The Complete Guide to Sales Pipeline Management

Written by
Josh Jordan
March 3, 2022

The journey of sales can be exciting and rewarding, but it can also require a lot of energy. If your sales team is spending too much time researching and calling leads that don’t close, that makes for a wildly inefficient strategy.

Beyond that, it’s easy to get lost in the day-to-day activities of SaaS sales. So what do you use to stay on track with your sales process and efficiently close deals on a regular basis?

Your sales pipeline.

It functions as both a roadmap of your sales cycle and a trusted strategy for bringing in new qualified leads at a steady pace. Building a pipeline is one thing, but none of that matters if you can’t keep track of the essential sales and customer data.

This isn’t just a one-time journey. In a proper sales pipeline, deals are always moving. Managing your pipeline is a recurring process in which you apply pressure to prospects at every stage.

Let’s take a look at how the most effective sales professionals do this every day.

What Is A Sales Pipeline?

A sales pipeline is the core of your sales process. The basic idea behind a pipeline is to consistently funnel leads through the sales process from unqualified prospects to recurring customers. A well-established, healthy sales pipeline will provide your business with a steady stream of new customers (or sales) every month. When managed properly, it can get you through a difficult quarter when you don’t close any new deals.

Sales teams often visualize their pipeline using Customer Relationship Management (CRM) software. This allows reps to visualize each prospect’s stage in the pipeline and take the appropriate action to move that deal toward a close.

With the use of a CRM, the real power of a sales pipeline is insight. It allows you to accurately forecast revenue, calibrate your resources and identify areas for process improvement.

To take advantage of the full visibility that a sales pipeline can provide, you will need to clearly define the stages of your sales process.

6 Essential Sales Pipeline Stages

Blocked pipes can create huge messes and often cost homeowners valuable time and money. If not properly managed at each stage, your sales pipeline can suffer the same fate.

That’s why it's important to keep your sales pipeline clean. If it gets clogged, this makes it more difficult for prospects to travel through the system.

What is a clog in this instance? It’s anything that stops deals from flowing toward a close. This can be a lack of effective contact, a customer objection, a bad sales methodology or something else within the process.

An effective pipeline will remain unclogged to allow a smooth and consistent deal flow. Let's take a closer look at the most effective goals and strategies for each stage of the sales pipeline and evaluate where you should focus your efforts.

1. Prospecting

The first step of any sales process should be targeting prospects who are likely to buy your product or service. However, when it comes to acquiring new leads, there’s no single strategy or clever campaign that will grow your prospect list. This means your Sales Development Reps (SDRs) need to constantly leverage a wide range of efforts across different channels to generate new leads.

You could lean on your marketing team to fill your pipeline, but general marketing often lacks the personal touch of speaking with a sales rep. For this reason, sales reps should be actively building relationships via calls, emails and social media.

With this strategy, efficiency is incredibly valuable. That’s why you should leverage the power of a solid lead generation program like Pipedrive, Intercom or LeadIQ. These allow reps to automate lead generation workflows and consistently pull prospect data from a variety of sources.

2. Qualification

If you’ve followed the first stage well, your sales pipeline should be full of prospective customers. But while many of these leads may fit your ideal customer demographic, that doesn’t mean they’re well qualified.

Without a healthy qualification process, you could be wasting a lot of time speaking with people who aren’t ready to buy. So how can you sort through leads to find the ones that are truly interested in your product or service?

Here are a couple of ways:

Lead Scoring

Lead scoring is a methodology that helps you understand how close your leads are to being qualified customers. It is a process where you assign points (1-100) to your leads based on their actions and characteristics.

For example, you may award a point for every email open or webpage visit attributed to a lead or also assign them a point score based on the job title or the industry your prospect works in.

Your leads' buying intention will then be reflected in their lead score. The higher the score, the more likely they are to make a purchase at the end of the process. Here's what a typical lead scoring table might look like:

Leverage The Bant Approach

BANT stands for Budget, Authority, Need and Timeline. It is a framework that uses these 4 criteria to decide if a lead is truly qualified. Using this will help you focus on the deals that are most likely to close.

You can break it down into a series of questions:

  • Budget: What are the prospect’s budgetary expectations for your product and how much do they typically spend on this type of purchase?
  • Authority: Does the prospect have the authority to commit to a purchase? Are there other critical players or stakeholders that you need to speak with ​to move forward with the purchase?
  • Needs: What challenges and pain points are your prospects facing on a day-to-day basis? Does your product fit their needs at this point in time?
  • Timeline: What is the prospect’s deadline? How much time will it take them to make the purchase?

