Sales pipeline

A sales pipeline is the set of actions taken by sellers to drive prospects toward a conversion, or purchase. At each stage of the pipeline, prospects learn more about a business and become more or less interested in purchasing or contracting for services. The pipeline, therefore, also refers to where prospects are in the purchasing process.

Read more below.

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Sales pipeline

The word “pipeline” entered the English vocabulary as a slang term for “a channel of communication” in the 1920s. Before then, when people said “pipeline,” they literally meant, well, a pipe. When the Roaring ’20s were in full swing, economic prosperity was stimulated by the cutting-edge technology of the day: cars, telephones, and radios. With these innovations making communication more immediate than ever before, the idea of the information pipeline entered the business vernacular and has stayed ever since. Later it evolved to the concept of deals in the pipeline: work or new business that is not closed yet but may be in the future.

Cut to today, and the sales pipeline has become a fixture of modern business operations. Leaders from the C-suite on down the chain of command want to know not just which deals are likely to close soon but also how much revenue each deal will generate, and the services or goods that need to be delivered in exchange. The sales pipeline can generate both excitement and anxiety as sellers watch their deals move closer to success or stagnate and stall for reasons they don’t understand.

The good news for sellers is, this uncertainty no longer has to be the norm. Thanks to technology, the sales pipeline — and the way it is created, updated, and used as a tool for sales success — is ripe for transformation. In this content, we want to explore the pipeline in its entirety: why a sales pipeline is important, what information the sales team sources from a pipeline, and how modern innovations could make those insights more robust, actionable, and useful on a daily basis.

What is a sales pipeline?

A sales pipeline is the set of actions taken by sellers to drive prospects toward a conversion, or purchase. At each stage of the pipeline, prospects learn more about a business and become more or less interested in purchasing or contracting for services. The pipeline, therefore, also refers to where prospects are in the purchasing process.

When it comes to understanding the prospect’s readiness to buy, today’s B2B sales pipeline is more like a skate park than a smooth-flowing roll downhill. According to research published by Gartner, customers complete six buying phases — from problem identification to solution exploration to consensus creation — to gather information and make a confident decision. The same survey found that as many as 10 decision-makers need to come to a consensus before a B2B purchase is approved.

This controlled chaos of 10 people each on their own fact-finding missions makes traditional sales forecasting methods, such as historical or opinion-based sales forecasting, somewhat obsolete. Traditionally the buying process has proceeded chronologically and with fewer stakeholders. In the past, as buyers met with sales reps to learn more about the products and services, the deal proceeded or didn’t based only on the opinions and information provided by the people in the room.

How those deals were won and lost isn’t fully relevant to today’s sales environment.

Now buyers are self-educating themselves at their own pace. They are answering not just their own questions but also the questions of their peers and fellow stakeholders. This means that the quality of information provided by both sales and marketing across digital and nondigital channels is key to growing revenue.

Let’s examine the definition of a sales pipeline in contrast with two other sales terms to fully explore the potential a modern sales pipeline has to drive revenue.

Sales pipeline vs sales forecast

A sales pipeline is the set of opportunities and actions sellers leverage to close a deal. It also shows how close the buyer is to making a purchase. The sales forecast is the goal or success metric that sales teams are chasing. A sales forecast is the projection of estimated sales for a given period, whether a week, a quarter, or longer. To meet the expectations and goals in the sales forecast, sellers leverage the leads in the sales pipeline.

The relationship between the sales pipeline and the sales forecast isn’t all rainbows. In traditional sales forecasting, sellers’ opinions about the state of the pipeline are key to making projections. Yet sometimes a seller may underestimate the potential of the pipeline, whether out of hesitancy and a lack of confidence or a desire to set lower standards that can be more easily achieved. Historical forecasting, based on the assumption that buyer behaviors and market conditions today will be similar to those of the past, is just as flawed and potentially inaccurate.

Today technology solutions such as Collective[i] have emerged to help sellers better navigate the divide between the pipeline and the forecast. Intelligent InsightsTM is a feature that guides each seller’s attention to the activities with the most potential to move a lead down the pipeline. Collective[i]’s neural network draws on historical data as well as third-party data to make informed recommendations that are customized to a company’s sales pipeline and market vertical. Predictive PipelinesTM gives sales managers insight into the activity not just of the sales team in the pipeline but also of the marketing and customer success teams.

Sales pipeline vs sales funnel

The sales pipeline is often thought of as the current list of leads; it details the number of leads that a sales representative has to work with at the moment, as well as the potential dollar value of each prospect. The sales funnel is a related concept in marketing, representing the stages of the customer journey that a prospect goes through before becoming a customer.

What is a sales funnel and how does it work?

