Let’s jump in.
What Is a Sales Pipeline?
A sales pipeline represents the customer’s path to purchase, from lead qualification to deal closure. It acts as a framework for sales teams to manage and optimize individual deals, dividing the sales process into clearly defined stages.
It’s different from the sales funnel, a broader framework encompassing the entire customer lifecycle, from initial awareness to the point of purchase (and beyond).
Potentially adding to the confusion, are two crucial sets of stages within the sales process: pipeline stages and forecast stages, each serving distinct purposes.
Pipeline Stages vs Forecast Stages
Here’s a breakdown of the differences between these crucial sets of stages:
- Pipeline Stages: Typically, pipeline stages are used for internal purposes, helping sales representatives, managers, and leaders understand where current deals stand. Each stage guides day-to-day sales activity, such as lead qualification, nurturing, proposal submission, etc.
- Forecast Stages: Forecast stages are designed to predict and share projections for future income with company leadership, board leadership, shareholders, and other stakeholders. These stages (e.g., Open Pipeline, Best Case, Commit, Likely to Close, and others) provide a higher-level overview of expected revenue.
So, you now have a grasp of what pipeline stages aren’t.
Let’s explore what they are.
6 Common Sales Pipeline Stages
The number and complexity of sales pipeline stages can vary significantly across industries and organizations.
While these stages offer a general framework, your company can adapt and customize them to align with your unique sales processes, objectives, and customer journeys.
Lead qualification often marks the start of the pipeline, but it’s not just a singular stage. Instead, it’s more of an ongoing process to determine whether identified prospects are a good fit for your product/service and intend to buy.
The sales team gradually refines the pool of potential customers over time, ensuring that any promising new lead is nurtured and prioritized for conversion.
To do this:
- Schedule discovery calls: Understand the prospect’s pain points and needs and determine whether they align with your organization’s value proposition.
- Offer value: Provide lead magnets, such as e-books, white papers, webinars, presentations, demos, or meetings to gauge interest.
- Criteria assessment: Evaluate whether leads meet specific criteria based on your chosen sales methodology, such as MEDDIC or MEDDPIC.
Even as a lead progresses through the pipeline and becomes a sales opportunity, ongoing qualification at different stages in the sales cycle ensures they remain a good fit and are genuinely interested in buying.
Watch out for lead data gaps.
Lost, incomplete, or inaccurate information makes it challenging to tailor your sales approach effectively — especially if you’re using multiple spreadsheets to gather and share data.
This issue is increasingly critical in the modern sales landscape. By 2025, around 60% of sales leaders are expected to adopt a data-led rather than experience-led strategy (Gartner). Therefore, if you want to stay competitive, you must perfect this process from the start.
A sales leader must clearly understand the prospect’s budget, timeline for making a decision, or specific pain points they’re trying to address with your product.
Otherwise, your sales representatives risk wasting time or effort pursuing leads who aren’t as qualified as initially thought, potentially leading to a longer sales cycle or losing promising leads to competitors.
For most sales managers and leaders, robust customer relationship management (CRM) or sales pipeline software is critical for knowing what’s going on.
Sales CRM software helps team members easily share and access consistent, organized, and up-to-date information for each sales stage. It should provide sales managers valuable insight into lead interactions and progress — but this isn’t always the case.
CRMs like Salesforce often generate overly complex reports that don’t provide the level of pipeline visibility you need, meaning you’re back at square one: using multiple spreadsheets.
But with an efficient CRM add-on, you can make keeping track of important data way easier.
This stage is all about building relationships with each potential customer.
At this point, you want to confirm there’s a strong business case before sending over a proposal. This often requires a more consultative approach, engaging in one-on-one interactions with prospects and tailoring communication to their needs.
It’s helpful to view it as a two-way learning process. While you address the prospect’s questions and concerns, you learn more about their decision-making process by asking:
- Who needs to be involved in the discussion?
- When do you need something?
- What other requirements do you have?
Common issues include:
- Maintaining Prospect Engagement: Keeping prospects from losing interest or forgetting about your offering over an extended nurturing period can be challenging.
- Balancing Personalized Outreach: While personalizing communication is essential for effective nurturing, it’s difficult to balance that with scalability.
- Identifying the Right Timing: Knowing when a potential buyer has been nurtured ‘enough’ to move to the next stage in the pipeline can be tricky. Pushing too early can be off-putting while waiting too long can result in missed opportunities.