3. Contact/ Meeting

Now that you’ve narrowed your leads down, it’s time to make your pitch.

Different people respond to different approaches when setting up a meeting. While you should pay attention to the preferences of your prospect, it’s also wise to follow up using a variety of methods (i.e. a phone call, email or text message).

85% of business decision-makers use online tools to set up meetings — and 50% of those meeting requests come from LinkedIn. You need to stand out in a sea of pitches competing for their attention. Here are some important tips to make a killer first impression during the contact stage:

Prepare a Clear Meeting Agenda

In order to get ahead of your next sales meeting, it’s critical to prepare a clear agenda. This means outlining what you intend to accomplish in that meeting, which includes what you want to share with prospects, customers or anyone else involved in the decision-making process.

It also means defining what success looks like at the meeting’s conclusion. By formalizing your meeting objectives in advance, you can help your team move towards consensus quickly and effectively.

Have The Right Resources On Hand

You’ll need case studies, webinars, relevant data sets and other resources to clearly explain your product and what it can do for your prospects. Having these resources on hand will prevent reps from scrambling around at the last minute trying to get everything done before their meeting.

Follow up with Actionable Steps

Leaving a meeting without a follow-up plan is like leaving the house without your keys. This can backfire in a big way and lead to wasted time and lost opportunities. That’s why it is important to follow up with a friendly email that summarizes your conversation and references any action items. You may also specify an appropriate timeframe to follow up again.

4. Proposal

Once you have a clearly qualified potential customer and built a solid relationship, it’s time to make a formal offer with a detailed, customized proposal. Depending on the nature of your product or service, the contents of this proposal may vary widely. But here is the information that your proposal should generally include:

  • A succinct walkthrough of your prospects’ biggest pain points
  • The key specifications of your solution
  • A well-defined pricing plan
  • A brief timeline of implementation
  • Clearly defined terms and conditions

5. Negotiation and Closing

Once your proposal is out, you've put all your cards on the table and you’ve reached the final stages of the sales pipeline. Now all you need to do is negotiate final pricing with your prospect and formalize the close.

During the negotiation process, remember to keep track of important details, such as your company's discount rate and payment terms. You may also need to answer the final few questions and reassure the prospect that your product is right for them.

In the end, if everything is done right, your Account Executives (AEs) will be helping their prospect sign a contract. That’s worth some congratulations and some high-fiving.

Pro Tip: Encourage your customers to sign the contract digitally. This saves you the trouble of faxing or physical mail and allows both parties to easily store the contract for remote access.

6. Retention

Now that you've closed the deal with a new customer, it can be easy to think your work is done. But in reality, it’s just starting.

In many ways, the success of your company is determined by the number of clients you retain for the long term. It is especially true for those with a high lifetime value or a high net promoter score (NPS). Those customers can’t be easily replaced.

The 80-20 rule applies here. Many times, 80% of your future profits depend on 20% of your existing customers. Beyond that, it typically costs around 5 times more to acquire a new customer than it does to retain an existing one. That’s a strong argument for nurturing a loyal customer base.

Here is a list of best practices that you should be following at this stage to improve your retention rates:

  • Thank-You Notes - A thank-you note is a good way to show your prospects that you appreciate their business. Beyond that, writing down your commitment to long-term service strengthens your client’s confidence in their buying decision.
  • Custom Training - Put together a custom onboarding program to make sure your new customer has everything they need to start using your product or service right away.
  • Keep Checking In - A consistent check-in schedule lets your customers know that you are still there to help them, answer questions or offer feedback on their progress.

How To Build Your Own Sales Pipeline In 5 Steps

Step 1: Identify Your Ideal Customers And Target Accounts

Before you can even start building your sales pipeline, you need to figure out who you’re trying to sell to and what they value.

Get specific. Don’t just say that your ideal customers are hospitality managers — figure out what unique industries they serve in, how many people work at each organization, where they’re located and what positions they hold. Know their common concerns, desires, challenges and fears. This level of specificity is key to effectively prospecting for new business. It also makes outreach much easier.

That said, research doesn’t always need to be extensive. Google searches, LinkedIn searches and maybe a quick survey will do. The goal here is to come up with a shortlist of target accounts so that you know which companies to focus on.

