What is a sales pipeline? A guide on how to build one

By Indeed Editorial Team

Published 7 June 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Sales pipelines are tools used by sales teams to track the progress of their activity. They are ways of visually illustrating the journey being taken by a potential customer, from initial contact through to completed sale, to stay aware of sales activity. They can be an effective tool and if you're thinking of using one, it's important to understand how they can be helpful and what may go into making one. In this article, we answer the question 'What is a sales pipeline?', including what some of the stages on a pipeline may be and other frequently asked questions.

What is a sales pipeline?

Sales pipeline is a tool that helps companies track their customers through different stages of them purchasing a product. It's a way of visualising this purchasing process. Very often, businesses visualise this process as a horizontal bar, or sometimes a funnel, with the bar divided into the different stages of the company's sales process. Sales professionals move potential customers through the different stages of the pipeline towards the end goal of a completed sale. The stages may vary depending on the specific business.

The pipeline is a simple way for sales representatives to illustrate the journey of a person from lead to, hopefully, customer. This illustration tool allows salespeople to see the exact progress of their various sales efforts, tracking their potential deals and possible revenue. It's highly valuable to sales professionals who may handle multiple clients at once, making sure they don't lose track of any valuable potential sales. Sales managers may also use the pipeline as a tool to track the progress of the sales representatives they manage and to maintain visibility of all sales activity going on in their team.

Related: What are the most important sales skills?

What are some of the stages of a sales pipeline?

A sales pipeline is most effective when it specifically fits the needs of your business. It's advisable to take the time to make sure you guide the construction of the pipeline with specific information about your customers, product, company and sales team. There are often similarities or common stages between the sales pipelines used by different businesses, though. Here are some of the common stages of a sales pipeline:

Finding prospective customers

The first stage for most sales pipelines is often to find sales leads and potential customers. The way companies go about doing this can vary depending on their size, organisational structure, target clients or the product it sells. Some organisations may have entire teams dedicated to seeking out potential leads. They may look at engagement with social media content for potential sales leads, manage and monitor communications into the business or even make speculative contact with leads who look like they may be ideal customers.

You can also use specialised software packages that can automatically and efficiently analyse data to generate potential leads from your target consumer base. Many companies may use a mix of manual and automatic lead generation, with sales professionals researching potential leads that may be outside of the existing consumer base, then using software to automatically find important information, such as financial and contact information. Having information about a potential customer, their finances, business operation and their ability to make purchases can be valuable in helping sales representatives decide on what sales technique to use when approaching them.

Making contact

This is when a sales representative has an initial conversation with the prospective customer. In this conversation, they may discuss with the client the specific needs of their business. They can then describe the benefits of the product or service they are trying to sell and how it can help meet their needs. They may mention how they have been able to help customers with similar needs in the past. There are several ways a sales representative can make contact with a prospective client, including by phone, text, email, social media or even face-to-face.

The method of contact varies depending on what is most appropriate or convenient for the potential customer. The sales representative may have discerned this information during their research to find new sales leads. Their choice of sales strategy may also influence how they establish contact. If they are taking an informal approach, or if they noted that the potential customer is particularly active on social media, they may opt to make contact via direct message on a social media platform rather than by email, for example. Sales representatives often keep databases of customers, potential customers and their preferred contact information.

Building relationships

Building a relationship with a client is more than trying to sell them on a product. Indeed, being too pushy or constantly contacting a client may turn them away from the potential sale. Building a relationship with a client is about talking through specific issues they may have and how your product can help them. It may also involve listening to and discussing any concerns they may have about the product or the sale. It involves a back-and-forth that helps the client build trust with the sales representative and makes them feel that the representative has their interests in mind.

If a sales representative can effectively build this trust, then a client is much more likely to want to complete a sale. This may also motivate them to continue their relationship with the sales representative, potentially leading to further sales in the future. The approaches taken to build a relationship can vary from case to case and are largely down to the judgement of the sales representative. Discussions may be more formal and focus on the specifics of the product or may be more social and focus on the client's personality.

Related: How to improve your communication skills

Closing the deal and completing a sale

After making contact and building a relationship with a client, it's time to ask for a sale. How you approach doing this can vary depending on the specifics of the client and situation. If you've taken the time to build a good relationship with a client, this can make this process easier, but that may not always be the case. There may be a period of negotiations to finalise terms that are maybe not exactly what the sales representative initially proposed, but secure the sale.

Other times, a client may be more apprehensive and ask for more time to decide or just stop responding to the sales representative altogether. If this happens, a sales team may mark these clients as 'cold leads' as they were a lead the team pursued without completing a sale. Companies do often keep a record of cold leads to potentially contact at a later date. They may send a message after an unsuccessful sale to say that even if they aren't ready to buy now, they are welcome to reach out when they are ready to preserve this client relationship.

Related: 8 Sales Forecasting Methods

Sales pipeline FAQs

Here are the answers to some frequently asked questions about sales pipelines:

What are some of the advantages of a sales pipeline?

Being able to visualise the sales process in the way a pipeline allows provides several advantages. Firstly, it allows for a clear and simple way to manage multiple leads and customers at the same time. The visual representation of progress through the sales process allows sales representatives to do their job with more efficiency. It also allows for an easy handover if another representative needs to take over managing a client. Overall team efficiency is further improved by having a clear sales lifecycle all representatives follow, which can make training new employees simpler also.

The pipeline approach also allows for the collection of data on different sales efforts. You're able to look at how well leads progressed through the pipeline when sales representatives used different sales tactics, for example. This can allow you to judge the effectiveness of these tactics. If you identify several leads that didn't make it through the pipeline to the end goal of a completed sale and all used a similar sales approach, this can help you make strategic decisions to make adjustments in the techniques sales representatives use to improve sales numbers and revenue.

Related: Decision-making skills: definition and examples

How do you build a sales pipeline?

When developing a sales pipeline, it's important to make sure you have all the information you need. One of the first pieces of information you may wish to get is your sales and revenue targets, so you have set goals to work towards and judge performance against. You may then wish to research, collect and organise information on your target customers, possibly storing this information in a database sales representatives can easily access and understand.

It's then important to develop the stages in your pipeline that best suit your business. Review the sales process or processes that your sales team use. If you have a strong process in place, then it may be that this established approach translates directly into the stages of the pipeline. Otherwise, collaborating with your sales team members in developing the pipeline steps may be valuable. They likely have experience of what has or hasn't worked in the past and using their diverse experiences and perspectives can help build a strong, innovative sales pipeline.

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