Sales Strategy
7 min reading

Sales pipeline: how to create and manage an effective sales pipeline?

Florian Reboussin
Published on
12/6/2024
commercial pipe management

When we talk about a sale, we usually refer to the closing: making the deal happen. It's the moment every salesperson eagerly awaits. But upstream of the closing, there's a whole process, with the multiple stages followed by the prospect until he or she is (finally) transformed into a satisfied, happy and loyal customer. This process is known as the sales pipeline.

This expression is no stranger to you. It's a popular buzzword. Sales people use it indiscriminately: "Throw your contacts in the pipe", or "Are there any hot leads in your pipeline? But there's more to the term than just buzzwords. The pipeline is a vital tool for any sales team, and its proper use can make all the difference to performance.

In fact, the stages of a sales pipeline help your team to better understand the transactional process and prospects' behavior throughout the sales cycle, from first contact to contract signature. It helps you to see where deals are stagnating, stalling or slipping away, and what actions need to be taken to get to closing. Without integrating this tool into your CRM (and training it in your sales performance software so that it becomes firmly embedded), you're missing out on essential information about the effectiveness of your sales process.

In this article, you'll discover what a sales pipeline is, how to create it step by step, and above all how to manage it effectively so that it helps you reach your sales targets by seizing as many opportunities as possible. And, as a result, you'll earn extra income!

What's a commercial pipe?

Does the word "pipeline" conjure up bad memories of high school geography classes, spent scrutinizing oil and gas pipeline networks on illegible maps? Rest assured, there's no question here of delving into the intricacies of international energy policy. The pipeline we're interested in isn't used to transport fluids over long distances, but to carry prospects from one end of the sales process to the other.

The sales pipeline: a simple definition

To give a definition of the sales pipeline, we can sum it up as follows: it's the visual representation of a sales process. This representation is made up of the succession of stages a prospect must go through to move from the status of a simple contact to that of a customer.

This makes the sales pipeline a strategic tool for visualizing the major stages of a sales cycle, and all the opportunities to be seized by sales teams. Sales teams follow leads as they progress through the buying process, and implement the necessary actions to bring them through to conversion.

Beyond its "sales tunnel" aspect, the sales pipe also plays the (essential) role of a database. It provides sales reps with all the information they need to manage their opportunities: number of leads in progress, probability of conversion at each stage, actions already taken and to be taken in the future, state of relations with current customers, and so on. It is, above all, asales efficiency tool for the company.

How a sales pipeline works

This representation can be multiple. Most often, the sales pipeline is represented by a horizontal bar divided into several boxes, each representing a different stage in a prospect's buying journey. Here, the way it works is simple: you read it as if you were following an arrow, with leads moving from left to right as they progress through the sales process. For example: a contact who responds to a cold email is immediately qualified and moves on to phase two.

The information needed to build each stage of the sales pipeline generally comes from CRM software, which is a veritable pool of information. They also come from feedback from sales staff, who enter their usual processes and actions into a sales pipeline tool.

The pipeline can also take the form of a sales funnel, as a result of a significant loss of prospects at each stage and a steadily decreasing conversion rate. However, as we shall see below, this representation is not always faithful to reality.

The usefulness of a commercial pipe

A lot has already been said about this tool. But in concrete terms, why implement a sales pipeline in your company? This tool enables the sales force to...

  • better visibility of the entire sales process;
  • track the progress of prospects at each stage of the sales tunnel, visualizing exactly where they are and what actions need to be taken to push them forward;
  • assess the maturity of prospects according to the stages of the sales pipeline, and prioritize the most relevant opportunities;
  • identify potential bottlenecks and friction, so that corrective action can be taken (in particular, by analyzing the conversion rate at each stage to determine where losses are occurring);
  • seize as many opportunities as possible, to improve sales prospecting results;
  • divide the sales process into a multitude of tasks that are easier to understand and optimize, thus helping to achieve objectives;
  • better understand prospects' buying path;
  • build loyalty among existing customers as part of effective customer relationship management.

