7 Stages Of Sales Pipeline: Benefits & How To Build One

Closing Deals / November 15, 2022 / Admin

A good sales pipeline is key to a successful small or medium-sized business. Unfortunately, not many businesses understand different sales pipeline stages and how to go about building one. Without a structured sales process, it may be difficult for businesses to track their progress and make strategic decisions. To overcome this problem, companies must develop and review their sales pipelines. Analyzing your sales pipeline will help you identify any weaknesses or bottlenecks so that informal adjustments can be made.

A sales pipeline gives you a visual representation of your sales process from start to finish. It outlines the steps your team needs to take in order to close a sale, and it allows you to track your progress along the way.

The purpose of this article is to describe what a sales pipeline is, the stages that it goes through, some of its benefits, and explain how to create one.

What Is a Sales Pipeline?

A sales pipeline is essentially the structure of the path that a potential sale goes through, from the initial contact to closing. It can include stages such as researching leads, conducting demos or evaluations, negotiating deals, and obtaining customer feedback. 

Many companies use a visual representation of their sales pipeline, often as a graph or diagram, to track progress and identify any potential issues.By monitoring the health of the sales pipeline, businesses can ensure they have a steady flow of deals in the pipeline at various stages, increasing their chances of hitting sales goals. 

Additionally, examining the sales pipeline can provide insights into improvements that could be made in the sales process. Keep in mind that an effective sales pipeline will help you maximize your sales efforts and manage your sales effectively.

What Are the Benefits of a Sales Pipeline?

Having a sales pipeline can greatly benefit your business by providing clarity and structure to the sales process. It helps identify and prioritize leads, track progress, and forecast future sales.  

Some benefits of a sales pipeline include:

  • Organize your leads: By creating a clear, organized system, a sales pipeline can track all of your leads from initial contact to closing the deal. This allows your team to prioritize important leads and follow up at the right time, reducing lost opportunities.
  • Improves communication within your business: A sales pipeline gives transparency among team members, ensuring a consistent approach for each lead and minimizing confusion or duplication of effort.
  • Provides valuable insights: Data gleaned from the pipeline can provide valuable insights into your sales process, identifying patterns and helping you make informed decisions about future strategies.

A sales pipeline also allows managers to assign tasks and track team progress, ensuring that sales activities align with company goals. With a sales pipeline in place, all members of the sales team have visibility into their responsibilities and can work collaboratively to close deals more effectively. 

Overall, having a sales pipeline can lead to improved productivity and increased revenue for a business.

7 Sales Pipeline Stages Explained

Graphic shows a pipeline with 7 stages, with colours ranging from bright yellow to dark orange. Title reads: "Sales Pipeline Stages & How to Create One".

Let’s get started on the seven sales pipeline stages

1. Prospecting

In sales, “prospecting” refers to the process of identifying and pursuing potential clients. 

This first step in a pipeline strategy helps to ensure that resources are focused on qualified leads rather than wasting time on ill-fitting prospects. One way to implement a prospecting strategy is through market research, studying demographics, and learning about target customers’ needs and pain points.

2. Qualifying Leads

Qualifying leads entails assessing potential customers’ interest levels and determining if they fit the target audience.

That allows sales teams to focus their efforts and resources on high-quality leads with a higher chance of converting into actual sales. Qualifying leads can be done through a variety of techniques, such as asking qualifying questions during initial conversations or analyzing data from previous interactions with the prospect.

3. First Contact

After identifying and qualifying potential customers, it’s time to reach out and make initial contact. The goal at this stage is to introduce the company and build rapport with the prospect.

That can be done in various ways, such as introductory phone calls, email, or personal meetings. However, it’s important to keep in mind that this initial contact should be focused on building relationships, and not sales-oriented.

4. Proposals

The fourth sales pipeline stage is when the team creates a formal proposal for the potential client. This document should outline the proposed solution and the associated costs in detail.

It’s important to have a clear and concise proposal that outlines all key points, such as what is included in the price, delivery timelines, and terms and conditions. The proposal should also address any objections the prospect may have raised during the pitch stage.

Proposing solutions helps move potential clients closer to making a purchase decision, giving them a clear picture of how partnering with your company can benefit them.

5. Negotiation or Analysis

Negotiation is the fifth stage of a sales pipeline strategy. This stage involves finding common ground with the potential client while advocating for your interests. 

That can be done by understanding your potential clients’ needs and concerns, identifying trade-offs, and making persuasive arguments.  Negotiation helps reach a mutually beneficial agreement and increases the chances of closing a sale. It also sets the foundation for a positive long-term relationship with the customer.

6. Opportunity Won

The sixth stage of the sales pipeline is “Opportunity won,” which means that an agreement has been reached with the prospect and the sale is complete. This stage can be implemented by properly tracking all communication with the prospect and ensuring they are ready to make a purchasing decision before marking them as “won.” 

