Understanding where your next client is coming from is important for consistency, cash flow and ultimately the success of your business. Many businesses use a sales pipeline to visualise potential incoming clients, and by doing so successfully they can create a consistent flow of new business. But what is a sales pipeline and what does it mean for your business? This article will answer that very question by looking at the following areas:
- What is a sales pipeline?
- What is a sales funnel?
- Why is the sales process important?
- What are the pipeline’s stages?
- How to create your own sales pipeline
What is a sales pipeline?
A sales pipeline is a visualisation of how your potential clients become customers. The pipeline includes several stages that a prospect (a potential client) would have to go through before they become a client (which is usually the last stage).
If you are a B2B business, the pipeline may apply more to your sales process than for a B2C business, who respond to market demand (the need for products in a certain sector). It will likely apply to your business if you have to pitch for business, or if you find yourself doing outbound calling to gain prospects.
So when identifying sales opportunities, you would include them in your sales pipeline and move them through each stage (we will come onto what those stages look like later). The goal with a sales pipeline is to move your potential customers through it to the end stage, a sale. Some prospects may skip stages depending on how familiar they are with your services or company. Alternatively, if the opportunity falls through, they will disappear from the pipeline.
A CRM (customer relationship management) system such as Hubspot allows you to plot the stages that apply to your business. You can then enter the details of your prospects so that you can fully visualise all the stages of the pipeline. This makes all current and future customer details visible on one page, so you can better understand the flow of new business coming in.
What is a sales funnel?
A sales pipeline differs from what is called the sales funnel. Many businesses use the funnel to describe the way they attract and then convert potential customers, by using marketing and inbound sales methods. The traditional funnel typically takes the form of the following stages:
Attract > Consideration > Conversion > Sale
It’s called a funnel because at the first stage there are likely to be more prospects coming in and, as they move through the stages, these will diminish, narrowing down like a funnel. Some might get this confused with the pipeline, as the same principle applies in that there will be more prospects in the earlier stages.
Why is the sales process important?
If you are a business, such as a freelance writer, an accountant or perhaps an SEO consultant, you need to know where your next contract and client will come from. This is key to ensuring a consistent flow of income.
If you are going to be forecasting for financial planning purposes or for your business plan then creating a pipeline will be helpful. It will aid your understanding of where your business will be coming from and how much money could be coming in if you win or lose certain contracts.
What are the sales pipeline stages?
Every business is different and so the stages of bringing in a new customer will change depending on your business’ needs. Your prospects might find you first by contacting you, or you might be reaching out via email or phone to businesses that you could work with. Here are the typical stages of a sales pipeline, in order, that would apply to many companies:
A lead is a prospective business or potential customer that seems to fit what you’re looking to work with, but you haven’t contacted them yet.
You’ve spoken to the prospect (either they contacted you, or you found them) and there seems to be an opportunity for you to work with them.
This is where you find out more information to decide whether the prospect and your business will be a good fit. Some things you’ll want to determine are:
- Do they have the budget for your services?
- Are you talking to the correct person at the company, or does someone else have the final say in who they work with?
- Do they have a need for your services?
- Do they have a timeline for needing your services, or would they just like to get round to it ‘at some point’?
If you get the right answers to these questions, you can move the prospect to ‘Qualified’ now that you’ve made sure they fit the criteria. If they aren’t qualified then move on, or come back to them at a better time for them. This means your time will be spent on customers that are likely to go to sale.
This stage is where you pull together a proposal for the customer about how you can help them with your services, including a price and timeline. You might have to pitch this to them or you could simply send it.
This is whether they accepted your proposal or not and if you won or lost their business. You can always come back to the ‘lost’ prospects at a later date or amend your proposal accordingly to try to win them.
How to create your own sales pipeline
To build your own pipeline, you need to identify the stages that a customer would go through before deciding to work with you. You can use the above steps to start you off, but consider things such as if education is needed to better understand your product, or what information you need to gather from them before you make a proposal.
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