Here’s how to build a sales pipeline that converts opportunities into revenue.
At its most fundamental, a sales pipeline is simply insight — the ability to see every stage of your sales process front and center from prospect through to deal closure.
Why should today’s distributor define a formal sales process?
The more control and visibility you have into your sales pipeline, the more revenue you’ll bring in. That’s according to HubSpot Research, which found that the more opportunities in your pipeline, the more likely you are to reach or exceed your revenue goals.
A Harvard Business Review survey generated similar results. It found an 18 percent difference in revenue growth between companies that defined a formal sales process and companies that didn’t.
Therefore, if knowledge of your pipeline is based on best guesses or last month’s figures, you’re probably leaving money on the table.
“Knowing your numbers in sales is like following a good recipe,” writes Laurel Mintz, CEO of Elevate My Brand. “When you know what components are going in, you know what’s going to come out. But, if you forget a few ingredients, you’re going to have a tasteless flat cake that no one wants to eat. It’s the same thing in sales.”
What is a sales pipeline?
A sales pipeline is a specific sequence of actions that a sales rep needs to take in order to move a prospect from a new lead to a customer. Once each stage is completed, the prospect is advanced to the next stage. Sometimes depicted by a funnel, the wider top indicates a prospect or leads that then narrows to decision and purchase.
An opportunity moves from stage to stage of your pipeline based on concrete actions, which can be represented visually in your CRM or other shared platforms. Because sales processes differ from company to company (and even product to product), your sales pipeline should be unique to your business and reflect your typical buyer’s journey.
How to build your sales pipeline
1. Clearly define the stages of your sales cycle
Start by defining stages and milestones that are universally understood by your salespeople. Your sales team shouldn’t have to guess where a particular deal stands or how they should be managing deals in each stage. In addition, your sales process should align with how your customers move through their buying process. Too many sales teams use generic sales processes and consequently get generic sales performance. Invest the time in developing a unique process for your team, and make sure that they understand how to use it.
As a distributor, your customer’s journey may vary, depending on the manufacturer, product or region in which you’re selling. For example, sellers that partner with manufacturers to obtain sales leads, lead generation, prospecting and in some cases qualification might be unnecessary steps in your pipeline. Instead, the top of your pipeline may begin with initial contact or proposal.
2. Calculate your numbers
How many deals do you need to add to your pipeline to meet your objectives? If you know how many deals you win on average, you can easily calculate the number of deals you need in each of the early stages by following these steps:
- Identify how many opportunities typically advance to the next stage
- Working backwards, calculate the number of opportunities you need at every stage to reach your goal
- Pinpoint the common reasons an opportunity converts at every stage — including the actions the rep takes (performing a demo) and prosper response (request for a proposal).
Decide on a shared platform
Pipeline visibility gives salespeople a snapshot of pipeline performance. It is often a CRM feature — but can be done on any shared platform, such as Google Sheets — and allows reps to determine how pipeline activities are tracking towards overall goals. Based on this insight, reps can adjust pipeline volume and budget expectations for more accurate sales forecasting.
Whatever method you use, be sure to ask:
- Does the CRM help salespeople focus on activities?
- Are salespeople able to see everything that’s happening in their deals?
- How does it allow salespeople to stay organized?
If your system is not meeting these baseline objectives, invest in a shared sales pipeline visibility platform that does. The return will be worth the investment.
Once you have your sales pipeline established, the world is your oyster. You’ll be able to forecast revenue more accurately, manage your sales team more effectively, increase deal speed, and increase total deal volume, size and revenue.
A well-managed sales pipeline is about continuously improving the process and honing the skills of your salespeople. Everyone’s aim should be to keep the pipeline moving from one stage to the next – and of course, to close sales.