The Ultimate Guide to Sales Pipelines

Implementing the right sales pipeline strategy is an essential element of business development for any company. Without a proper process in place to build sales

Prospects and leads will go cold
Valuable insights will be missed
Conversions will be limited
Your business will lose out on revenue

But what is a pipeline in business development terms, and how do you create and manage one that will be effective for your organization? In this guide, we’ll cover everything you need to know, including the various sales pipeline stages, how to build and maintain an effective strategy, and which metrics to watch.

What is a sales pipeline?

A sales pipeline is a visual representation of your sales process, providing a bird’s eye view of every stage a prospect moves through — from initial discovery to becoming a loyal customer. An effective pipeline drives conversions and makes sure no opportunities are missed. At every stage, you can incorporate accountability for action that pushes prospects on to the next phase.

The exact sales process will vary from company to company. When it comes to building a pipeline, business models and unique needs will dictate the process. Primary goals remain constant across all industries and organizations when it comes to designing an effective pipeline:

High-level understanding of business health
Consistent and predictable revenue

Sales pipelines are usually visualized as a horizontal chart, broken down into various stages. They provide:

Total visibility
Control
Opportunity to analyze the entire process

But it’s important to incorporate some flexibility, because not every customer follows the same journey. Some will move through your business pipeline quicker than others, depending on their level of interest and how much knowledge they have about your products and services.

Nailing down your sales processes and pipeline marketing strategy early on provides multiple benefits:

You’ll know the total number of deals on the table at any given time and their potential value.
You’ll have a clear overview of where prospects sit and which deals to focus on, so it’s easier to allocate time and resources.
You’ll make snags or bottlenecks in your pipeline easy to identify and fix by effectively tracking.
You’ll make sure leads don’t drop out of the pipeline or go cold through lack of contact by attributing accountability within your sales team.
You’ll make sure your pipeline provides an accurate estimation of how many sales your reps have the potential to close, making overall revenue predictions more straightforward.

Sales pipeline vs. sales funnel

You might think a sales pipeline sounds pretty similar to a sales funnel, but there is a key difference. Your pipeline is seller-oriented and focuses on actions taken by your teams during the sales process. A sales funnel measures your conversion rate as a whole. That’s why it’s called a funnel — widest at the top where there is the largest number of prospects, and narrower at the bottom as leads become disqualified or decide not to buy.

A sales pipeline report can determine the value and quantity of all prospective deals on the table at any point in time. In contrast, all a sales funnel report will tell you is what percentage of leads from a particular cohort progressed through each stage of the pipeline.

Sales pipeline stages

Although strategies vary among companies, there are typically about 6 stages in any business pipeline. Let’s take a look at each stage in a little more detail.

1. Prospecting/lead generation

Finding potential customers is the first step in any sales pipeline, and usually the most challenging. It’s important to note that casting your net as wide as possible and hoping for the best is typically not the best way to build sales. Your bottom line will be healthier if your efforts are targeted.

Most businesses start by creating an ideal customer profile and focus their marketing efforts on attracting people within those parameters. Effective prospecting involves significant research and can involve both inbound and outbound methodologies.

Outbound prospecting: Sending emails to contacts you’ve found by researching on Google or professional networks like LinkedIn. It’s also possible to get a little help by enlisting the help of a professional lead generation service.

Inbound prospecting: Reaching out to people who have already expressed interest in your products or services. For example, contact those who signed up for your newsletter or entered their details on your website.

2. Lead qualification

Each lead needs to be assessed for the right fit and the likelihood of purchase. Otherwise, you’ll waste valuable time and resources having your sales team chasing dead-end leads and problem customers. The best approach is to separate prospects into “hot” and “cold” leads.

As a general rule, hot leads typically come from inbound prospecting strategies, while cold leads tend to result from outbound methods. Before you make a black and white decision, additional analysis is required to assess:

If they genuinely need your products and services.
Whether they can afford them.
Are they ready to buy, or do they need more information?

3. Contact

Your sales reps initiate contact with each lead with the goal of building a relationship and better understanding their needs and requirements. There are several routes you can take, including:

Phone calls
Emails
Text messages
Social media messaging

4. Sales optimization

After your initial contact, you’ll have a better idea of which prospects are ready to buy. Now it’s time to optimize those leads by scheduling a meeting or demo to showcase how your products and services can help them achieve their business goals. At this stage of your pipeline drive, you may want to set up an additional meeting if the contact you’re working with isn’t the end decision-maker.

5. Nurturing and negotiation

Most prospects will likely have follow-up questions and sales objections you’ll need to deal with and overcome. It’s essential to build the relationship naturally without them feeling harassed by a constant stream of emails or calls. Managing expectations is a crucial aspect, with the ultimate goal of building trust that leads to a sale. During the nurturing and negotiation process, you’ll likely discuss:

The scope of work;
Price adjustments; and
Terms of service.

6. Closing the deal

Recording the outcome of the deal as won or lost is the final stage, but that doesn’t necessarily mean it’s the end of the journey for nonclosers. It could be that the prospect simply isn’t ready to buy at this stage, in which case they can be kicked back to the nurture and negotiation phase for a follow-up down the line. Likewise, any other cold leads that have dropped out along the way can be moved to another part of your CRM for inclusion in a future campaign.

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How to build and maintain a successful sales pipeline

Building and maintaining a business pipeline can feel overwhelming. However, by following a systematic process, you can create and maintain a successful and profitable model. Here are the basic steps for building and maintaining a successful sales pipeline:

Define your sales pipeline stages

While the six stages listed above are a good guideline, there are several variances. There are many pipeline marketing templates available online. However, it’s usually worth taking the time to develop your own so you can design each stage to match your ICP buyer journey and cater to the specific requirements and goals of your business plan. To achieve this, it helps to consider the mental process your customers will work through:

Awareness. The buyer’s pain point presents itself.
Consideration. The buyer defines how they will overcome their pain point, researches options, and develops evaluation criteria for a range of solutions.
Decision. With the strategy decided upon, the buyer begins to compare vendors.

