Building a Sales Pipeline: Strategies for Success Part 1: The Stages of a Sales Pipeline
Whether you’re starting a new business or own a well-established one, you know how important your sales pipeline is. Without a continually moving pipeline, you’ll quickly find your company facing stagnating growth and little, if any, increased profits.
While many people talk about the sales pipeline in the abstract, it’s not always easily defined. Basically, your sales pipeline is a queue or line that starts with leads or prospective clients on the left and ends with completed sales or secured clients on the right.
There are various stages throughout the pipeline that you want potential customers to move through. These stages do sometimes vary depending on the company. Most start with prospects, interest, or awareness of the brand, then move into qualifying candidates, building proposals, negotiating, and finally closing deals. While different sales managers may call stages differently, the end goal is always the same: bring in more customers.
In order to do that, you’ve got to build a strong sales pipeline. Scaling Sales is here to help you do just that. In this first blog, we will take a look at how to create a sales pipeline, what stages your pipeline may need, and how to create metrics to measure success. In the second blog, we will look at how to optimize your pipeline to increase your sales and profits.
Define Your Ideal Customer Profile
The first step to creating a sales pipeline is to determine who your customers are. Otherwise, you’re going to be trying to bring many people into your sales pipeline who simply aren’t interested in what you’re offering. They may be in the wrong industry or not have the profit margins necessary to make use of your services. For example, a small business isn’t likely to need software solutions designed for large corporations with thousands of employees.
One of the first things you’ll want to do if you’re a new business is research your industry or niche. What challenges and issues do people who would need your services face? How can you position your services or products as the solution they need? If you have customers already, you can analyze them. What do they have in common? What made them seek out your services, and why did they select you instead of a competitor? This will help you craft the ideal customer profile.
One thing to note is that an ideal customer profile is not the same as a customer persona. Your ideal customer profile is the perfect customer for you—they are exactly who you want to sell your products to. Unfortunately, they also likely don’t exist. Instead, you’ll have a lot of customers who mostly match this profile. You’ll create various personas to group these customers based on their similarities. Your profile will help you narrow down your potential clients, while your personas will help you market to specific customers.
Identify Your Sales Stages
Next, it’s time to define your sales pipeline. As mentioned earlier, not every sales team will use the same pipeline or have the same terms for each stage. You want to create a system that works for you. However, most pipelines will start with prospecting. During this stage, you look for prospective clients that closely match your ideal customer profile. You may make cold calls, send out emails or mailers, or work a tradeshow.
The second step is typically to qualify or determine if a prospect is right for your company. Do they have a problem you can solve? Do your services address their needs? It can be tempting to try to convert every possible lead, but that’s not always realistic. Some people or businesses may approach you without a clear idea of what they need or what you offer. Trying to boost your conversion rates by converting everyone can backfire as clients later abandon you because you’re not meeting their needs. Your customer personas can help here.
Once you’ve identified which prospects are good candidates for conversion, it’s time to connect with them. This is where your sales team talks to the business, letting them know what you can do for them. They will explain the value of your services and answer any questions the prospect may have.
If all goes well here, the prospect moves to the next stage of the sales pipeline: negotiation. This is where your sales team and the business representative discuss what exactly you will do for them and what the cost will be. If an agreement can be reached, the prospect reaches the end of the pipeline: closing the deal. They become customers.
In some cases, you may not need all of these stages. For example, if you carefully research potential customers before reaching out or market to specific customer personas, the prospecting and qualifying phases may be reversed or combined into one. If you offer a menu of services at a set price without customization options, there may not be much to negotiate. Prospects may go directly from connecting with your team to paying customers.
Establish Metrics for Each Stage
How do you know if your sales pipeline is succeeding or not? Your sales management team should make use of specific metrics in order to determine which parts of the pipeline need to be adjusted. While it’s easy to set end goals of growing your customer base by a certain percentage or increasing profits by a specific amount, those metrics won’t help you find breakdowns in the different stages of the sale. Here are some metrics for each stage that you may find helpful.
How many leads do you have? How many leads respond to your mailer or email? If you have a large number of people responding, it shows that you are targeting the right customers. Those who have a small percentage of respondents may need to look at their customer profile again.
Now that you have a pool of potential customers, do they match problems you can solve? Look at how many match your profile and your personas. If any leads determine that they don’t want to move forward, do try to get a reason as to why. This is another step at which you can perfect your marketing.
How quickly do leads move on to negotiation? Does your sales team have to work hard to convert leads, or is it a fairly easy process? If it takes quite some time, you may not be presenting your services in the right way. You should also ask for feedback from those who fall out of your sales pipeline. Were they not interested in your products? Did they feel like you didn’t provide the right solutions?
Where does the negotiation process fall apart? Was it the value of the product or the cost? Conversion rates are one important metric here, but you also need to look at why customers didn’t convert.
Closing the deal
Your metrics for closing the deal are going to be similar to the negotiating metrics. Who converted, who didn’t, and why didn’t they? The answers to these questions will help you determine how successful your overall sales pipeline is.
Contact Scaling Sales Today to Learn More
Whether you’re creating your sales pipeline for the first time or want to know if you’re using the right metrics to measure success, Scaling Sands can help. We can help you build your pipeline, analyze your conversions, and suggest improvements where necessary to help you grow your profits. Reach out today to learn more.