To keep your communication fresh, relevant, and valuable, consider the following:
- Maintaining Prospect Engagement: Leverage your understanding of the prospective customer to provide tailored sales presentations, product demos, or walkthroughs that address their unique challenges.
- Balancing Personalized Outreach: Automate certain aspects of sales outreach but still make prospects feel they’re receiving individual attention (e.g., email templates with merge fields that address prospects by name).
- Identifying the Right Timing: Gain a clear understanding of prospect engagement by actively listening to cues and using lead scoring software to trigger follow-ups when their interest reaches a certain threshold.
In this sales stage, finding success hinges on the delicate balance between consistent communication, personalized outreach, and efficiency — all without being too pushy.
It’s a matter of utilizing sales pipeline software and tools to eliminate bottlenecks and offering additional information or resources to help prospects make a decision at their own pace.
Next, present a formal document outlining the terms, pricing, and details of your proposed solution (e.g., scope of work, competitive advantages, deliverables for a project, etc). The aim is to convince a qualified lead that the value you deliver is more than enough to justify what they’ll spend.
The key difficulty here is ensuring your proposals cater to the unique requirements of each potential customer.
Additionally, errors in the pricing or terms of the proposal can result in misunderstandings or objections from a prospective customer.
To address this, sales managers often personally review proposals before sending them. However, you then risk bottlenecks and delays with manual approval processes, slowing down your sales cycle.
Proposals that align with established guidelines can be automated for quicker processing and a shorter sales cycle length. In fact, automation can help companies free up sales team capacity by 20% (McKinsey).
For example, proposals for standard product offerings that fall within predefined pricing limits and don’t involve complex terms or customizations may proceed without manual approval.
For prospects with more unique requirements, the sales manager can receive an automatic notification when a proposal requires attention.
This streamlines the process, reduces errors, and ensures timely attention to critical cases. Ultimately, this reduces pipeline delays and improves sales velocity, that is, how fast prospects move through your pipeline and generate revenue.
The negotiation stage is a critical phase where both parties work to refine the proposal, finalize details, address any concerns, and negotiate terms.
It can involve negotiating the final price or additional features and services, expanding or shrinking the scope of work, establishing timelines, consulting with legal teams, and managing expectations.
At the negotiation stage, a potential buyer may have some objections to certain details outlined in the proposal, such as:
- Scope Creep: “We want additional features or services included.”
- Comparisons to Competitors: “We’re considering a competitor’s offer with better terms.”
- Budget Constraints: “Your proposal exceeds our allocated budget.”
- Scope Creep: Evaluate the feasibility of adding requested features.
- Comparisons to Competitors: Leverage your industry knowledge to highlight your unique value proposition and address how your offering outperforms competitors.
- Budget Constraints: Emphasize the product’s value and how it directly addresses the prospect’s stated problem.
Tip: Price is a common sticking point for many prospects. Even those who fully intend to purchase may object to the expense initially. Therefore, it’s best to focus on the product’s value and benefits before discussing the price.
If progress stalls, consider adjusting your pricing strategy.
For example, offering prospects smaller billing options like monthly payments or installment plans instead of requiring them to pay a lump sum upfront. Such adaptability is vital for accommodating different customer preferences and financial capabilities.
5. Close (Opportunity Won or Lost)
This pipeline stage determines the outcome of the sales effort, marking the sales opportunity as either “won” or “lost.”
For example, if the prospective customer signs the contract and commits to the purchase, it’s marked as “won.” If they decide not to proceed, it’s marked as “lost” (or “No Decision” if the outcome remains uncertain).
You’re nearly at the finish line — but it’s not time to celebrate yet. You might still run into some last-minute hurdles.
A potential buyer might start having second thoughts for several reasons. For example, changing organizational priorities or concerns about the learning curve.
Sometimes, you’ll encounter delays even if the enthusiasm is still there.
For instance, getting the proposal signed by all involved parties can still take a while.
In cases where prospects express second thoughts, it’s crucial to revisit the value proposition of your product or service. Offer a trial period, additional training resources, or personalized onboarding to alleviate their concerns and reinforce your product’s value.
Also, a centralized portal simplifies the signing process so prospects can see all the relevant forms and documents in a single space.
After closing deals, the main goal is to pave the way for effective onboarding or implementation.
Although not directly responsible for post-sale activities, the sales team must orchestrate seamless handoffs to account management or the customer success team, where the focus shifts to customer retention.
When appropriate, focus on cross-selling, upselling, renewals, or referrals.
