What is a Sales Pipeline and Why You Need One

Many sales teams and their managers are familiar with the concept of a "sales pipeline." They understand that it is more than just a buzzword that gets tossed around at meetings. But what exactly is a sales pipeline, why is it important for your business, and how has it evolved in recent years with the widespread use of AI and CRMs?

The Takeaway (LT:DR)

• Sales Pipelines can help you improve and follow your sales process.
• Sales Pipelines and Sales Funnels are not the same thing, but they work together.
• A Sales Pipeline is an essential element in your CRM.

A Sales Pipeline Helps You Track and Manage Your Sales Activities

In its simplest version, a sales pipeline visually represents where your leads or prospects are in the sales process. Understanding your sales process in a visual format can help identify, track, and manage your leads. Additionally, it can help your sales forecasting and performance.

Sales pipelines usually have the following common stages:

1. Lead Generation: You’ll find leads through traditional marketing, social media, or other awareness efforts, or, more likely, a combination of these efforts.
2. Lead Qualification: Next, assess these potential customers and determine which ones are worth pursuing and which ones are not. Sales teams must operate with maximum efficiency, and lead scoring is a helpful tool in achieving this goal.
3. Sales Presentation: Using printed and electronic collateral, alone or alongside face-to-face contact, a sales presentation is made, discovering the solutions needed by the client.
4. Proposal / Asking for The Sale: No presentation is complete without asking for the sale, either to find objections or to close the deal.
5. Negotiation: After the solutions are uncovered, and the sale is asked for, typically and especially for B2B sales, some types of negotiations are needed, either on price, terms, or levels of service.
6. Closing: Finally, the closing, when both parties agree, and both parties find mutual benefit to the transaction, paperwork is signed, products are delivered, or services begin.
7. Follow-up: The process of selling continues even after a product or service is sold. Sales and client service teams need to ensure that they fulfill their promises and satisfy the client to ensure their loyalty and potential referrals and renewals.

How is a sales pipeline different from a sales funnel?

The terms Sales Pipeline and Sales Funnel are two commonly used phrases. While both are used as visual representations of leads going through the journey to become clients, they are different processes.

The client journey starts with a sales funnel. In a sales funnel, the goal is to attract a large number of potential clients and filter them down until they become viable prospects. There are also stages in this process that qualify leads. As each stage is reached, the lead becomes more qualified, and in the final stage, they are ready to convert or purchase. After the sales funnel is done, the clients move to the sales pipeline.

In a sales pipeline, the goal is to guide leads through each stage of the sales process and have them become long-term repeat clients. This approach involves steps and activities that nurture leads and establish relationships as trusted advisors.

Sales Pipeline Management

Like all aspects of the sales process, the sales pipeline must be properly managed. Pipeline management can estimate how much your sales team can bring in from current and potential deals. If you regularly monitor, your team will be able to see how their deals are performing against your goals. Using and managing the pipeline will allow your company to find problems in your sales process that can be corrected.

Is a sales pipeline the same as a CRM?

While a sales pipeline isn’t a CRM (Customer Relationship Management) system, it is a critical component of one. Your sales pipeline is a KPI (Key Performance Indicator) that allows you to measure and track the progress of your leads and clients as they progress through each stage of the sales process.

By using a sales pipeline, you can discover areas where your sales process is not functioning or slowing down and areas where your sales process is working well. Then you can use this information to make improvements in your CRM that result in increased conversion rates. This information can also be used to help with forecasting revenue and sales volume.

What is the difference between a sales target and a sales pipeline?

Although a sales target can be used (and should be used) as a KPI within the sales pipeline, it is not the same thing as the pipeline itself. A sales target is a goal to achieve a specific number of sales, units sold, or revenue. As we point out in this blog post, a sales pipeline monitors your sales and progress, pinpointing areas that need improvement.

What is the difference between a sales cycle and a sales pipeline?

Much like how sales funnel and sales pipeline are often used interchangeably, sales cycle and sales pipeline are also used interchangeably.

But, while they are related terms, they are different. The sales cycle is the journey that a lead goes through before converting and making a purchase. The sales pipeline is a visual representation of your current deals that are in progress.

How a Sales Pipeline Can Benefit Your Business

A sales pipeline can benefit business-to-consumer (B2C) and business-to-business (B2B)organizations in many positive ways. Those benefits include:

• Prioritizing sales activities and focusing on clients most likely to convert.
• Insights and data to help forecast marketing and revenue more accurately.
• Identify areas in your sales process that need to be improved.
• Encouraging collaboration between teams.
• Tracking deals with your CRM.

Some Common Sales Pipelines Used by Businesses

There are many different types of sales pipelines being used today, and we aren’t able to list all of them, but here are a few common ones:

• Inbound Sales: This pipeline works with businesses that have mostly inbound marketing, such as content marketing, SEO, social media, etc.
• Outbound Sales: This pipeline works with companies that use outbound marketing, such as telemarketing, email marketing, direct mail, and similar services.
• SaaS Sales: This pipeline is more specific to companies that use online subscriptions as their main source of business.
• E-commerce: This pipeline is for businesses that sell physical or digital products and services.

How AI is Changing Sales Pipelines

AI (Artificial Intelligence) is transforming business; the sales pipeline is no exception. AI benefits businesses by providing them with patterns, trends, and insights powered by their own and industry-level data. Some key aspects that will be improved include:

• Sales enablement solutions: Data-driven AI can simplify prospecting and lead qualifying by using data to create better customer profiles, more realistic buyer personas, and more targeted Ideal Company Profiles (ICP).
• Lead Qualifying: AI tools can be a critical part of lead qualifying and can nurture leads until they are ready for the human touch provided by engaged sales team members.
• Forecasting: Based on industry trends, market trends, and historical data from your CRM, AI can help forecast your revenue, sales levels, and other key aspects of your business.

What is pipeline coverage?

Sales pipeline coverage is the ratio between the total dollar value of a sales funnel and the revenue target. It's a tool that managers and reps use to evaluate the likelihood of meeting quota.

In Closing

A sales pipeline is an essential and powerful tool that helps improve closing ratios, revenue, and efficiency. Planning a clear and concise sales pipeline that matches your client journey can help you manage your opportunities and convert at higher ratios. A sales pipeline is one of the features offered by TigerLRM.