The ability to track opportunities that have been won helps sales teams gauge their success and measure their sales performance. In addition, it allows sales teams to shift their focus toward new potential prospects rather than spending too much time and effort on deals that have already been closed.

7. Post-purchase and Follow-up

When it comes to sales pipeline management, it’s not enough to focus only on the initial prospecting and closing stages.

It’s also important to pay attention to the post-purchase stage and follow up with customers. That means addressing any concerns or issues they may have after their purchase and staying in touch with them for future sales opportunities. 

That can be implemented by creating a system for tracking post-purchase communication and setting aside time for regular client check-ins.

How to Create a Sales Pipeline?

Now that you know the different stages of a sales pipeline, you may be wondering how to create one. To help you, we’ve put together a step-by-step guide on how to create a sales pipeline.

Create a prospect’s profile

To start your sales pipeline, the first step is creating profiles for your ideal prospects. 

Start by identifying your target market and then creating buyer personas. To make things easier, you can add your prospects’ profiles to a CRM app like Daylite. With Daylite, you can create, manage, and edit new and old contacts, as well as send prospecting emails directly from your Apple Mail app.

Using Daylite, you can create, edit, and manage prospects. 

Identify the sales pipeline stages

Once you have a list of potential clients, you need to identify which stage of the sales pipeline they are in. Remember, no two customers are the same, so it’s important to tailor your sales pitch to each client’s specific needs. If you have a larger sales team, you may want to designate certain team members to focus on each stage of the sales pipeline. 

Whether  sending out a newsletter, picking up the phone to make a call, or scheduling a meeting, each stage of the sales pipeline requires its unique set of activities. 

The goal of the sales pipeline is to move customers through each stage until they reach the point of purchase. By understanding your customers’ needs at each stage, you can more effectively market your product or service and close more sales.

Structured and visual teamwork comes in handy here, so everyone stays on the line of what’s happening. Consider using a tool such as Daylite, which has a visual sales pipeline and helps track your sales activities.

Daylite’s Opportunities Board helps you and your team stay on track by creating fully customizable sales pipelines.

Constantly review your sales cycle

There are several stages in the sales pipeline, and customers progress through them at different speeds. It’s important to constantly review your sales pipeline and adjust your sales activities accordingly.

Think about it from the client’s perspective. What are their needs at each stage of the sales pipeline? How can you more effectively address those needs and move them to the next stage?

For example, if you have a new offering, you may need to add a new stage to your sales pipeline to account for demonstration and training. On the other hand, if you’re no longer selling to a certain customer segment, you may need to remove a stage from your sales pipeline.

Update sales stages accordingly

Once you have reviewed your sales pipeline, it’s time to update the stages of your sales cycle. Depending on the needs of your business, you may want to add, remove, or rename certain stages. 

Daylite allows you to easily add or update stages to your sales pipeline.

It’s also important to keep your sales team up-to-date on any changes to the sales pipeline. By clearly communicating the changes, you can ensure everyone is on the same page and working towards the same goal.

Sales Pipeline Stages FAQs

Now that you know the basics of a sales pipeline, let’s answer some common questions about sales pipeline stages.

How long should a sales cycle be? 

The length of a sales cycle will vary depending on the product or service being sold. For example, the process of a realtor selling a house can take months, whereas upselling an existing customer takes only a few days.

What are some key metrics to track in my pipeline?

There are a few key metrics that you should keep track of within your pipeline:

  • How many new opportunities you get per week
  • How many new deals have been closed
  • Win rate percentage
  • The reasons for deals being lost
  • Ratio of Leads to Sales Qualified Leads
  • Number of days in stage
  • Estimate value in each sale

What are the challenges of managing a sales pipeline? 

One of the challenges of managing a sales pipeline is keeping track of the progress of each sale and making sure that no opportunities are slipping through the cracks. A good plan and the correct tools will help you with that.

How can I improve my sales pipeline?

There are a few things you can do to improve your sales pipeline:

  • Make sure you have a clear understanding of your target market and ideal prospects
  • Create buyer personas for your ideal prospects
  • Keep track of the progress of each sale
  • Use the right tools like Daylite to help you manage your sales pipeline
  • Constantly review and adjust your sales activities as needed

Wrapping Up

A sales pipeline is an essential tool for any business. By understanding the different stages of a sales pipeline and what to expect during each stage, you can better manage your sales process and increase your chances of making a sale. 

When creating a sales pipeline, it’s important to consider the needs of your business and your sales team and use the right tools. 

There is no one-size-fits-all solution, so it’s important to find a system that works for you. If you’re not yet using a sales pipeline in your business, now is the time to start. Pipelines help businesses stay organized and focused on their goals. Implementing a sales pipeline can help you close more deals and grow your business, so why not give it a try?

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