A guide to sales pipeline management

Posted March 29, 2023

In organizations across every industry, sales leaders are often ill-equipped to effectively build, close, or manage pipeline. Setting rep quotas, monitoring rep attainment and participation, ensuring sufficient pipeline coverage, and accurately reporting on pipeline movement are all crucial factors for success; yet adequately accomplishing these tasks in a consistent, predictable way can feel impossible. 

Changes in the sales pipeline throughout the quarter, like losses or pushed deals, can impact weighted pipeline and create coverage gaps, leaving sales leaders scrambling to hit quota. Over time, the inability to effectively and efficiently manage pipeline hinders team productivity, performance, and, ultimately, revenue. 

The good news? Understanding the best practices of sales pipeline management can help sales leaders make meaningful improvements that increase team productivity and drive higher revenue across the quarter. 

Below, we'll take a close look at sales pipeline management, including key factors, best practices, and how the right technology can help your team maximize pipeline.

What is a sales pipeline?

The sales pipeline refers to the number of deals a rep or team has in flight, at various stages of the sales funnel. It's a vital tool that helps sellers visualize each potential buyer as they progress through each stage of the buyer's journey. 

It's important to note that while the two terms are closely related, the sales pipeline and sales funnel are actually two separate concepts. The sales funnel represents the buyer's perspective, with the conversion rate at each stage in the sales process illustrated by a specific qualifying term. For example, there are generally many prospects at the top of the funnel in the awareness phase of lead qualification process, while there are very few that make it to the bottom as actual paying customers. 

In contrast, the sales pipeline represents the seller's perspective and revolves around revenue opportunities. It acts as a visual guide for which sales activities are needed at each stage of the sales process in order to meet revenue targets or quota. The pipeline also illustrates how each revenue opportunity is distributed across the sales process stages, enabling sellers to uncover key insights around their efficiency and efficacy.

What is sales pipeline management?

Sales pipeline management is the process of ensuring reps, and the sales team as a whole, have enough deals at various stages of the pipeline. Effective sales pipeline management consists of both the calculation of potential profits from revenue opportunities and several intentional actions that teams take to increase their ability to close more deals. 

Consistent pipeline management enables a steady stream of deals that are ready to close by the end of the sales period. This is especially vital for deals that have a long sales cycle (looking at you, B2B sales!), as teams must always think ahead to the next month, quarter, and year to meet the goals of their department in a timely manner. 

How to engage in effective sales pipeline management

A healthy sales pipeline promises greater operational efficiency and transparency, but reaping those benefits first requires an excellent pipeline management strategy. Gartner research shows that sales executives report pipeline management as one of the top areas where sales operations functions are least effective, giving those with a strong practice a clear competitive edge. 

Here are the key components and considerations for a successful sales pipeline management strategy:

Metrics in sales pipeline management

The sales pipeline is virtually useless if your team doesn't actually analyze the data it generates. To measure what's going right and what's going wrong (and take corrective action), you'll need to use a variety of sales metrics, including:

  • Average deal size - The average deal size is calculated by taking the sum of total revenue achieved over a certain period (e.g. per month) and dividing it by the number of closed/won opportunities for that same period. 
  • Average sales cycle length - To understand how efficient and effective they are at converting prospects into actual paying customers, sellers need to know the average time it takes to close deals. Simply add the total number of days it took to close all relevant deals, then divide that sum by the number of closed/won opportunities over that same timeframe. 
  • Number of deals in the pipeline - This metric refers to the number of sales-qualified leads (SQLs) an individual rep or the sales team as a whole is currently engaging. 
  • Sales win rates - To determine win rate, divide the number of closed/won deals over a specific time period by the total number of opportunities created within that same period. The sales win rate can be used to identify low- and high-performers, pinpoint areas of strength or weakness in the pipeline, and uncover coachable moments. 
  • Sales pipeline value - Pipeline value is the total estimated value of all the active, qualified opportunities currently in the pipeline. When accurately calculated, this metric can help contribute to stronger forecasts. 
  • Probability to close - Depending on your analysis strategy (and the tools you use to track and measure progress and performance), a deal’s probability to close might depend on a variety of factors. This might include the sales process stage a deal is at with a certain number of days remaining in the quarter; the size of the deal; and the average win rate for deals in that same stage in the sales process. 
  • Lead response time - To evaluate lead follow-up and identify how certain follow-up actions impact conversion, you’ll need to calculate lead response time. This metric refers to the average time between new lead creation and when your team sends an initial response. Just take the total amount of time between lead creation and response (for each lead assigned to a particular seller) and divide that by the number of leads responded to. 
  • Sales velocity - You can calculate sales velocity by multiplying the total number of qualified opportunities in the pipeline by the deal value amount and the win rate percentage, then dividing that product by the sales cycle length. This number measures how quickly deals flow through the sales cycle.
  • Quota attainment - This provides a detailed look at an individual’s or team’s ability to reach their target quota attainment. It’s a strong metric for understanding trends, making predictions, and determining whether sellers are on track to meet their objectives. Quota attainment is calculated by dividing actual sales by total sales quota, then multiplying that number by 100. If, for example, a seller closed $10,000 in sales over a specific quarter but they actually closed $9,000, their quota attainment would be 90%. 