Step 2: Define The Stages Of Your Buyer’s Journey

If your sales pipeline is only built around actions taken by sales reps, you’re only seeing part of the picture. The customer’s perspective plays an integral role in any pipeline analysis.

The most useful sales pipelines start with your buyers’ priorities, then work backward to solving their problems and needs, then progressing through their decision-making process.

That’s why it’s important to take time to understand each stage of your buyer’s journey and align your sales pipeline with how prospects are consuming information. As you think about each stage, consider what information would be most helpful for that group of buyers and how you can create a nurturing experience for them.

For example, let's say you're pitching a business credit card to working mothers juggling jobs and children. They don't have the luxury of spending lots of time making decisions, yet they want to feel confident in their choices.

To streamline the different stages of their buying journey, you can envision the buyer persona of a fictitious woman named Jennifer, who works in HR for a financial organization. You can then map out a sales pipeline that will best appeal to her. Does she see an ad from you in her Facebook feed? Does she come across one of your valuable blog posts while exploring LinkedIn? What type of content does she consume most often? Does she ask for a demo of your product or would she prefer another method of outreach during her busy day?

What information does she need to help her make the decision to purchase? Who else can she turn to for advice before purchasing your product or service? Is she the final decision maker for this purchase?

These are all important parts of the customer’s journey to consider. As you attract and persuade your customer in one stage, consider where you want them to go next.

Step 3: Identify Trigger Behaviors

Once you’ve built up your pipeline with prospects from your target market, work on converting as many of these contacts as possible into paying customers.

Start by analyzing your customer data. With this information, you can determine which behaviors and actions indicate buying interest and which strategies have the best conversion rates.

A conversion event can be as simple as visiting a website, making a purchase or downloading an ebook. It could also be something more complex, like watching a demo video, completing a free trial or submitting an email address. The key is to think about what specific actions and events will lead the prospects through your sales pipeline.

You’ll want to leverage department-wide metrics and analytics here.

For example, imagine that 60% of people who watch a product demo go on to negotiate about purchasing the product. What made that 60% choose to continue through your pipeline while the others decided to stop? How did each group react to specific demo features? Did the number of follow-ups have a positive or negative correlation to conversions? If you can connect the trend to specific sales reps, you can then analyze each of their sales strategies and decide what works and what doesn’t.

Step 4: Determine Your Ideal Pipeline Size

The length of your sales pipeline is measured by the number of opportunities it provides your team. This directly impacts your ability to influence prospects effectively.

In turn, this can be a huge driver of revenue. It's important to have the right number of opportunities in your pipeline at any given time.

The rule of thumb for many sales reps is that their pipeline should be at least 3 times their quota. However, this can vary widely based on the product you’re selling and the industry you’re selling to.

It’s also important to consider how your sales pipeline will impact your department goals over time. By always preparing your sales pipeline for the year ahead, you’ll make sure you’re giving priority to finding new customers and generating leads as a long-term strategy. You will then be better prepared to reach your goals on time.

  • First, take a moment to think about how much revenue you'd like to target each month (e.g. $10,000).
  • Divide your target by the average value of your deals (e.g. $10,000 ÷ $100 = 100). Once you have a number of deals to your name, you will know how many you need to close to reach that goal.
  • To find out how many leads you need, divide the number of deals by the average conversion rate for that stage. If you want to make 100 deals in a given year (and your closing rate is 50%), you'll need to have 200 leads by the time you close the deal.

Once you have determined the number of leads that close each month, you can work backward to determine how many leads you should be getting in at the earlier stages of the pipeline.

Step 5: Remove Stagnant Deals From The Pipeline

A stagnant deal is one that hasn’t moved forward within a reasonable amount of time. In many cases, it’s best to remove deals from your pipeline if they’ve been stagnant for 3 months or more.

The longer they sit, the less likely they are to convert into closed business. These dead leads not only bring down your conversion rate but also drag down your average deal size.

Instead, it’s best to focus efforts where they matter the most – with deals that are still moving.

Pro Tip: You can help your reps move deals faster from one stage to the next with a CRM that automatically informs your team of stagnant deals.

Sales Pipeline Metrics to Measure Success

Once you’ve set up your sales pipeline, it is important to track your success over time and measure your progress as you move through it. Thankfully, there are several metrics that can indicate a strong sales organization. Here are a few of them:

1. Number of Qualified Leads

Your sales pipeline is only as good as your qualified leads. The number of qualified leads tells you whether or not you’re engaging with enough relevant, interested prospects.

