Pipeline Management Explained – 2023 Revised

Posted August 8, 2023

Understanding what works and what doesn't within the sales process can be complex for any sales team. But a strong understanding of your most and least effective activities is a critical part of predicting revenue and reaching targets.

To gain an accurate picture of progress and better manage performance, organizations need an efficient, predictable sales pipeline. Here, we’ll take a deep dive into pipeline management in sales, answering questions like: What is a sales pipeline Why is it valuable? How can you build one that can make a real impact?

What is a sales pipeline?

A sales pipeline is a powerful tool that enables you to visualize various potential customers as they move through different stages in the buyer’s journey. It's a highly organized means for tracking and managing sales activities, with details about each prospect, deal, and even money.

Sales pipelines are essential for uncovering key insights that drive efficiency, effectiveness, and, ultimately, your bottom line. And because salespeople already have a lot on their plates (e.g., prospecting, interacting with clients, preparing reports, closing deals, and more) they need instant, seamless visibility into granular details on buyer progress. If your sales management operation doesn't utilize a pipeline tool, you’re at risk of key information falling through the cracks.

We can’t discuss what a sales pipeline is without also diving into what it isn't, particularly because it's commonly confused with other sales terms.

A sales pipeline is not a sales funnel

Though the two are very similar and closely related, it’s important to note the distinctive qualities of each. A sales funnel revolves around leads, operates from the prospect’s perspective, and illustrates conversion rates at each stage of the sales process. The sales funnel acts as a general visualization for the overall lead qualification process, with many sales leads entering the wide top of the sales funnel, and very few making it to the bottom as actual customers.

A sales pipeline, on the other hand, centers around revenue opportunities, operates from the seller's perspective, and illustrates which sales activities are needed to meet quota or revenue targets. It visually demonstrates the stages of your sales process (like prospecting, needs analysis, proposal, negotiation, and closing) and the distribution of revenue opportunities across those stages.

A sales pipeline is not a sales forecast

A sales pipeline is not a sales forecast, but you need both to accurately predict future revenue, understand lead conversion ratios, and make smart decisions that improve your team's performance. Think of a sales forecast as just a small piece of your broader pipeline, which can be used to predict expected revenue in a given time period.

Precise forecasts are calculated when an opportunity reaches the fully qualified stage in your pipeline. They require reps to predict what deals will close often based on weighted percentages, categorizing deals, or the total number of sales they've committed to for a specific period of time. Some revenue teams leverage revenue intelligence software that helps them build these forecasts based on their sales pipeline. Those tools then help them identify where, exactly, they need to adjust the pipeline to hit their revenue goals.

In contrast, your sales pipeline should show all of your opportunities, giving you a clear view into everything from newly identified opportunities all the way through to opportunities that are ready to close. Whereas your pipeline helps you understand and strategize each step in the sales process, your forecast acts as a projection based upon more specific assumptions within that pipeline.

What is pipeline management? 

At the big picture level, a sales pipeline is the visual tool, illustrating how revenue opportunities are distributed across sales process stages. Sales pipeline management is the process of managing that tool through identifying and assessing deal quantity, quality, and maturity to ensure sellers have enough coverage to deliver on their goals.

Sales teams are in a position where they can’t just address current revenue needs, they must always think ahead to the next month, quarter, and year. Effective pipeline management looks at the complete picture and ensures that sales pipeline health and movement are such that teams can hit their number now and in future periods. 

Of course, sales pipeline health is not always sunshine and roses, which is why an excellent pipeline management strategy is so important. So, if something is going wrong, sales teams can take corrective action to fill coverage gaps and qualify deals to get back on track.

While there's no secret formula for managing a successful pipeline, there are a few tactics that can help:

Define metrics to evaluate progress 

You should set key metrics that help you consistently measure overall pipeline health and sales performance. These might include:

  1. Number of new leads per month
  2. Number of deals
  3. Sales pipeline value
  4. Average deal size
  5. Average sales velocity
  6. Sales win rates
  7. Probability to close
  8. Lead response time
  9. Quota attainment

The stages of the sales pipeline

Before you can benefit from the transparency and operational efficiency that a sales pipeline offers, you must first understand the stages it's comprised of. It's important to note that both the specific industry in which your organization operates and your unique business model can affect the actual stages.

Here, we'll take a look at some common stages that are often included in a sales pipeline:

1. Prospecting, or lead generation

Before customers can start buying your product and service to resolve their pain points, they need to first discover that it actually exists. In this stage, sellers identify and contact potential leads who fit the profile of an ideal buyer.