Pipeline metrics are much more than intangible numbers that denote how good or bad a sales team is performing; they tell a dynamic story that can help the entire sales team increase their knowledge and act independently to better optimize their pipelines. Because of their potential power, sales leaders and sellers alike should make use of their pipeline metrics and make a concerted effort to understand how each contributes to their overall success or failure. 

Understand sales pipeline velocity

Sales pipeline velocity is just one metric that impacts forecast accuracy, but its a crucial one at that. It measures the rate at which winning deals flow from new deal creation to closed/won. 

Over time, calculating sales velocity can help teams better understand the sticky parts of the sales process that need greasing, as well as those that should be standardized and repeated moving forward for continued success. 

To calculate sales velocity, use the following formula:

V = [# x $ x %] / L

Sales Velocity (V) = [Number of Opportunities (#) x Deal Value ($) x Win Rate (%) / Sales Cycle Length (L)

Each figure in the sales velocity formula can be described as follows:

  • Number of deals - Total number of fully qualified leads in your pipeline
  • Average deal size - The size or value of each purchase, depending on your organization’s pricing model
  • Win rate percentage - The number of closed/won deals in a specific period divided by the total number of opportunities created in that same period
  • Amount of time in the sales cycle - The time it takes for a qualified lead to become a paying customer.

Sales forecasts and pipeline reviews

The sales forecast is a visual tool that provides a high-level view of expected sales revenue. In other words, the forecast is a projection based on what's currently in your sales pipeline. When used regularly (and correctly), forecasts help align the expectations of sellers, managers, leaders, and other key stakeholders. 

The sales pipeline review, on the other hand, provides a detailed analysis of the sales process and the opportunities within it. A sales pipeline review can inform the sales forecast by providing insights into the likelihood and timing of closing specific deals, which can then be factored into the forecast. 

Likewise, the sales forecast can also help inform the sales pipeline review by providing guidance on the overall goals and targets that the sales team is working towards. It shows exactly what they'll need to achieve to hit their goals. 

If you already have a healthy pipeline, a strong sales process, and well-structured goals, you know the critical value accurate sales forecasts and pipeline review. In fact, sales organizations that use a structured, formalized forecasting process increase their win rates of forecasted deals by 25%.  

Together, forecasts and pipeline reviews help your business efficiently plan for demand, make well-informed business investments, uncover and resolve issues before they become larger problems, and continuously improve your sales process to close even more deals. After all, no sales process, business, customer base, or competitors are unchanging; so it's essential to have tools that help you move forward with confidence. 

Utilize technology to generate sales pipeline reports

Sales pipeline reports are in-depth summaries of the effort, productivity, and performance of your team across a specific timeframe. At their most basic level, these reports illustrate the number of active deals across each stage of the sales cycle and the total value that these deals represent. 

More detailed pipeline reports also show the specific activities and metrics that contribute to productivity and performance, including:

  • The number of prospects generated
  • The number of emails sent compared to the number that were opened, clicked, and replied to
  • The number of inbound and outbound calls made compared to the number of answered calls

The right pipeline metrics can make generating accurate, impactful reports much easier. While it can be a time-consuming, burdensome task if your team still relies on various, disparate tools for capturing, managing, and updating data, the right technology offers a clearer, more holistic view in a fraction of the time.

Many sales managers and leaders use CRM systems to generate their pipeline reports, but these tools still leave much to be desired. They simply don't offer a consistent, connected way to monitor and maintain data. Leaders using CRM tools often spend a significant amount of time trying to understand and analyze data, rather than producing strategies that improve pipeline health. 

This is why modern, competitive organizations leverage Outreach, the only platform that allows you to both inspect pipeline and take action on insights from a single tool. As a single sales execution platform, Outreach eliminates silos between data sources and enables a single CRM connection to track, manage, and analyze all of your key pipeline data. 

Stronger sales pipeline management with Outreach

Effectively building, closing, and managing pipeline are essential to ensure your sales team delivers on its goals. But getting it right can feel impossible without the right strategies and tools for support. 

Outreach's Sales Execution Platform offers intelligent tools for seamless pipeline management. With capabilities that enable leaders and sellers to assess and improve pipeline quality, quantity, and maturity in real-time. Plus, built-in modeling provides leaders with everything they need to quickly identify risks early and still ensure proper coverage.

Learn more about how to improve deal health and pipeline coverage even in a competitive market, or request a demo today.


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