A sales funnel is the model of the customer journey that can be used to calculate conversion rates at each stage of the pipeline. It helps teams understand what actions to take at each stage to help prospects move all the way through the pipeline. It can also help teams understand where and why they lose prospects. There are generally four main sales funnel stages: awareness, interest, desire, and action. Every sales funnel starts wide, with all the leads and passive users who become aware of a company. Then sellers take actions to turn that awareness into interest. Today, much of this interest generation and sharing of insights is done by digital marketing content, leading to a greater need than ever for alignment between sales and marketing.

Turning interest into desire hinges on large and small factors. In some cases, simply improving the user experience on a webpage can be enough to boost conversions by making information easier to access and understand. In other cases, tracking the sales funnel can reveal that there are gaps in customer-facing information about your product or services — which may be responsible for leads slipping out of the pipeline. The metrics of a sales funnel help marketers, sellers, and customer success teams work smarter, not harder, to attract and retain customers.

Collective[i]’s Intelligent WriteBackTM allows teams in sales, customer success, and marketing to stay connected about the insights that have been provided to each prospect or existing customer in the pipeline. Automatic CRM updates are pulled from information sources such as email and chat logs, which increases transparency about customer touchpoints as soon as they occur. A Virtual DealRoomTM provides a central hub for everyone to discuss the progress. And insights from C[i] RecommendsTM make the sellers aware of opportunities to nurture the lead deeper into the funnel.

Sales pipeline stages

Much like a sales funnel, a sales pipeline has stages defined by the different actions a sales professional takes to move the deal along. But if you’re wondering, “What are the default stages of a CRM pipeline?” the truth is there’s not one answer. Some organizations swear by a four- or five-stage approach like the sales funnel we just described. Other groups use a seven-step sales process that brings more nuance to different stages.

What is a sales pipeline template?

It’s a map for the way each organization approaches the sales process. Generally speaking, the pipeline has the following stages:

  • Prospecting/Awareness: The prospecting stage means the process of lead and attention generation. For a sales team, this may include leads from client referrals, marketing, or cold calling.
  • Preparation: An element of the early stages of deal nurturing has always been that salespeople prepare for and research the prospect. But today that role is often reversed: Prospects usually research and decide whether to approach a salesperson. As a result, today’s sales preparation is stronger when powered by insights about the buyer’s behavior.
  • Approach/Interest: A deal moves down the pipeline when a salesperson approaches the prospect or the prospect otherwise signals interest. For instance, when a potential client has opened a certain number of marketing emails or reached a premium piece of content on the website, sales pipeline software can automatically prompt a seller to follow up.
  • Handling Objections/Decision: As we mentioned earlier, most B2B deals these days involve 10 people that must come to a consensus before a buying decision is made. That means the stage of handling objections and guiding prospects from interest to a decision has become more essential than ever before. It’s also become more hands-off than ever before.
    • Even though two-thirds of B2B buyers told Miller Heiman Group that they find value in discussing their needs with salespeople, more than 70% of the same buyers said they have already decided what they need by the time they talk to a salesperson. This suggests that even though buyers do their own research, they are aware that they might have needs they aren’t considering. Sales can enter the equation to answer specific questions and close the deal.
    • Sellers must also step in to overcome each party’s distinct objections to the deal. These may include concerns about the scope of the transition, the presence of required key features, the timing of the deal, the cost, and buyers’ change resistance. It’s essential for salespeople to know when objections should be addressed and when to walk away.
    • These efforts become easier than ever with tools that use a neural network to monitor the third-party data and market conditions that might affect the deal outside the scope of the seller’s knowledge. With the real-time insights provided by these tools, sellers can create perfectly timed strategic outreach as new prospect needs surface.
  • Closing/Action: When a deal closes, that’s great news for the buyer and the seller. But it doesn’t mean the sales process has concluded. Customer success and marketing teams now assume more importance in keeping the client engaged and growing lifetime revenue. It’s far easier to sell to an existing client than a new one, meaning no client ever really leaves the pipeline, just starts over.

What is sales pipeline software?

Sales pipeline software is also sometimes called sales CRM software. These are platforms that enable salespeople, their supervisors, and other relevant parties to track and store information about each deal. Cutting-edge sales pipeline software that automates previously manual processes has the potential to save sellers time.

Collective[i] sales pipeline software also transforms sales forecasts, using a neural network and deep learning to analyze the pipeline and the actions within it to provide daily updates about revenue growth at any given moment. Based on this analysis, Collective[i] also gives each seller advice about how to improve the forecast.