Qualified leads in the pipeline = Number of (potential) deals in the pipeline

2. Average Close Rate

Your close rate is the percentage of qualified leads (on average) that become paying customers. This is an important metric because it tells you what you’re doing right. It also helps you see where your team may need improvement.

Average Win Rate = Won Opportunities / Total Qualified Leads

Keep in mind that the average close rate alone can’t give you an accurate health status for your sales pipeline. Instead, examining the quality of leads to ensure they have true closing potential will provide you with a more insightful picture.

3. Average Deal Size

Average deal size (ADS) is one of the most commonly used metrics to determine the health of your sales pipeline. With a reliable ADS, you can calculate how many deals will likely occur within a specified period. You can use this to determine how many deals your reps need to close to meet the goals outlined in your overall sales plan.

Average Deal Size = Sum of Value of Won Deals / Total number of deals won

4. Total Pipeline Value

When you have a large number of open deals, it can be difficult to see what’s going on with the big picture. Total pipeline value is the total value of sales opportunities in the pipeline at a given time. This is calculated by adding up potential revenue you could achieve if every lead in the pipeline became a customer.

For example, if a salesperson has 4 open leads that are worth $1,000 each, their total pipeline value would be $4,000. This metric is useful for determining how well your reps are prospecting and qualifying leads. If you always have a small pipeline value, there is likely a problem with finding your ideal customers.

Pipeline value = Total value of all leads in the pipeline

5. Average Sales Cycle Length

Once a sales lead comes into your pipeline, it can take some time to close the deal. One of your primary goals as a salesperson is to shorten that sales cycle; doing so will drastically increase your closing rate and revenue.

An average sales cycle length refers to how long it takes for a lead to turn into a customer. For example, if it takes an average of 25 days for a person to buy your product or service, then your average sales cycle length is 25 days.

6. Sales Pipeline Velocity

Sales pipeline velocity (SPV) measures how much money is flowing through your sales pipeline and how fast you're moving leads from one stage to the next. This is mainly a measure of efficiency. Understanding how fast you move leads toward a close can help you identify growth opportunities in your sales methodology.

Sales Pipeline Velocity (SPV) = Total number of deals x Average Deal Size / Average sales cycle length

For example, SPV for a software company with 75 deals in its sales pipeline and an average deal size of $100 with a 6-month sales cycle would be $7,500 divided by 6 months. That’s $1,250 per month, or $41.67 per day.

To the average sales team, moving prospects through the pipeline as fast as possible is the main goal. But applying too much pressure based on this metric is problematic. When sales reps are only focused on closing deals at all costs, something ironic happens — their closing rate suffers.

Relationships are a huge part of effective sales, and relationships are built on trust. At Prehired, our methodology is Science-Based Sales®. It's a comprehensive system of selling that's based on hours of research and interviews with the best salespeople in the SaaS industry. At the core of this methodology is the idea of Clarity > Closing®. This mindset says that sales reps should be clear and helpful about the true value the product can offer before they try to implement any process. By becoming a trusted tour guide, you can create a natural environment for a deal to close without cheap tricks or coercion.

Best Practices to Manage your Sales Pipeline

Sales pipeline management takes into account current sales opportunities and predicts how much money a business will make with its current pipeline. It provides sales reps with a method to organize, monitor and evaluate prospects, helping them determine how well they track against their monthly, quarterly and annual goals.

In sales, you want to maximize revenue while minimizing costs. To do that, you need to build a system for managing your sales pipeline. Here are 5 steps you can take to build that successful sales pipeline management system.

1. Conduct Sales Pipeline Review Meetings

Sales pipeline review is a highly collaborative team-wide brainstorming session. This process charts the ideal course of action to keep your pipeline in tune with your sales goals.

Sales pipelines should be reviewed regularly to ensure that your process is balanced, accurate and contains only qualified opportunities. Sales managers may want to convene with reps on a monthly or quarterly basis in order to review their pipelines, verifying that they are not missing key opportunities and making sure that each rep understands the buying process as defined by the sales methodology. This will help managers gain visibility into any roadblocks that exist.

PRO TIP: Each week, hold a short (30-60 minute) meeting with your sales team where individual reps show the status of their top 3-5 open opportunities. This will help them focus on high-level strategy, prioritize deals that need the most attention and prevent any big issues from slipping through the cracks.

