A sales pipeline is broken down in several stages between the initial contact and close. These stages represent each step that a sales rep needs to take between first engaging a lead and ultimately driving them to make a decision.
Simply having stages isn't enough to have an effective pipeline. Your stages need to be activity-based, which means each stage must have a clearly-defined set of sales activities that move a prospect forward in the pipeline. If your stages don't create momentum, it can lead to what's called a leaky pipeline, where prospects drop off without having explicitly come to any decision.
The stages for each product or service will be different, but the pipeline can be broken up into three parts:
- Prospecting. Sales reps should be spending the most time here, gathering as much data as possible to filter out all the leads who aren't a good fit. Stages can include: “lead gen,” “research,” and “qualify.”
- Engaging. These are the stages where you actually run through demos and send along educational materials that explain why your product is a good fit for your prospects. Stages can include, “schedule meeting,” “present sales deck,” and “show demo.”
- Closing. This is the stage where you ultimately propose a plan and finalize terms. Stages can include, “send over sales agreement,” and “negotiate.”
For highly technical products, the middle of your pipeline might be longer as you start with high-level explanations and then educate leads on the more nitty-gritty details of how your product works. For less technical products, you'll want to keep the pipeline as short as possible, with just a “qualifying” stage, a “meeting” stage, a “proposal” stage, and a close.
Traditionally, sales reps would fill their pipeline with as many leads as possible, and then close only 1-5% of those leads. Today, more sales teams are using a highly data-driven approach, spending time at the beginning of the process to pick only high-quality leads that have the highest probabilities of conversions. In this case, fewer leads move through the pipeline, but conversion is closer to 30-50%.
It's just as important to regularly empty your pipeline as it is to regularly fill it. Any time a prospect gets stuck—either because they're not replying to emails or because you're in an endless back-and-forth with them—you should re-evaluate your stages and the sales activities that keep momentum.
Perspectives on Sales Pipeline Stages
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