Sales Pipeline

What is a Sales Pipeline?

The sales pipeline is a visual representation of the steps leads go through before buying. It’s a crucial concept for businesses looking to increase revenue and grow their customer base.

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In simpler terms, it’s converting leads into paying clients. Think of it as a “virtual pipeline.” Buyers move along different stages until they reach the end goal: closing a sale.

The 6 Stages of a Sales Pipeline Explained

Sales Pipeline Stages

A sales pipeline typically consists of 6 phases. They represent a specific step in the buyer’s journey and involve different strategies to move the potential client closer to making a purchase decision.

1. Prospecting

This is where businesses look for potential customers who fit their target audience. What this means is that you have to identify and qualify leads first. Then, you gauge their needs to determine if they fit your offerings well.

2. Lead Qualifying

The difference between prospecting and lead qualifying is that the latter focuses on gauging if a lead fits your target audience. Prospection, on the other hand, involves actively searching for potential clients. This determines the readiness of the leads to make a purchase.

3. Engagement

The aim here is to connect with qualified leads. Communication takes place through different channels to understand their pain points and needs. Sales email campaigns and content marketing are effective approaches at this stage.

4. Lead Nurturing

Now that you’ve built connections and rapport with leads, the focus is on sustaining it until they decide to buy  — lead nurturing. This can take time because not all leads are at the same stage of decision-making.

This is where nurture campaigns and follow-ups come in handy — providing personalized emails that offer valuable information to build trust with qualified leads.

5. Negotiation

This sales pipeline stage is about reaching an agreement that satisfies the profit requirements of the sale and appeals to the customer enough to close the deal.

Here, you’ll be negotiating pricing or payment methods or even incorporating event incentives such as discounts.

6. Conversion

At this stage, you’ve taken the lead all the way from prospecting to becoming an actual client. Conversion focuses on the exchange of deliverables, of course—but it also involves following up with the client to ensure lasting customer satisfaction with after-sales support.

How to Build a Sales Pipeline in 7 Steps

The stages mentioned above are clear, but how do you build and ensure an efficient sales pipeline? Here are 7 steps to follow that will help you in your quest:

  1. Develop a Target Audience

    Define who your offer is suitable for. It helps you channel your marketing efforts more efficiently. Conduct research on your preferred demographic, interests, and problems—or use the existing customer base.
  2. Set Goals

    Set revenue goals for the number of leads and conversions to achieve in a given period. This will give you an idea of what results are considered healthy enough for business.
  3. Identify KPIs

    It’s hard to measure growth without data—hence the need for KPIs. These reflect how well your pipeline is doing. They include metrics such as lead response time, sales cycle length, and conversion rates.
  4. Map Your Customer Journey

    Following your target audience’s journey helps you understand personas. Customer journey maps positively affect decision-making throughout the entire funnel process. Start from purchasing a product, installing a service, and following checks that help retain clients.
  5. Segment Your Leads

    Not all leads are receptive to similar messages or are ready to buy at the same time because they have different needs. That’s why segmenting leads into categories like interested, not interested, or promising makes it easier to plan and execute your strategy.
  6. Implement a CRM System

    CRM systems offer automation and insights into the sales process. It helps businesses follow up easily via emails, manage customer information or activities, and close deals faster.
  7. Analyze and Adjust

    Measure the performance of your sales pipeline management. The easiest way to do this is by setting up dashboards on your CRM. Look at how well each KPI performs and analyze if it’s working for you. If not, adjust the required areas.

You may have noticed that we didn’t include the final step of conversion—because data and metrics are an ongoing process. Tracking allows businesses to understand client behavior, make data-driven decisions, and adjust strategies for maximum results.

Sales Pipeline vs Sales Funnel

Sales Funnel Vs Sales Pipeline

The image above describes the perspective each one follows — both aim to convert leads into clients.

That said, a sales funnel is a broader approach that involves all marketing efforts for lead generation, whereas a sales pipeline focuses on the sales stages of converting leads into customers.

A funnel is about attracting leads, whereas a pipeline is about converting them into paying customers.

Bottom Line

Whether you’re a small business or a large corporation, understanding the sales pipeline definition and effectively managing your own pipeline is crucial for driving revenue growth.

The biggest takeaway here should be knowing your target audience. This knowledge makes it easier for businesses to tailor their marketing and sales strategies and ultimately increase conversions.

The bottom line? Don’t neglect your sales pipeline—nurture it like a valued customer.

FAQs

What is a pipeline in sales?

What does a healthy sales pipeline look like?

Why is a pipeline so important in sales?

References

  1. Understanding Customer Journey Maps (Interactive Design Foundation)
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Nick Saraev

Nick Saraev is a writer & entrepreneur who pivoted from a path in medicine to forge a series of successful digital media businesses. He's been featured in Popular Mechanics, Apple News, & Bloomberg, and is an Amazon Kindle best-seller. He has extensive experience in the tech and SaaS industry, writing in-depth guides to help users grasp technical concepts better.