2. Agenda Templates to Automate Workflows

While pipeline reviews are an incredibly important part of managing the sales pipeline, they can also be time-consuming.

You can make pipeline review meetings more efficient by using collaborative templates to automate workflows and standardize meeting activities.

Let’s say you want to get your whole team together for a status meeting. Try creating a One Week agenda in Google Docs, and invite everyone on your team to add talking points directly to the agenda. You can pull in data from other tools so everyone knows what’s happening as soon as you publish changes.

This means that you don’t have to waste time at meetings trying to pick up the flow of the discussion. Even when your team members are all in different locations, they can easily get up to speed on what was discussed at the last meeting. This also helps you avoid wasting time revisiting the same topics over and over again.

3. Use a CRM Platform to track your Deals

Customer Relationship Management (CRM) software will keep all of your sales opportunities organized in one place.

When choosing a CRM platform for your team, pay close attention to the features it offers. A good CRM will allow you to clearly define each stage of your pipeline and create custom statuses for each deal. It should also allow you to assign a dollar value to each deal and calculate total pipeline value for you.

Some advanced programs use AI to determine the best course of action to move deals toward a close. At minimum, your program should remind your reps when to follow-up with certain leads. It may even set up calls or demos automatically when necessary.

If you rely on Excel spreadsheets to stay on top of important tasks (or worse, email), you won’t be able to benefit from a full pipeline. Consider what features you can use to boost efficiency in your process.

Pro Tips:  Integrating your CRM with relevant data collection tools, such as Google Analytics or HubSpot’s marketing platform, ensures that you’re tracking key performance indicators (KPIs) and making real-time adjustments as needed.

You can also integrate your CRM with customer communication tools like Drift, MailChimp or Zendesk. This is a great way to ensure your sales team is following up on leads. It will also help you create personalized email templates. You can save these in your CRM for instant access any time you need to make an introduction or schedule a call/demo.

4. Sales Rep Performance Tracking 

Sales rep performance is essential to the health of your pipeline. Monitoring their individual KPIs closely will help you hold everyone accountable to department goals. For a clear picture of your team’s performance, you want to achieve a combination of activity metrics (lead metrics) and results (lag metrics).

First, your reps need to put in the work necessary to increase their odds of success. If they are meeting lead activity metrics, this is a good sign your reps are working hard. But at the end of the day, the goal is to increase sales.

Lagging metrics like booked meetings or sales quotas aren’t always predictable. However, if a sales rep is putting in a lot of work with no results, this often indicates a skills or strategy issue. Insights from these metrics can be used to encourage successful behaviors or address a lack of performance standards. You can then isolate this data further to specific stages, identify bottlenecks and obstacles and optimize your process for each stage.

For instance, in the qualifying stage, which sales approach leads to the best conversion rates? Does cold calling convert better than lead attribution via email? Or do sales reps perform better with a sequence of phone calls and emails?

Final Thoughts

Sales pipeline management can seem like an overwhelming process to follow. But it’s worth going through the learning curve to implement a good management strategy. Take this guide to heart, and you will be on your way to building a system that helps you generate revenue by placing prospects in the right stage of your sales process.

But keep in mind that none of this happens in a vacuum. Your management and execution strategies are only as effective as the people you have on your team. Sales reps are the lifeblood of any SaaS company. If you aren’t working with the best in the industry, you may be missing out on more opportunities than you realize.

A team of highly-skilled SDRs can bring in greater deal value and shorten the time it takes you to reach a positive return on your investment. As a Prehired partner, you can tap into a curated source of trained SDR candidates that you can hire right away. Once our members work through our research-backed Science-Based Sales® curriculum, they’re vetted for multiple criteria to make sure they’re ready to take the sales floor.

In a world of ever-evolving technology, SaaS companies simply can’t afford to waste time and resources training low-tier sales talent. Hire a Prehired member and start generating more pipeline value for your company today.

Josh Jordan

As Prehired's Founder & CEO, Josh Jordan is leading the mission to help 10,000 people launch 6-figure software sales careers by the end of 2024.

How? With Prehired's Science-Based Sales® process -- born from helping dozens of software companies build their sales teams...

...and then consulting with hundreds of Software Sales Managers on exactly what they wanted new hires to know...

...and then helping hundreds of regular folks break into software sales in 12 weeks, on average.

Josh created Science-Based Sales® to help nearly anyone succeed in software sales, because it creates clarity for prospects. No killer closer instincts, charisma or kissing up to decision makers needed.

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