Sales pipeline VS sales forecast VS sales funnel

At this stage, you may be feeling confused. What about sales forecasting? And isn't the famous "sales funnel" the same thing as a pipeline? In reality, there are important differences between these concepts.

  • While the sales pipeline focuses on opportunities managed by the sales teams, regardless of the stage and maturity of the prospects, the sales forecast is a long-term projection with an informative value. The aim of this analysis is to estimate the number of potential transactions and the theoretical sales that the sales team will be able to achieve over a certain period of time. The team can refer to it to visualize its objectives and evaluate the path it needs to take to reach them.
  • As for the funnel, it is indeed a type of sales pipeline, but the reverse is not necessarily true. In fact, the shape of the sales funnel implies a gradual decrease in the volume of leads throughout the process, so that it is necessary to always have X number of prospects on the left of the pipeline to obtain Y conversion rate on the far right. But this image is misleading. A better analogy would be to visualize the sales pipeline as a cylinder of always equal diameter: once the prospects have been entered, all or almost all are suitable for conversion into customers. Selection therefore takes place upstream of the sales pipeline, with high conversion potential inside.

Creating a sales pipeline: how does it work?

Now you know what a sales pipe is and why it's useful. The next question, of course, is how to set it up. What are the main steps involved in creating an effective sales pipeline?

1. Know your customers' buying path inside out

This is the basis. Insofar as the sales pipeline unfolds in stages, and since these stages are directly connected to the prospect's buying journey, it's essential to know the latter well in order to build the latter. As a reminder, the sales cycle generally takes this form:

  •  The expression of a problem to be solved (awareness).
  • Examination of solutions on the market and comparison of offers (consideration).
  • Decision-making (conversion).

Of course, it's up to you to refine this generic schema, according to the realities encountered by your sales team.

2. Identify the different stages of the sales pipeline

Each sales pipe is unique, as its construction is adapted to the stages of the sales process specific to each company. But there are roughly five or six key stages:

  • Contact: the prospect enters into contact with the company (phone call, filling in a form on the website, downloading content, etc.).
  •  Making an appointment: the prospect agrees to hear a salesperson's arguments and learn more about the proposed solution.
  • Post-meeting: the prospect enters the reflection phase, having been fully briefed on the steps to follow. They have all the information they need to compare offers.
  •  The proposed solution: the prospect shows interest in the product, service or solution.
  •  Sending an offer: the prospect studies the offer and refers it to the decision-makers.
  • Closing: the prospect signs the contract or gives up along the way.

Of course, the number and nature of these steps are likely to be different for your company. Building your sales pipeline therefore depends very much on your CRM and the feedback you receive from your sales force.

3. Determining the ideal size for the commercial pipe

The size of a sales pipeline varies according to the length of the sales cycle. The number of steps required will be different for selling office supplies (short term), SaaS software (medium term) or real estate (long term). It's important to take this into account when building a pipeline sales process.

Another essential point: you also need to assess the time spent by prospects at each stage of the sales pipeline. For example, it may take two to three weeks to move from phase 4 to phase 5, while closing will take just a few days. This data enables sales reps to identify the most relevant opportunities and to sort through the leads, discarding those that fall outside the set scope.

Create a process from scratch or draw inspiration from an existing model?

There are two ways to create a sales pipeline: build a process from scratch, or adapt an existing one. In the first case, you draw on the information contained in your CRM software, and analyze the workflows of your best salespeople, to highlight their methods and the steps they take to manage opportunities. What actions do they take? How many follow-up e-mails are sent out, how many calls are made? How much time should be allowed between each stage of the pipeline?

In the second case, you start with a generic process and adapt it to the realities of your business. Here again, a glance at your CRM will help you visualize the steps required to build the pipeline. There are many templates available online: don't hesitate to use them for inspiration!

What tools do you need to create a sales pipeline?

There's nothing simple about creating a sales pipeline. But the good news is that there are a number of tools you can use to make it happen. The most important of these (you guessed it) is CRM software, which gives you access to a wealth of information essential to building a sales pipeline in stages.

Other solutions can assist you in your task, such as a Deal View tool [en1] to monitor sales opportunities and identify areas for improvement.

