SALES PIPELINE MANAGEMENT: THE ULTIMATE GUIDE FOR THE BEST RESULTS
Sales are one of the backbone pillars in the life of a business. This means that, if you want to succeed in sales, you need to know how to manage your sales cycle.
This article describes why a well-structured sales pipeline is fundamental for the growth and for the health of your business. In addition, it will show the best practices for sales pipeline management. Indeed, “there’s a direct financial correlation between maintaining a healthy pipeline and piling on revenue,” said Mike Ciccolella, founder of Grow your Sales Pipeline.
WHAT IS A SALES PIPELINE?
A sales pipeline visually describes the sales process. It allows to display and neatly arrange all the potential customers according to the stage they find themselves in the sales cycle.
A sales pipeline is generally represented by the metaphor of a leaky funnel.
This is how it actually works:
- Sales opportunities are dropped at the top of the pipeline.
- As they gradually flow through it, the number of open opportunities decreases, while the number of “hot” leads, who are more likely to close a deal, increases.
- The bottom of the funnel is reached only by those leads who are willing to close a deal and to become actual customers
Remember: the higher number of qualified leads is dropped at the top of the pipeline, the more chances salespeople have to sign contracts and close deals!
Sales pipeline: 100% benefits
The sales pipeline is fundamental to run the whole sales process and to structure the salespeople’s work. If well managed, the sales pipeline can give dramatic benefits:
- It allows salespeople to follow a definite path and not to lose track of their daily activities.
Actually, they use it as a compass to orient their selling-boat through the tricky sea of sales. Needless to say, the sales pipeline helps them know exactly what they are doing and what their goals are at every stage of the process.
- It’s the visual representation of both the customer’s journey and the salespeople’s open opportunities, that is two sides of the same coin.
Indeed, depending on the facet you decide to analyze, you will get a different, yet complementary, point of view on the topic plus a better insight into the sales pipeline and a much greater awareness of its trends and health.
- It’s a reliable performance analyser that helps you focus on your sales goals and keep track of your performances.
It’s like a doctor doing a blood test who checks the results and tells you which values you have to fix in order to stay healthy.
sales pipeline: the engine that makes it work
A sales pipeline works only if leads are regularly moved through it. These are the players that help guarantee a constant flow into the funnel:
- The marketers: their duty is to nurture the top of the funnel with qualified leads. In order to do this, they use outbound and inbound tactics plus referrals. When marketers successfully get in touch with a prospect they automatically send the potential client to the top of the sales pipeline, where he is ready to start his customer journey.
- The salespeople: their job starts when qualified leads enter the sales pipeline. Their duty is to move the leads from the top of the funnel to the bottom and eventually close a deal with them.
Hence, what marketers and sales people do is complementary. Indeed, their goal is the same: closing as many deals as possible.
sales pipeline: how to build up an effective structure
A sales pipeline is composed of all the different steps needed to sell your solution and to turn a lead into a paying customer. Yet, it’s impossible to determine the exact number of stages a pipeline should have. It varies all the time, depending on the goals and on the type of customers a business has got.
As an overall hack, be aware that:
- If you have too many stages it might be counter-productive, as the management of the pipeline becomes difficult and time-consuming.
- If you have too few, your cycle might be too fast. Your salespeople would have to be pushy to try to sell your solution, not having enough time for nurturing the leads. Moreover, if you show your potential buyers you just care about money and not about their needs, you won’t be able to persuade them to purchase your solution.
This is how a healthy pipeline should look like, according to our experience:
You can use this example to take inspiration for the design of your own sales funnel – which should always represent your customer journey.
WHAT IS A CRM?
A CRM (customer relationship management) software is essential to manage the sales pipeline properly.
It helps aggregate customer’s information in one place. Indeed, it guarantees easy access to contact details, purchase history and any information related to customer service representatives. In this way, the CRM helps employees interact with clients, anticipate customer needs, recognise customer updates and track performance goals when it comes to sales.
Actually, the main purpose of a CRM software is to make interactions more efficient and productive. It does work like an external memory for salespeople’s brain. Thanks to this tool, indeed, they are able to keep under control all the on-going activities in their pipeline.
#Quick CRM hack:
There are many CRM out there. Before choosing one, consider trying some demos first. In this way, you will be able to weigh up the pros and cons of each solution and to eventually make a mindful choice.
Here a list of some CRM which can be helpful to manage your sales pipeline:
WHAT IS A SALES METRIC?
A CRM software can give you the best results only if the right sales metrics are set up.
Sales metrics are a collection of individual and organisational performance indicators and ratios. They are calculated from collected data, which describe the company’s historical and ongoing sales activities.
They are used to understand the effectiveness of the sales activities and the efficiency of the sales process.This means that if salespeople are provided with the right metrics, they will be able to take control over the whole sales process and to constantly monitor it.
Here follow some of the metrics we believe to be essential:
A key factor for the sales team. You can analyse it from different points of view:
- TIME SPENT SELLING: You can measure how much time reps actually spend on selling. This helps identify any issues hampering sales performances.
- TIME SPENT ON A SALES CYCLE: You can measure the average length of time a salesperson needs to close a deal. In this way, the sales manager can check team members’ performances.
- TIME NEEDED TO MOVE A LEAD TO THE FOLLOWING STAGE: it’s also possible to measure the average time a deal needs to pass through each stage of the sales pipeline. With this metric, the sales manager is able to detect deals that are less likely to close by the amount of time they are taking to progress.
