Article

What is the sales pipeline and how do you track it?

By Caroline Chromik, Senior product marketing associate

Published March 30, 2020
Last modified March 30, 2020

It’s a sales rep’s job to guide consumers through the process of learning about your organization’s product and ultimately purchasing it. The sales pipeline is simply a rep’s tool for organizing and managing this consumer journey. And your CRM is your secret weapon.

In this post, we’ll take a deeper look into what the sales pipeline is, along with how to track and manage it with a CRM. We’ll also clear up some of the common confusion around industry buzzwords by explaining the difference between the sales pipeline and the sales funnel.

What is a sales pipeline?

A sales pipeline is a representation of where prospects are in their buying journey. The sales pipeline consists of five stages, which represent the consumer buying journey from the salesperson’s perspective. Typically managed within a CRM, the pipeline is a tool sales reps use to organize their leads and guide them through the journey to becoming a customer.

Sales pipeline stages

    1. Prospecting. This is the stage where you identify prospects and enter them into your pipeline. Focus on customers who match your qualification criteria.

    2. Qualified. Once your prospects are qualified leads, set up a meeting or demo to present your product/service to decision-makers. Home in on the value of your product/service and how it meets the potential customer’s needs.

    3. Quote. Discuss terms and prices. Explain what features the potential customer is getting for the price. This stage helps you determine whether the lead is willing to commit to your product/service.

    4. Closure. It’s time to seal the deal. Put what you’ve discussed in writing — maybe you’re offering a tailored membership or discount for this potential customer. Send the final terms or proposals.

    5. Won/Lost. This stage means that the potential customer either bought your product or they didn’t. If they did, make good on your promises. If they didn’t, find out why. Determine what works and what doesn’t in your sales pipeline.

Think of a sales pipeline as moving prospects right down a pipe — the ultimate goal being to get them to the end of the pipe and converted into customers.

With that in mind, let’s talk about the difference between a sales pipeline and a sales funnel.

Sales pipeline vs. sales funnel: What’s the difference?

Would you say that a pipeline and a funnel are shaped the same?


 

Hopefully, your answer would be no, but in the sales world, the terms “sales pipeline” and “sales funnel” are often confused. The difference is clear: a sales pipeline shows the sales process from a sales rep’s perspective, while a sales funnel illustrates the process from the buyer’s perspective.

Set up like an upside-down pyramid, a sales funnel helps identify and break down the key steps in a buyer’s journey to better understand where customer actions are taken and opportunities lie. Below are the five stages, along with tips for how reps should engage with leads during each one.

    Awareness. The consumer discovers a new product. Reps can help drive awareness for their product with tactics like cold calling, email outreach, or offering free product trials.

    Interest. Your lead has shown explicit interest in your product. Now is the time to nurture these prospects by educating them about your product or service. Email drip sequences, case studies, and testimonials are all effective in building leads’ trust and appreciation of your brand.

    Evaluation. The lead is interested in your product and wants to learn more. This is the rep’s opportunity to fill in their knowledge gaps and show that their product can solve the lead’s unique pain points.

    Engagement. Your lead is in the final decision-making stages of their buying journey. Continue to engage and support them. Help your leads travel the last few yards of the sales funnel by implementing the ASK process: Align priorities, secure commitment, keep the relationship alive.

    Purchase. The lead has completed their purchase and becomes a customer. Continue to build the relationship after the close to improve customer-retention rate and to identify opportunities for upsells.


 

The sales funnel helps reps visualize the buying journey from the eyes of the consumer. But actively driving that experience (getting a consumer to buy your organization’s product) means managing it from a sales rep’s perspective with the right tool — a sales pipeline.

And if you want to increase your sales success rate, you need to optimize your sales pipeline. That means tracking key metrics with your CRM to identify the stages at which leads are typically getting lost and why or the sales reps who are driving the most conversions.

Let’s take a look at how to do this.

Tracking sales pipeline metrics with a CRM

Using your CRM, monitor the following metrics to identify bottlenecks in the sales process and to gain insights about how to improve the overall efficiency and health of your sales pipeline.

    Number of qualified leads. Track this metric to ensure that your sales team is generating enough qualified leads for the “Prospecting” stage to meet your group’s revenue goals. To track this metric with Sell, use the Pipeline Coverage report. Managers can use this report to determine if their reps are on track to meet their goals. The “Pipeline Value Needed” column will determine whether enough qualified leads are in the pipeline to be able to meet those revenue goals.

    MQL to SQL conversion rate. Check how many Marketing Qualified Leads become Sales Qualified Leads at the prospecting stage. If there’s a big gap between the two numbers, you might need to better align with your marketing team (https://blog.getbase.com/sales-rep-for-a-day). Sell, for example, indicates the source for leads in your pipeline within those leads’ contact cards. You can determine the effectiveness of marketing-generated leads by tracking their progress through the sales pipeline. If most of them are getting lost at the qualification stage, you might want to reassess your marketing campaigns.

    Average sales cycle. This metric is used to determine how long it typically takes to close a deal. If there are deals that are stagnating in your pipeline for longer than your average sales cycle, find out why and what you can improve to shorten the process.

There are a couple of ways to track your average sales cycle with the Sell app. The Stage Duration by Owner report indicates how long prospects remain in one stage of the pipeline before moving to the next. This helps managers identify at which stages of the pipeline leads are getting stuck. The Time to First Action by Outcome report shows how long it takes your team to initiate engagement with leads during each stage of the sales pipeline. This report can help managers measure the efficiency of their sales reps and identify any stages where inefficient processes might be holding them up.

    Deal-loss reasons. It’s inevitable that you won’t close every deal—but you can learn from the lost ones. Sell, for example, allows reps to track deal-loss reasons in theDeal Losses (https://support.zendesk.com/hc/en-us/articles/360041516373-Using-Deal-Loss-Reasons-for-Tracking-and-Reporting) report. This can be customized based on typical trends, such as “poor follow-up” or “customer didn’t have the budget.”

Automated reports like the ones listed above enable managers and reps to identify bottlenecks in the sales process. Use these insights to improve the efficiency and effectiveness of your pipeline and your sales reps’ performance.

Drive more sales by tracking your sales pipeline with a CRM

A sales pipeline provides a road map for your reps to follow when guiding leads through their buying journey, and the right CRM makes tracking the stages of the sales pipeline effortless. The tool automatically generates reports to help you get a high-level view of your pipeline—seeing where leads are getting lost, identifying bottlenecks in the process, and identifying opportunities for improvement. Use this information to improve your sales operations and ultimately, drive more sales.

Start a free trial of Zendesk Sell today to learn more.