Sales Pipeline

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A Sales Pipeline is an organized visual way that shows the progress of potential customers as they move through the stages of deciding to buy.

It’s usually shown as a horizontal bar or funnel, with each section representing a step in the sales process.

A pipeline gives a clear view of which sales activities are most profitable, showing the company’s potential and highlighting areas for improvement.1

Visual Representation

Sales Pipeline visual representation

Stages

  1. Lead Generation: Identifying potential customers.
  2. Initial Contact: Make the first contact with leads.
  3. Qualification: Assessing the lead’s potential and interest.
  4. Proposal: Presenting a tailored solution or offer.
  5. Negotiation: Discussing terms and addressing concerns.
  6. Closing: Finalizing the sale.
  7. Post-Sale: Follow-up, feedback, and retention efforts.2

Purpose

The main goal of a sales pipeline is to help businesses clearly see their potential sales and where customers are in the purchase process.

This allows sales teams to predict future sales, organize their efforts better, and concentrate on the most promising leads when it’s most effective.

Managing the pipeline well also aids in predicting income, using resources wisely, and making achievable sales targets based on how many leads there are and how likely they are to turn into sales at different points in the process.3

Usage

Sales pipelines are primarily used in businesses with a sales team focusing on converting leads into paying customers.

This applies to a wide range of industries, but some of the most common ones include:

  • Selling to Other Businesses (B2B): Companies use them to keep track of deals they’re trying to close with other companies.
  • Selling to People (B2C): Even when selling directly to people, especially for expensive things like cars or houses, pipelines help keep everything organized.
  • Tech and Software Sales: For businesses selling software or tech services, pipelines help manage who’s interested in buying and how close they are to saying “yes.”
  • Services Like Consulting: Agencies or consultants use pipelines to know who might hire them next.
  • Online Shopping Sites: Even websites that sell things directly to you use pipelines to understand how customers decide to buy.
  • Real Estate: People who sell houses use pipelines to track who’s looking to buy or sell and what needs to happen next to close the deal.4

Example

Imagine a sales pipeline for a company that sells custom kitchen renovations.

Here’s how their sales pipeline might look, broken down into stages:

  1. Lead Generation: The company attracts potential customers through ads, home shows, or their website. A homeowner interested in a kitchen makeover fills out a contact form online, becoming a lead.
  2. Initial Contact: A sales rep reaches out to the homeowner to discuss their interest and gather basic information about their kitchen renovation needs.
  3. Needs Assessment: The sales rep schedules a meeting, either in-person or virtually, to assess the homeowner’s space, understand their requirements in detail, and discuss potential design concepts.
  4. Proposal: Based on the assessment, the company prepares a detailed proposal outlining the renovation plan, materials, timeline, and cost.
  5. Negotiation: The homeowner reviews the proposal. There might be some back and forth as they request changes, ask for different materials, or negotiate the price.
  6. Closing: Once the homeowner is happy with the proposal, they sign the contract, and the sale is considered closed. The project moves to the planning and execution phase.
  7. Follow-Up: After the renovation is completed, the sales rep follows up to ensure the homeowner is satisfied with the work, addressing any final tweaks or concerns and asking for a testimonial or referral.

Related Terms

References:

1. OÜ, P. I. / P. (n.d.). What is a sales pipeline and how do you build one?. Pipedrive. https://www.pipedrive.com/en/blog/sales-pipeline-fundamental-stages

2. Tarver, E. (2023, November 25). What is a sales pipeline? Definition & Best Practices. Forbes. https://www.forbes.com/advisor/business/sales-pipeline/

3. Peterson, R. M., Rodriguez, M., & Krishnan, V. (2011). CRM and sales pipeline management: Empirical results for managing opportunities. Marketing Management Journal, 21(1), 60-70. https://core.ac.uk/download/pdf/51143063.pdf#page=67

4. Sales & Marketing Procedures for Sales Pipeline Management: The Professional’s Ready-to-use Guide to Enhance Strategies and Tactics and Increase Customer Satisfaction. (2008). United States: Bizmanualz, Incorporated. https://www.google.com/books/edition/Sales_Marketing_Procedures_for_Sales_Pip/BNkFMQAACAAJ

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