- AVERAGE SIZE OF THE DEAL:
This metric makes it easier to spot opportunities that fall outside the normal deal size. In this way, the sales manager is able to check the performances of the sales team:
- Some deals might be smaller: if this happens, perhaps some of the reps are closing smaller deals or they’re giving discounts. Indeed it’s easier to chase the small goldfish rather than the big shark. The sales manager can analyse their behaviour and find the right adjustments to it.
- Some deals might be bigger: if this happens, the sales manager can look for the factors that contribute to increasing the deal size and he can understand which tools are needed to pursue bigger opportunities.
- WIN RATE:
This metric makes it possible to look at the average percentage of deals that successfully made it to the bottom of the pipeline. Moreover, it allows understanding which factors can help the sales team reach the best results and the best win rates. By keeping an eye on this metric the sales manager can work with the reps in order to fix the mistakes they make when closing deals plus he can teach them the best tactics to accomplish this “mission” efficiently.
- SALES FUNNEL LEAKAGE:
This metric determines the number of opportunities that are deleted from the sales funnel at various stages. It’s inversely related to the conversion rate. The purpose of tracking this ratio is to better understand why deals are removed from the sales funnel. Monitoring funnel leakage enables you to take measures to stabilise the leakage and your resulting business volume.
Once the right sales metrics are set up, it’s possible to analyse the trend of the sales pipeline from different points of view. Hence, the sales manager is able to know what has to be improved and act consequently.
SALES PIPELINE MANAGEMENT – BEST PRACTICES
There are several tricks the sales team can use to effectively manage the pipeline and to achieve the best results.
Here some of the hacks you can use to rock your sales funnel:
- DESIGN THE SALES PROCESS
If you want the sales pipeline to work properly, you need to pinpoint a formalised sales process. Indeed, sales funnel without clearly defined sales steps is like a house trying to stand up without proper foundations. With a well-structured sales process – which is up to no discussions once it’s set up – salespeople will know exactly how to manage their deals at each stage and their work will be more organised and more efficient. If your sales team has to guess where a particular deal belongs, you probably don’t have a formalised sales process.In addition, remember that the sales process shouldn’t be just focused on a sales point of view, but also, and especially, on the customer’s perspective. Invest time in developing a unique process that reflects the reality of your potential buyers and makes sure your sales team understands how to use it. In this way, salespeople become more closely aligned with the customer’s procurement process improving predictability of customer’s action at the same time plus they have more chances to influence the customer’s buying decisions.
- USE YOUR CRM SOFTWARE WISELY
Lev Tolstoj once said that there is no greatness where there is no simplicity. This thought is applicable not only to life, but also to the sales funnel management. Actually, a CRM works at its best when you make it as simple as possible. The fewer tabs, metrics and functions you can get away with in your CRM tool, the better it is.Adding more features to the CRM would just create a real haphazard jumble. Play it easy and you will win. Indeed, sales people only need a bunch of golden backbone metrics to make their work more efficient and to improve their performances.
- MEASURE EVERYTHING
If you don’t measure the data coming from your sales pipeline, you are basically shooting in the dark. It’s impossible to know what has to be improved at each stage and what the weaknesses of the team are without proper measurements.That’s why it’s important to have clear metrics that helps you analyse the sales pipeline trend. Think of the metrics as milestones. With each milestone, the probability of closing the sale increases as the risk of getting lost in the sales process is avoided.Once the right information is given, it’s possible to determine the steps, the procedures and the behaviour that have to be improved.
- HIRE THE BEST SALES MANAGER YOU CAN FIND
A sales manager can help the sales team achieve the best sales results. Ideally, he behaves like an orchestra leader. Indeed, he his able to coordinate his musicians – each of them with different skills and attitudes- and make them play a great symphony.The sales manager has to take care of several things if he wants to maintain a healthy pipeline and improve his team performances:
- He has to master the CRM software. That’s where all the knowledge about the sales process comes from. He has to know exactly how it works to get the most out of it.
- He has to detect the best metrics which will enable the sales team to efficiently manage the pipeline and improve their results.
- He has to adopt really good analytics modules in the CRM for his analyses.
- He has to identify the best patterns, the best practices and the best current stages to optimise the sales pipeline trend.
- He should make his team focus on sales only. Indeed, if salespeople are given the wrong sales responsibilities, their performances will be affected.
- He has to be strict and demanding with his sales team in order to get the best performances. Moreover, he is required to punish those who are misbehaving on the CRM.
- THE SALES MANAGER HAS TO CONSTANTLY TRAIN HIS SALES TEAM
The sales manager cannot expect his team to work efficiently if he doesn’t prepare the team members adequately.
These are measures required:
- He should always inform salespeople about the periodic priorities in the pipeline so that they can act consequently.
- He should teach them how to use the CRM tools efficiently and how to improve their personal skills.
- He should average his team out. To do this, he has to check who is the top performer at each stage of the funnel and find what he does differently and better. Then, according to the results he gets, he has to teach the others what they can do in each step to improve their performances – he can set out short-term goals to head their path correctly.
# Easy-peasy hacks for salespeople:
They have to face many challenges every day. Check out 11 solutions to deal with their pains and generate bigger ROI here!
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P.S.: Credits for visual elements go to Freepik – Canva – Flaticon