Even the most successful businesses which produce lots of sales in a given period will have problems from time to time. This will usually come down to having too many sales to process at the same time or, conversely, suffering from a temporary dearth in sales. Leaving the process of inbound sales to chance is an error, especially when you are selling goods and services which require considerable capital investment to produce.
The answer is to even out the flow of sales and to make adjustments to your capacity to meet them accordingly. In order for that to work, you will need a sustained sales pipeline.
True, a sales pipeline can never guarantee you the expected turnover you'll see. However, without one, you can make no informed decisions about production capacity. Nor will you be best positioned to organize your sales and marketing activities to produce the best results. Building one has so many benefits, but it is important for all sales teams to implement it properly. So, what's involved?
Defining What a Sales Pipeline Is
To begin with, a sales pipeline is a summary of your current and future sales opportunities. So long as your sales metrics indicate how many opportunities you are likely to close in a given period, your pipeline will offer a valuable insight into where you expect to be in the next reporting period. It might help you to decide whether to take on additional sales staff or make other strategic decisions.
The term pipeline is an apt one in sales-led organizations. Even if you still rely on face-to-face marketing instead of more modern alternatives, like remote digital video prospecting and pitching, you will be able to see how much activity is going on at any part of the sales process. Since pipelines covey things from A to B, using one in a sales sense will allow you to work out how much output you can expect from your input.
Building the Stages Needed for a Sales Pipeline
Every business is different. Some business-to-business enterprises may have more stages in the sales pipeline,and some business-to-consumer ones may have fewer. Regardless of this, the main ones that most enterprises will need to build are as follows:
Step 1: Prospecting
Prospecting is at the start of the pipeline. Prospecting means doing the work to establish who might be a customer from your targeted audience. Cold emailing and phoning, as well as connecting with leads through webinars and video conferencing presentations, are all forms of prospecting.
Step 2: Qualifying
Once you have established the first stage of the pipeline, the next will be qualifying, in which your sales team researches each prospect further to work out which ones are most likely to leadto positive responses.
Step 3: Initial Contact
This is when you break the ice either in person or through a sales call or a focused live video conversation about your company. This is when some qualified prospects may reject your overtures or otherwise plan to keep you on file in case their current supplier lets them down.
Step 4: Nurturing
The next stage in the sales pipeline is called nurturing. Essentially, this means keeping the business relationship going even if no orders have yet been placed. Nurturing can involve product and service updates, providing helpful information on industry best practices, and even entertaining potential clients.
Step 5: Proposals
The penultimate stage in most sales pipelines relates to making proposals. This is when you get the chance to quote for particular jobs or orders, and your proposition is likely to be directly compared to your competitors for the first time. Proposals often involve handling any objections that your client may have.
Step 6: Closing
The final stage is when you hopefully seal the deal and get the customer to commit. Sometimes, sales teams use specialist closers at this final stage.
The KPIs to Follow in a Sales Pipeline
Measuring the success or otherwise of your sales pipeline often means setting key performance indicators (KPIs) for your sales team. These will also necessarily vary according to the nature of your business. However, in most cases, it would include having a good spread of sales that are at each stage of the pipeline. Too many projects that are at the closing stage and not enough at the prospecting stage, for example, is often asign of a problem.
A CRM system that provides analysis of sales activities will often help to quantify sales KPIs. This means you won't have to rely on the more qualitative assessments of sales reps, for instance. KPIs you might use include:
- Measuring how short sales cycles can be shrunk to in the pipeline. In other words, you measure a closed deal from when it was first prospected. Those with the shortest cycle indicate the most successful and free-flowing pipelines.
- The time a sales rep spends online face-to-face with their prospects compared to being physically present or talking on the phone is another performance indicator. Face-to-face sales discussions, conducted in-person or via a video call, tend to be of most benefit so measuring this amount of time and comparing it to email responses or phone calls will often be beneficial for sales managers to know.
- Comparing initial contacts to qualified leads is another KPI that will be informative when building a more successful sales pipeline. Measuring this will help to show how effectively – or otherwise – prospecting is. This is because too high a rate of failed initial contacts may show the qualification process is not as thorough as it ought to be.
- Finally, the quotation to close ratio is another KPI that helps sales organizations to focus on their competitiveness. If your deals are not being closed despite making good progress through the sales pipeline, then ask yourself what it preventing them from being taken up.