How can you effectively manage your sales pipeline?

Now that your sales pipeline is in place, and after all the trouble you've gone to, it's time to make sure it's running smoothly. What are the keys to effective sales pipeline management?

Ensure a steady flow of leads into your pipeline

Imagine that the number of transactions soared in the first quarter, but then plummeted in the following quarter. What happened? Such a situation can arise if your sales teams focus on current opportunities in the pipeline, neglecting the necessary upstream prospecting. Picking up prospects may not be the most glamorous aspect of a salesperson's job, but it's absolutely essential to make a pipe work.

That's right: managing a sales pipeline means constantly injecting prospects into the funnel, so that there are always as many opportunities to be seized. Remember, leads are the fuel of an efficient sales process!

Standardize lead progression stages

When it comes to sales piping, standardization of the steps to be followed is an essential prerequisite. Your sales force must have a well-defined procedure. Communication channels, actions to be taken, deadlines to be met, and even the frequency of mailings or reminders, all need to be standardized within the team. For example, X contacts must be made for each prospect, and a lead must respond to an offer email within three to four weeks - after which it will simply be put aside.

This standardization has the advantage of being reproducible: the effectiveness of the pipeline is based on the relevance of the process and the actions to be taken, rather than on any personal qualities specific to salespeople (which are difficult to copy). It is also a way for the team to disqualify certain leads when updating the pipeline.

Regularly update your list of pipe opportunities

Yes, regular updating is essential for the proper management of a commercial pipe. As such, you need to perform several operations:

  • Make sure prospect and customer information is viable. Is the contact's phone number still valid? Are you dealing with the same people since the beginning of the process? Does the email you wrote down still work?
  • Identify the leads you want to eliminate. It may sound a bit harsh, but some prospects don't belong on your list of opportunities. If you notice that a stage is getting longer than usual, or that a contact is stubbornly refusing to respond to your reminders, it may be time to abandon it - so that you can focus on the really relevant opportunities (except, of course, when the probability of closing is very high). Take the opportunity to send a commercial break-off e-mail: if the recipient turns a deaf ear, you'll know where you stand.
  • Keep your sales pipeline flexible. Although the stages of the process are fairly fixed, realism must prevail. In some cases, it may be necessary to move opportunities back in the pipeline (for example, if your initial contacts have changed and you need to resume negotiation at an early stage), or on the contrary, to extend the time allowed for a conversion at a key stage (because the customer's internal organization dictates a slower pace). Be flexible!
  • Identify paralyzed opportunities. Silent leads, blocked transactions, stagnant exchanges... These situations tend to clog up the sales pipeline and create confusion. Take advantage of the update to assess the likelihood of each opportunity succeeding or failing, and to determine whether it's best to remove it.

Evaluate the performance of your sales pipeline

Like all workflows, the sales process needs to be regularly evaluated to ensure its effectiveness. This is done with the help of the right KPIs: number of opportunities in the pipeline, average transaction value, total value represented by all qualified leads at time T, average time spent in the pipeline, conversion rate for each stage, and so on.

With these elements in hand, you can identify areas for improvement in the sales pipeline and implement corrective actions to optimize the process.

Examples of commercial pipelines

Let's finish with two examples of sales pipelines, each corresponding to a specific sector of activity.

Example of a sales pipeline for a SaaS software publisher

  1. First contact (0%).
  2. Prospect qualification (10%).
  3. First appointment with software demonstration (30%).
  4. Free software trial (50%).
  5. Pricing proposal and negotiation (80%).
  6. Closing (100%).

Sample commercial pipeline for a real estate agency

  1. First contact (0%).
  2. Presentation of the offer (20%).
  3. First estimate appointment (50%).
  4. Negotiation of commission (70%).
  5. Second appointment and signature of mandate (100%).

The sales pipeline is far from being just a buzzword with a short shelf life. Behind this technical term lies a powerful, strategic tool that sales teams use to track the progress of leads throughout the sales cycle, identify the most interesting opportunities, and increase their chances of going all the way to closing. It's an essential tool for sales efficiency.

Florian Reboussin
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