If an account is closed-lost, it’s often kicked out of the pipeline, but sometimes, you’ll need to set a reminder to reach back out to a closed-lost lead the following quarter or year if there’s still significant interest in your product.
When it’s time to follow up on a closed-lost opportunity, it re-enters your pipeline at stage 1, and the cycle repeats.
At this juncture, effective collaboration is crucial for a successful handoff. Any miscommunication between teams during this transition can also result in a lack of clarity for the customer, reducing their likelihood of renewing their contract when the time comes.
To ensure a seamless transition, all the customer information you pass onto an account manager or customer success team must be clear and up-to-date.
If existing customers still express uncertainty about continuing their relationship with the company, reiterate the benefits of renewing and offer incentives if applicable.
Of course, the obstacles you encounter depend on your industry, product/service complexity, and the prospect or customer’s specific needs and concerns.
It doesn’t help that the journey from lead qualification to deal closure isn’t always a straightforward path. Let’s delve deeper into the variable dynamics of sales pipelines.
Pipeline Stages Aren’t Always Linear
Buyers don’t always move linearly through each pipeline stage because their buying process doesn’t necessarily align with your sales process.
For example, a new lead might sign up for a demo but not ask for a proposal because they aren’t ready to buy. But then, they might continue to engage with your newsletters and buy after six months when they are ready.
Similarly, someone who asks for a proposal might not move forward because of budget issues. But they might interact with your SEO content or retargeting ads and ask for another demo after a few quarters.
It’s important to gauge where buyers are in their buying process and nurture them accordingly. Pushing them too much at the wrong time might alienate them forever.
Structure with a degree of flexibility will help you adapt to various customer journeys and behaviors within the broader sales cycle. Think of it like growing a garden. Although plants may not grow exactly the same way, they still need a healthy base to grow from.
That’s why a lot of the work begins before you even create a pipeline:
4 Key Considerations Before You Build Your Pipeline
Before diving into the actual pipeline-building process, you’ll need to think about the following:
1. Target Audience and Prospect Information
Clearly define your ideal customer profiles (ICP) and buyer persona to identify your target audience.
For instance, if you’re a software company, your ICP might be medium-sized businesses in the healthcare sector looking for electronic health record solutions. Meanwhile, your buyer persona would delve into the roles and preferences of key decision-makers within those healthcare organizations.
Once established, gather comprehensive information about your prospects to assess if they align with your organization’s ICP.
2. Lead Generation Strategy
Develop strategies for generating leads through various channels, tailoring your approach to suit different types of prospects. For instance, content marketing and ads may work well for reaching tech-savvy B2B prospects.
Meanwhile, referrals and networking events could be more effective for building relationships in particular industries, like professional services, finance, or real estate. These industries rely heavily on personal connections and trust when making business decisions.
3. Qualification Criteria
Establish criteria like MEDDIC or other frameworks for qualifying leads to ensure you focus on every potential customer. But as mentioned above, not all leads follow a strict or predictable path. As such, your salespeople should be a big part of the vetting process to capture any leads that may not fit your criteria but still have potential.
4. Team Roles and Responsibilities
To build an effective sales pipeline, involve both individual sales reps and cross-functional teams, including sales, marketing, and possibly product or service development teams.
Define roles and responsibilities for each sales rep, outlining who’s responsible for lead qualification, outreach, needs assessment, presentation, closing, and follow-up.
Teams may need to adjust their roles as the pipeline evolves. For example, developing a dedicated deal desk that collaborates with operations and sales leaders to ensure salespeople adhere to the agreed-upon processes and submit contracts correctly across the board.
Now, you’re all set to start building your pipeline!
Let’s dive in.
How to Build and Manage an Effective Sales Pipeline
Here are the steps for constructing a consistent and efficient process:
1. Collect Internal Information
To begin, collect sales data about the following:
- Previous quarters
- Current sales targets
- Information about sales staff
- Sales process documentation
- Product profitability and demand
2. Refine Contact and Outreach Techniques
Implement effective methods for reaching out to each qualified lead and initiating conversations. For example:
- Consistently communicate across platforms
- Personalize email campaigns
- Use the same social media platforms as your ideal customer
- Create dynamic content that addresses customer pain points
- Conduct direct sales outreach via sites like LinkedIn or in-person events
Additionally, ensure your website has tools to capture a new lead interested in learning more about your product or service.