The third main feature of sales pipeline software is its ability to provide easy-to-understand reporting for all the sales pipeline metrics and analytics each member of the team needs. All in all, sales pipeline software should achieve three goals for sales teams:

  • Automation: The best software for sales automates mundane, non-revenue-generating tasks such as CRM updates and sales forecasting.
  • Augmentation: Sales pipeline software should support the decision-making and ability of sales reps to prioritize their day by helping them know what they don’t know. Insights such as changes in buyer behavior, updates to a social network, or fluctuations in market conditions can help sellers perform more efficiently and profitably.
  • Acceleration: A sales pipeline software is only worth the investment if it moves deals faster — and therefore more profitably — through the pipeline. This is why AI-lite functions, such as process automation, are best used in tandem with more cutting-edge solutions that use deep learning and neural networks.

Sales pipeline metrics

The primary set of sales pipeline metrics varies from company to company and even project to project, depending on business goals. A business aiming to grow brand awareness will want to emphasize different metrics than it would for a targeted campaign to grow conversions. Here is a list of common sales pipeline metrics that could be useful for your business:

  • New opportunities: A summary of all the new leads in the pipeline — those from inbound and outbound marketing activities as well as the efforts of the sales team. This metric is a key indicator of the baseline the team is starting from to achieve goals and grow revenue.
  • Qualified leads: An opportunity or prospect that a salesperson identified as worth pursuing. Qualified leads know what their problem is and what kind of solution they want. They include parties with the authority to make a buying decision. An unqualified lead may eventually become a qualified lead, so if your business has a long buying cycle, it may be wise to track this metric for a few months or quarters.
  • Funnel stage conversions: The conversion rates between each stage of the funnel. If 10% of your opportunities turn out to be qualified leads, what happens next? How many ultimately end up buying? Tracking funnel stage conversions gives a glimpse into the alignment between sales and marketing and can help pinpoint areas for improvement.
  • Win rate: The comparison of how many opportunities are available versus how many close. This measurement can help both the team overall and individual sales reps reflect on their success. For instance, if a sales rep closes two out of every five deals, they would have a 40% win rate. Not only is this insight motivational, it can also be helpful in setting realistic targets to grow revenue over time.
  • Sales cycle length: The average sales cycle length of a business is worth tracking over time. Whether it takes an average of one month or one year to close a deal, that insight puts sales representatives in a position of power. It means they know when to pursue a lead and when to ease off, as well as when to say no to an opportunity completely.
  • Average deal size/value: This metric isn’t just about the dollar amount of each deal at closing but also about how much revenue it will bring in over time. For example, if a client was signed only due to a discounted rate, that would diminish the overall deal value. However, identifying high-value deals and low-value deals sometimes means looking beyond the revenue to see which types of customers stay longer and become the most lucrative.
  • Return on investment: Related to average deal value is the concept of return on investment. If a seller had to spend lots of money and time closing a deal, the return on investment might not be as high as that of other deals. That doesn’t mean one type of deal is better than the other — but with the support of a neural network, sellers can recognize which deals may take more investment of time and other resources, and balance their workload accordingly.
  • Customer retention: If sellers are endlessly having to replace customers they just won a few months earlier, the effort to grow revenue will never pay off. Instead, sellers can learn which types of customers are the ideal target, and focus more strongly on closing deals with long-term or repeat customers.

Sales pipeline report

A sales pipeline report is a regularly generated summary of many of the sales pipeline metrics we just defined. Collective[i]’s goal is to make this type of reporting obsolete. Our sales transformation platform features an on-demand dashboard where all sales pipeline metrics are available and updated daily for maximum transparency. When a deal is won or lost, sellers won’t have to write it down or document it in a report. Instead, the entire team immediately has access to the insights to adapt, supported by recommendations from a neural network that is learning right along with the team about what works and what doesn’t.

Sales pipeline management

Sales pipeline reporting becomes obsolete through proactive sales pipeline management and sales forecasts. Reports tell sellers and company leadership what has been happening in the recent past, which is valuable insight when planning for the future. But teams can adapt to the circumstances of the pipeline faster when insights are automatically updated with real-time third-party data. Knowledge of current market conditions and buyer behavior through the Collective[i] platform makes managing the sales pipeline a proactive, results-focused part of the sales culture.

Go beyond sales pipeline analytics to action with Collective[i]

The Collective[i] platform is specifically developed to transform the sales pipeline into a tool that serves modern teams as a source of insight, not stress. Collective[i] uses artificial intelligence to automate the data capture and analytics that help teams thrive. Then, our neural network learns from that data to improve how sales teams grow revenue and move deals down the pipeline. Collective[i] merges a sales collaboration tool with a buyer insights platform, all superpowered by the strength of a deep learning algorithm that grows and evolves along with sales teams.

A sales pipeline can be a proactive, future-forward resource that sales, marketing, customer success, and other teams can leverage to make better decisions about how to serve and gain customers. The key is Collective[i]. Explore our product today and schedule a demo to see the potential for yourself.

Work together, win together

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