How to Build a Sales Pipeline with Converting Prospects?
True lead generators understand how to bring leads in, and how to build a strategy for that. In case you missed it, we explain how to build a winning sales strategy in this blog.
Next to a solid sales strategy, there are some other factors that determine your lead generation and sales success. Businesses consistently exceeding their revenue goals have an effective sales process with a growing sales pipeline. They always keep their pipeline full and have smart ways to turn data into valuable insights.
Unfortunately, more than 40% of businesses fail to hit revenue goals. If this is you, you need a better sales pipeline management system. Without having valuable insights into the sales pipeline, you’ll miss crucial insights that lead to lost sales. And without enough prospects, you will not be able to fill this pipeline (hello LinkedIn!)
Sales pipeline stages hold considerable importance, as only 25% of leads are actually interested in meeting a sales rep when you approach them the first time. Understanding these stages is essential for the sales teams to lead the prospects across the sales pipeline effectively, and nurture them to convert them later.
In this blog we will cover what a sales pipeline is, what the stages of a sales pipeline are and our best practices and tools for building one of your own. Let’s go!
What is a sales pipeline?
A sales pipeline consists of different stages that turn a prospective customer into a customer. Sales pipeline management is used to visually represent multiple prospects and track their journey along the sales pipeline stages.
Sales teams use pipelines to gain more insight into their sales strategies and understand how to transform prospects into customers. It also is useful to have for simple, practical reasons. Keeping track of your prospects can be messy if you don’t have the right system for it. With a clear sales pipeline you’ll have a great overview of sales stages and tasks that come with that.
What are the different stages within a sales pipeline?
Sales processes are different for every company — and even for products within the same company. So you’ll need a unique sales pipeline that reflects a typical buyer’s journey.
Each prospect moves through the sales pipeline at a different rate based on their level of interest, urgency and amount of research they’ve done on a product or service.
Some prospects even skip stages sometimes. For instance, let’s say an excited buyer reaches out through a referral and proactively introduces you to their budget before you ask about it yourself. In that case, you would move them from the ‘’initial connect’’ stage to the ‘’meeting with decision maker’’.
By determining what stage of the sales process prospects are in and projecting how many of them will close within a specific timeframe, the sales pipeline allows reps and managers to forecast revenue.
1. Define the stages of your sales pipeline.
While the quickest way to define your sales pipeline stages might be copying a template, developing your own is worth the time and effort.
Why?
Because the pipeline stages have to match your prospect’s buying journey for you to track progress and predict revenue.
After all, the pipeline stages must match your prospect’s buying journey to help you track progress and predict revenue effectively. That being said, there is a structure to the madness. Customers undergo a typical process:
Awareness. The buyer realizes they have a pain point or opportunity.
Consideration. The buyer defines their paint point, develops evaluation criteria, and researches potential approaches.
Decision. The buyer has finalized their strategy and compares vendors/specific solutions.
Let’s take our lead generation business as an example:
Awareness. The buyer realizes they are not generating enough leads for their sales team.
Potential problems:
– Not enough leads in numbers;
– Not enough qualified leads;
– Not enough warm leads;
They are aware of the problem and are looking at several options to do some more research on it.
- Discuss with professional peers;
- Research best practices in blogs (like ours 🙂 ) and ebooks.
Consideration. The buyer is considering different options to solve the problem.
- Research different lead generation methods
- Compare bulk lead purchases vs. targeted lead generation
- Develop a case to justify the hiring of external lead generators
Decide. Making a decision between the best options.
- Create a list of good lead generator businesses
- Meetings with firms for demo’s etc.
- Decide on a firm and negotiate.
Companies with an effective sales pipeline management see 15% more growth than others.
With this in mind, the sales pipeline might be:
- Connect. The buyer engages with your company through an email from a salesperson, a webinar, or a piece of content.
- Appointment set. The buyer agrees to a meeting to learn more about how you can help them.
- Appointment completed. They attended the meeting, and you confirmed the next steps.
- Solution-proposed. The buyer wants to use your product to solve their pain point or capitalize on their opportunity.
- Proposal sent. The buyer reviews your proposal or contract.
Note that this is a standard explanation, the more complex your product, the longer your sales cycle will take — and the more sales pipeline stages there may be.