Dedicate a portion of your sales organization to promptly follow up with leads who visit your site or engage with your social media pages. Speed is critical for converting a lead into a sales opportunity in your pipeline.
3. Develop a Structured Sales Process
Map out your entire sales process, starting from prospecting to deal closure and beyond.
While each pipeline stage isn’t always set in stone, you still need consistency. Identify the key pipeline phases, actions, and touchpoints that prospects typically navigate while keeping in mind that they may need adjusting later on.
A best practice is to create and customize a template, helping you track different stages, set tasks more effectively, and streamline the process.
4. Track Metrics
Understanding and tracking the following pipeline metrics is crucial for optimizing your sales strategy:
- Number of Opportunities: The total number of leads you’ve determined as likely to purchase based on your chosen criteria, indicating potential revenue and sales activity levels.
- Lead Velocity Rates (LVR): The number of leads generated in the current period compared to the previous one. It’s crucial for understanding the speed and effectiveness of your lead generation efforts.
- Average Deal Size: The monetary value of a typical sale, helping you forecast revenue, evaluate the importance of different deals, and understand your overall sales pipeline value.
- Win Rates: The percentage of total deals that result in a sale, indicating sales team effectiveness and conversion success.
- Total Pipeline Value (TPV): The sum value of all deals in the pipeline, giving you a snapshot of total potential revenue.
- Pipeline Value by Stage: The potential revenue of deals in a particular pipeline stage. Later stages, like negotiation or proposal, are likelier to close, offering a more realistic estimate of future income.
- Pipeline Coverage: The ratio of TPV to your quota, indicating whether you have enough potential revenue in the pipeline to meet sales goals.
- Customer Acquisition Cost (CAC): The overall cost of getting new customers, including marketing and sales costs. It provides valuable insight into the profitability of your sales efforts.
It’s good practice to evaluate the sales performance of each sales rep and the team as a whole. Also, perform weekly reviews to keep tabs on pipeline health and share your findings with the team.
As you monitor these metrics, you’ll find they play a huge role in the ongoing pipeline management and optimization process — but they’re only a piece of the puzzle.
Things to Look Out For When Managing a Sales Pipeline
Let’s delve into three critical aspects of sales pipeline management:
1. Data Management
Establish a system for collecting, organizing, and managing customer and prospect data. Remember to prioritize compliance with the General Data Protection Regulation (GDPR) or other data privacy regulations relevant to your industry or location.
Your data pipeline should have the functionality, reliability, and efficiency to meet your data needs and expectations.
2. Testing and Optimizing Your Pipeline
Consider testing different sales scripts, approaches, and the number of follow-ups to enhance your pipeline’s sales performance.
It’s crucial to continuously analyze the outcomes and gather feedback from your sales team. This iterative process allows you to maintain an efficient and effective sales pipeline over time.
3. Sales Tools and Technology
Select the necessary pipeline management tools and technology, including sales CRM software, lead scoring and tracking systems, and communication platforms.
Remember that traditional CRMs have drawbacks, such as complexity, lack of visibility, and resource-intensive maintenance.
You might need a CRM add-on to simplify the process.
Nail Each Sales Pipeline Stage with Scratchpad
Scratchpad streamlines sales pipeline management so your team can make the most out of Salesforce.
This tool lets you inspect deals on multiple levels, quickly update relevant fields, and automate forecasting in a single platform.
Enjoy a cleaner pipeline, improved transparency, and better visualization without altering your workflow, empowering your sales team to excel in closing deals.
Let’s take a closer look:
- Enhance efficiency with advanced views, simplifying field, object, or next step modifications in Salesforce.
- Create convenient workflow tiles for quick access to vital data.
- Pinpoint pipeline gaps using deal spotlights to receive alerts about missing fields and ensure deals align with close dates and forecasts.
- Integrate Salesforce workflows with your notes and easily edit, share, and templatize them for future use.
- Simplify manual processes with no-code Slack automations and improve workflow efficiency.
- Automate forecast roll-ups and track pipeline changes at all levels.
- Leverage historical data with trends analytics to track deal progress and ensure each rep meets their sales target.
Organize & Optimize Your Sales Pipeline Stages Today!
Understanding how sales pipeline stages work is crucial for sales efficiency.
Regardless of your organization’s pipeline structure, a framework helps sales teams move prospects from initial contact to closing deals with clarity and control.
However, managing every sales stage can be challenging. That’s where tools like Scratchpad come in.
Try Scratchpad for free to supercharge your Salesforce operations and maximize your sales potential!