At first hearing of the words ‘sales pipeline’, the first thing that usually pops up in one’s mind could be a certain flow of sales. Which isn’t exactly wrong. To properly understand a sales pipeline, it’s essential to first understand the goals of a business, and what your target audience is.
A sales pipeline, in effect, is a clear visual representation of all stages of a business’ sales process. It helps you effectively implement and manage all activities in your sales process. You can also identify which activities are giving you the best results and focus on the same.
What is Sales Pipeline Management?
According to the CEO of Breakthrough Sales, Mark Sellers, “the tracking and management of every sales opportunity through every stage to a successful close of a revenue-producing contract.” In layman terms, it is basically careful monitoring of each stage of the sales process from start to end.
This is very necessary as effective management of the sales pipeline is a sure way of increasing revenue.
Benefits of a Sales Pipeline
Before adopting the use of a sales pipeline, it is beneficial to know about the benefits you and your business stand to gain from implementing this technique.
As was stated previously, a sales pipeline helps in implementing the sales process and monitoring performances of sales teams, all these and more are further elaborated upon below:
Helps monitor the team’s progress
As each sales stage requires a list of actions needed to succeed at that and move on to the next. The presence and use of a sales pipeline can, therefore, help team managers in monitoring progress at each stage and helping team members move through these stages at a rate that isn’t detrimental to the business.
Encourages adequate allocation of resources:
this is because in monitoring the various stages of sales, you as a sales manager can then determine what resources and in what quantities would help move a deal to the next step and closer to the end of that deal.
Helps in making more accurate forecasts:
sales pipelines are effective for telling where each sales rep is in the sales process. Because of this, it is, therefore, easier to estimate how close teams are to reaching their target quota making revenue estimate for a given period of time easy to do. This information is also beneficial to other departments in the organization.
Helps in increasing total sale volumes and revenue:
as we all know the goal of every business is to make a profit so anything that can increase the volume of sales and revenue is advised. Use of sales pipeline does this by clearly showing which stages of the sale process produce quicker and better results and which stages may need to be completely ignored in order to be more productive and earn more.
Sales pipelines pose a lot of benefits to organizations but need to be effectively managed in order to get the best results. According to the Harvard Business Review, companies that practiced effective sales pipeline management experienced a significant increase in growth rate and revenue. It goes further to mention how companies that adopted 3 specific pipeline practices were able to experience over 28 percent increase in their revenue. These three practices are:
• Adopting a well-defined sales process
• Investing time in building and mastering that process
• Educating sales managers in the principles and techniques of pipeline management.
Stages of a Sales Pipeline
It has previously been stated that it isn’t enough to adopt the use of a sales pipeline, you also have to effectively manage it in order to achieve beneficial results.
Most importantly, you need to have well-defined sales pipeline stages. There are 5 major sales pipeline stages every business should have in order to ensure that the right set of activities are being carried out throughout the business period. These 5 stages are:
• Identify prospective members of your target market.
• Quickly evaluate their needs and proffer ways to which you can solve them.
• Convince them on why they should buy from you.
• Close the deal.
• Follow up and keep in touch with them in order to retain them.
Setting these stages for your sales process not only makes your pipeline management much simpler, but you can also keep a check on how it is working. You can track leads as through each stage and figure out what is working and what is not.