Prospecting often includes activities like sending outbound emailscold calling, messaging through LinkedIn, and other promotional activities. If your organization relies on inbound marketing techniques to generate leads, they might refer to this stage as lead generation.

Regardless of what you call it, this stage is crucial, as 82% of buyers say they're willing to accept meetings with sellers who proactively reach out. And since a company loses a portion of its customer base each year from gradual attrition, your team likely can't afford to ignore the benefit of attracting potential customers whom they can convert into buyers. Remember: acquiring more customers helps mitigate the risks of lost sales, so it works to your advantage to create a strong prospecting strategy.

2. Qualification

Not all prospects are viable in terms of becoming actual customers. Even if they fit the profile of your ideal buyer, it doesn't necessarily mean they're going to move forward in the sales pipeline. In fact, while 61% of B2B marketers send all direct leads to sales, only 21% of those leads will actually be qualified.

Without a qualification process, reps risk wasting valuable time chasing leads who can't or won't ever actually buy your product or service. Worse yet, they could end up buying a solution that doesn't solve their pain points, which causes issues in attrition and customer service in the long run.

Qualification is essential for distinguishing between hot and cold leads, so make sure your pipeline includes a research process that answers these questions for each prospect:

  1. Does the prospect have the appropriate budget for your product or service?
  2. Does your solution solve the prospect’s pain point?
  3. Does your prospect have the authority to make purchasing decisions regarding your product or service, or do they need buy-in from other stakeholders?
  4. Is the prospect ready to buy now?

By offering insightful resources to prospects (and determining if they're interested in learning more), sales reps can more accurately uncover truly qualified leads. Make sure your sellers are empowered with a strong strategy for handling objections, which can help warm up those initially cold leads.

3. Contact

This stage of the pipeline is pretty straightforward: once a rep has determined that a lead is qualified, they can reach out to actually engage with that prospect.

62% of buyers want to hear from sellers when they're actively looking for a solution to their problem. By contacting qualified prospects with a tailored message, sales reps can get ahead of their competition and nudge leads in the right direction. It's important that reps first research buyer pain points and build a strong case for how your product or service resolves those pain points, then contact the lead (whether by phone or email) while it's still hot.

4. Relationship building

Building meaningful relationships with customers is crucial for closing more deals and closing them faster. Strong relationships (created by a customer-centric approach) can help you sell 4 to 8% more than competitors who don't prioritize a high level of engagement.

Your customer relationship management strategy should ideally extend across the remaining stages of the pipeline, too, as building rapport and enhancing trust isn't a one-and-done kind of gig. Through effective listening, expertly-crafted content, sharing your company's mission, personalizing each interaction, and collecting and addressing feedback, reps can cultivate strong bonds that ultimately increase conversions.

5. Meeting, demo, sales call

Once a rep has established a relationship with a prospect, it's time for them to actually set up a meeting. This is where sellers present (and often demonstrate) your product or service in an effort to prove its value to the prospect.

58% of sales meetings are not valuable to buyers. That's a staggering (and scary) number, but there are best practices reps can follow to ensure success at this stage in the pipeline. Making a great impression and influencing buyer decisions in a positive way requires:

  • Focusing on the specific value that your product or service can provide to the buyer
  • Collaborating with the buyer to develop a mutual action plan (MAP) that takes their input into consideration
  • Educating the buyer with new perspectives and ideas
  • Understanding the unique challenges within the buyer’s market or industry

Conducting successful sales meetings can be time-consuming and burdensome for busy managers and reps. They must often spend the entire time scrambling to take accurate notes, which is distracting, error-prone, and challenging.

Modern sales organizations rely on virtual assistant tools that help improve their meetings without sacrificing rep productivity. These technologies provide conversation intelligence, real-time coaching, live transcription and notes, and actionable data, so sales teams can focus on the customer during meetings (and still have accurate notes for follow-ups).

6. Deal closing

Closing a deal requires more than just a handshake. You must first send a detailed proposal, which outlines how your product or service will address the buyer's needs, how the value of your offerings justifies their cost, and how your company offers a distinct advantage over competing vendors.

The customer will likely then negotiate these terms perhaps several times until you both come to an agreement on the scope of work, price, and managing expectations. This can sometimes be a complex, lengthy part of the sales pipeline, as both sides must be willing to compromise until they reach a mutually beneficial agreement. And since salespeople say that effectively resolving objections and driving consensus among various stakeholders are among their biggest challenges when closing deals, it’s paramount that your reps know how to successfully negotiate without crumbling.

