every sales pipeline is unique and it requires time-taking efforts to build a good one for you; that too in a trial and error fashion. The underlying principles of the ‘sales pipeline building’ for every B2B business are more or less the same and will have the 4 basic building steps.
Step#1- stage defining
Looking into the customer journey, before landing on a buying decision they must have passed through three stages such as awareness, consideration and decision. Recreating that journey line in the sales point of view, you will come across the following scenario.
- Awareness stage – you are identifying the potential customer without considering the conversion probabilities.
- Consideration – demonstration of your services/product with doubt clearance if any.
- Decision- closing the deal with proper relationship retaining plans.
Tabulating the above facts, you normally will have the following category of leads in a sales pipeline:
- Connected and qualified
- Completed demos
- Sent proposals
- Closed deals with Relationship nurturing
Along with the pipeline structuring, you must also consider the intricacy of the service you offer. As the complexity level increases, your sales cycle also will take a longer time to complete.
The sales pipeline is also a measure of this time for a particular sales process. Keeping an eye on the time spent by a particular customer in each pipeline stage, in a closed deal will help you calculate the cycle time. In future business, setting this as a benchmark, sales forecasting can be easily done.
Step#2-Pipeline size calculation
Every business will have fixed sales goals for a month/quarter/ year. They all will have some conversion rates too. So the next thing is what is the role of pipelining and sales goal? Let me explain with an example.
Suppose your business has got a sales goal of $6000 in a year and your conversion rate is 10 % and the average deal size is $500. By the famous sales pipeline formula,
Sales pipeline size = (Revenue goal / average deal size) ÷ lead conversion rate
In our example,
the sales pipeline size = (6000/500) ÷ 0.1 = 120
This clearly indicates, if you got 120 leads and since your conversion rate is 10%, you can win 12 customers. (Which accounts for 12×$500= $6000)
By this backward propagating calculation, one can predict the number of leads they want in each pipeline stage for targeted revenue.
Step#3- activities planning for lead movement
After planning the different stages in the sales pipeline, you have to coin different action plans for these stages, that too for different customers. For that, a close watch on the prospect movement is necessary. Then only you can identify whether prospects are turning into potential customers or continue to be a basic lead.
Identify the actions of the leads in each stage of the sales pipeline which clearly tells you that they are ready for the next stage. Interconnecting the proactive movements from the leads to the salesperson, one can easily make it out. The sales rep must ensure the leads are moving in a pipeline and any abnormality in-between can be considered as a call for action.
Step#4- Sync your sales process to new pipeline
At the final stage, you have to check whether your sales process matches with the new sales pipeline. The improper syncing between your sales process and pipeline will bring negative effects on your deals by misguiding your salespersons. In case you missed the inclusion of any important aspect of your sales process, a rework is possible and essential.
The sales pipeline is the centre of modern sales processing and the demands for them are increasing. Knowing your business capacity and the limitations of sales pipeline templates you can either opt for a template or build the perfect one for you.
But if your business is monitoring so many sales processes, you might need more than one sales pipeline. Be ready with a CRM that supports multiple sales pipelines for your business and let the success be yours!