Identify benchmarks for each stage

Knowing how long a prospect spends in each stage, how many opportunities advance through the entire pipeline, and the percentage that drops out in each phase is critical. Establishing a yield probability for each stage helps you set realistic targets, attribute roles and responsibilities to your sales reps to ensure timely progress, and ensure your monthly, quarterly, and annual revenue estimates remain as accurate as possible.

Calculate the number of opportunities you need

Once you’ve set your benchmarks, you can work backward to establish how many total lead opportunities you’ll need in each pipeline stage to meet your goals. For example, if your goal is to convert 200 prospects every month and your reps usually close 85% of deals in the nurturing and negotiation stage, you’ll need 250 prospects to enter that phase.

Likewise, if you know your sales optimization stage normally retains 70% of prospects, you’ll need just under 360 leads coming out of the contact stage. Work all the way back to the lead generation stage. Once you have your target numbers, you can progress to goal setting for your sales team.

Keep adding leads

A significant percentage of marketers say that generating leads is problematic for their organization, and more than 40% of salespeople say prospecting is the most challenging part of the process. To keep your sales pipeline stable and growing, you should be continually prospecting.

As a general rule, the lead generation stage of your pipeline should always have the most opportunities, with numbers gradually decreasing as you progress through the pipeline. Your conversion rate in the prospecting stage is likely to be much lower than in the closing stages, so you need to account for that in advance to keep a steady stream of opportunities flowing through your pipeline. Take advantage of sales prospecting tools like Crunchbase to keep leads flowing.

Set follow-up processes

If you don’t follow up with leads, you’ll lose sales. This is why having a set procedure for follow-up processes is vital. When designing your follow-up strategy, you should consider timing, frequency, and contact method. You’ll need to develop a uniform structure for:

How quickly each inbound lead is contacted.
How many times they are contacted per week/month.
How they are contacted on each occasion – i.e. via phone, email, text, social media, etc.
What new information is provided at each touchpoint.
How your teams take action and keep track of prospect progress.
At which point prospects are removed from your pipeline.

Schedule cleans

What is pipeline cleaning? It’s exactly what it sounds like–periodically reviewing and removing prospects so that your sales reps are not wasting time and resources on chasing cold leads. It can be tempting to leave as many opportunities in your pipeline as possible. However, this approach doesn’t help you close more sales, and it also skews the accuracy of your sales forecast.

Follow these steps to keep your pipeline healthy:

Identify prospects who have spent a longer than average time in your sales cycle.
Send them an email with a straightforward option to respond if they are still interested or to ignore if they are not.
Move prospects around the pipeline based on their answers. For example, you might move a lead from the nurturing and negotiation stage back to the sales optimization stage if they require more information.
Remove cold leads from the sales pipeline or move them to another category of your CRM where they can be included in future communications and campaigns.

Review data regularly

Research shows that decision-makers typically change roles at a rate of 20% per year, and an estimated 25% of sales reps change positions every year. Keeping track of this information ensures no opportunities slip through the cracks due to internal or external personnel changes. You may also want to make general changes to your pipeline design as new data and insights come to light. For example, you might need to add a whole new stage, lengthen the timeline of an existing stage, or redefine your criteria of what constitutes a hot or cold lead.

Schedule review meetings

Pipeline review meetings are essential in ensuring your sales reps remain driven and motivated to succeed. Some organizations conduct pipeline review meetings weekly, while for others, monthly or quarterly meetings may be sufficient depending on the length of their sales cycle. Here are tips for running an effective pipeline review meeting:

Use your CRM to analyze how each rep is doing.
Ask each rep to summarize the deals they are working on.
Provide positive feedback followed by assessments on areas for improvement
Decide the next steps of action, and document this on your CRM for increased accountability.

Think-tank your roadblocks

Putting everyone’s brains together to find a solution is better than trying to do it yourself, and including your teams in the design, review, and implementation of your sales pipeline procedures makes your teams feel more valued. Plus, brainstorming together could generate many helpful ideas on how to combat anything from competitor pressure to objection handling and risk mitigation.

Sales pipeline metrics to watch

If you don’t consistently analyze your data and measure your performance, you won’t know where and how to make improvements. These are the top six metrics to watch.

Total number of opportunities – You should have complete visibility of the total number of qualified prospects being pursued by your sales team at all times.
Average deal value – While you’ll always want to chase the big wins, a series of small deals could ultimately convert faster and be a better predictor of revenue.
Average win rate – Knowing your overall average win rate helps nail down your benchmarking strategies and opportunity calculations, and can be valuable in identifying shortfalls and action planning for increased sales rep performance.
Lead to opportunity ratio – Many leads may enter the pipeline, but not all will turn into qualified opportunities. Your lead to opportunity ratio is indicative of both the quality of your leads and the determination of your sales team.
Sales cycle length – The time it takes a prospect to move through all six sales pipeline stages will vary between businesses based on the products and services offered and the size of each deal. Nonetheless, having a defined idea of how long the process takes is essential.
Total pipeline value – Knowing the total value of all potential deals in your business pipeline helps you predict revenue more accurately and refine your strategies for closing a higher percentage.

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Crunchbase’s sales intelligence software surfaces information about millions of companies to help you target the right prospects, at the right time with the right message.

Learn more about our intelligent prospecting software, and check out these additional resources to discover how Crunchbase helps sales teams close more deals:

Originally published June 16, 2022, updated November 3, 2023

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How to Build a Successful Sales Pipeline