Once these negotiations have been completed, it's time to (finally!) close the deal. For some businesses, this stage includes signing a contract, while others simply facilitate a transaction.

How to generate sales pipeline

There's no doubt that using a sales pipeline can empower teams to become more efficient and effective. But building a pipeline that's specific to your unique business needs, sales process, and customers can be daunting.

Here, we've outlined some basic steps to help you get started with building a sales pipeline that can help your team improve performance and drive more revenue:

Determine your ideal buyers

Start by identifying to whom you want to sell your product or service. You can develop your ideal customer profile (ICP) by studying direct competitors, which should help you understand the types of businesses and personas that might benefit from your solutions.

Make a comprehensive list of target companies and key decision-makers. This could be a pretty lengthy list, so use a tool to help you keep track of all the details (like company, contact information, and any interactions you may have with them). Some smaller companies choose simple tools, like spreadsheets, to manage this information, but it's important to note that this method doesn't offer the functionality needed for larger businesses or businesses that are looking to scale.

Other organizations rely on their CRM to track these details, as it centralizes, analyzes, and updates all of their information about prospects, leads, and clients. This is a much stronger option than, say, Excel, but it still leaves much to be desired as your company grows.

Competitive sales enterprises have started investing in sales execution solutions, which fill in the gaps left behind by their CRM. Sales execution platforms automate repetitive tasks, clean your data, and leverage machine learning, so managing and engaging the contacts in your pipeline is a breeze, no matter how quickly your business grows.

Define and set up stages

Reps are busy, and the stress of achieving their goals can lead to burnout and employee turnover. Your pipeline should take some of this burden off their shoulders by effectively measuring and managing all of the daily activities they need to execute to reach those goals.

To determine the stages in your pipeline, outline all of the daily activities your reps must complete. Be sure to highlight those that you believe have the most impact on your sales, then assign each activity to a stage in your sales cycle. The stages above can help guide you, but this should really reflect your business's specific sales process, so don't be afraid to make it work for you.

Traditional sales tools (like a CRM), can help with defining your stages, but they really don't offer all the necessary capabilities for total visibility and pipeline optimization. That's why more and more teams have implemented sales pipeline management tools, which make building your stages an easier, more effective task. Sales pipeline management software helps you visualize which activities provide the best outcomes and help you create a pipeline that makes your team more effective, productive, and profitable.

Refine your stages

Remember that your pipeline is a living, breathing tool, so it shouldn't be set in stone. Once it's up and running, you might notice that some activities or conversation types garner better results. This could mean that those activities or conversations should actually become an individual stage in your pipeline. Others might need to be removed if they're ineffective.

As you refine your stages, make sure that your team has a shared definition of each stage. It can help to use a roadmap for this, as it captures the customer journey and establishes a defined sales process for reps. Look for a roadmap that covers the following for each stage:

  1. Activities
  2. Time spent in stage
  3. Sales questions
  4. Exit criteria

If you use key insights to modify your pipeline over time, you can more accurately predict revenue moving forward. But this data can be difficult to string together if you use disparate systems, manual tools, or a basic system of record for managing your pipeline. This means issues are often missed, and you're always at risk for unexpected slippage and losses, especially as market conditions shift.

Some businesses are instead leveraging more robust tools that provide a single view of pipeline health and buyer engagement signals, so they can easily build accurate forecasts. What's more, these systems include warning signals that help teams fix pipeline issues even before they show up on a forecast. That means you can proactively tweak and resolve problems before it's too late.

What about sales pipeline management software? 

Sales leaders today must run a predictable revenue organization that removes pipeline uncertainty for maximum forecast accuracy. To do so, you need to implement the right tools for support. Advanced sales pipeline management software seamlessly tracks each activity in your sales process and determines how they influence your pipeline and impact attribution. That way, you can identify which activities are actually moving the needle in terms of revenue.

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 identify risks early and still ensure proper coverage quickly.

Want to know how your team can create more pipeline and close more of it — no matter the market? Watch our on-demand demo video, or download our latest ebook for AEs to learn:

  • New buyer preferences and how sales teams can adapt.
  • How sales teams can gain efficiency to prioritize meaningful activities that serve prospects
  • How sales teams align with buyers and stay ahead of risks to successfully close more deals.


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