2. Identify how many opportunities continue through each stage.
You should know how long prospects stay in each stage. This counts for across the board and closed deals. For example, the average prospect may spend two weeks in the demo stage, while those who eventually buy spend three weeks.
You should also know the percentage of opportunities that advance to the next stage.
Don’t forget about your conversion rate. This is important! Perhaps prospects are 75% likely to buy in the demo stage and 90% likely to buy in the negotiation stage. Once you’ve assigned these percentages to each stage, you can develop monthly or quarterly revenue estimates.
Knowing these benchmarks will help your sales reps and managers predict which opportunities will likely close.
3. Calculate the opportunities you need to hit your goals.
After you’ve established step 1 and 2, you can work backwards and determine how many opportunities you need in each pipeline stage. You do this by starting with your monthly target or quarterly revenue divided by your average deal size. By doing this, you will know how many deals you need.
After that you divide your target deal number by your conversion rate per stage. For instance, if you need to get 135 deals, and your sales reps typically close 90% of deals in the negotiation stage, 150 opportunities have to reach that stage in a month.
You repeat this process for every stage. Once you have your total milestones, you can divide these goals by every sales rep in your team.
Here’s an example:
- 2,000 deals/year = 167 deals per month
- 8,000 proposals/year = 667 proposals per month
- 32,000 meetings/year = 640 meetings per week
- 64,000 calls/year = 256 calls per day
After this, you divide these numbers over your total amount of sales reps and there are your targets!
Keep in mind that every sales rep has different conversion rates in each stage of the sales pipeline. For instance, someone may struggle to prospect but has a great demo-to-close rate.
4. Optimize closing rates by understanding commonalities.
By knowing the main characteristics of opportunity that convert for every stage, you can optimise your sales process. These include actions like sending a follow-up email and prospect responses (agreeing to a demo).
5. Continuously add leads to your pipeline.
Setting up a sales process isn’t enough, unfortunately. Many sales reps are not too big on prospecting (hence why we offer our lead generation service!) which is the main reason why you will end up with a dry sales pipeline. Many sales teams focus on closing deals, and therefore tend to forget prospecting for the upcoming month.
In an ideal sales pipeline, you should always have more opportunities in the prospecting part than in the closing part. That’s because the number of prospects in each stage decreases while the probability of closing progressively increases. Even if you have enough leads for a month, it’s good to have a diversified prospecting strategy, so you keep adding new leads for the upcoming month.
6. Keep your pipeline healthy
60% of prospects say no four times before saying yes. Still, nearly half of the sales reps never follow up. This means that you will lose leads if you don’t establish a (at least!) five step follow-up process throughout the sales pipeline. Make sure your team has a system for following up leads, including timing and contact method. Set clear expectations, such as:
Every inbound lead is contacted within six hours or less;
And
Every lead receives various email, phone and social media touches.
If you keep a uniform follow-up strategy, it will help your reps keeping their pipeline clean. They will know when to disqualify prospects or when to push a bit more. If a prospect hasn’t responded by the last touch, they should be removed from the pipeline.
Our best practices
Perform Regular Cleanups
When it comes to a sales pipeline, more doesn’t equate to better.
Just having more leads in your pipeline cannot warrant more sales. You need to pay attention to how qualified these leads are to make the purchase. This can help you devote your time and resources to leads that carry more value.
Regular cleanups of your sales pipeline to drop dead leads and prioritize high-value prospects can help you gain more efficiency.
Align Sales & Marketing
Collaboration and synchronization between your sales and marketing team can pave the way for your business’s growth.
Both teams have to work closely and define what qualifies as a good lead. This can help your business get access to qualified leads and not waste any time or attention on leads that have minimal chances of conversion.
By aligning your sales and marketing team you are able to better nurture leads and bring more revenue in your business.
Include Relevant Content
In this day and age, calls and emails just won’t make the cut on their own. You also need to offer additional information about your business to increase your sales.
This is where content marketing comes to place. Whatever buyer’s journey stage the prospect is in; your content should be personalised to that. Online content can help guide leads toward conversions by answering their questions and providing detailed information about the product or service.
So, we shared our secrets and best practices on how to build a strong, healthy sales pipeline. Already have it but not enough prospects in the beginning to keep things flowing? Try out one of our lead generation packages by requesting a free demo here. LinkedIn is a great opportunity to find new business, especially because it’s a platform specifically designed for professionals. Let us know how we can help!
