Sales pipeline management is a critical B2B sales tool to maximise results.

According to research conducted by marketing automation business Hubspot & the US Sales Management Association, companies that train sales managers on pipeline management had 9% greater revenue growth than those that don’t. Here’s some tips for getting the most out of this essential tool. 
What is a sales pipeline?

Simply put, a sales pipeline is a systematic, visual representation of the steps in the sales process required to sell your product or service to your customer. Not only does the sales pipeline allow you to quickly see the status of each prospect, with the addition of weighted values for each stage (see below), you have at your disposal a powerful tool helping predict future revenue flows and analyse the health of your sales operations. The steps of the pipeline vary according to the nuances of your business, but should be no more than five – seven stages. At IRD we use Qualification, Meeting, Proposal, Negotiation and Close. We recommend the list maps against the key activities in your sales process that move a prospect towards a sale. Adding too many stages is considered counterproductive, providing little by way of beneficial data or actionable sales intelligence. 
 

Pipeline Weighting:

Considering the old adages, “what you can measure you can manage” and “sales is a numbers game”, the power of the pipeline is realised when weighting is applied. That is, each prospect is given a value based on where they are in the buying process. IRD’s model assumes that 10% of prospects at the Qualification stage, 30% at meeting stage and 60% at proposal stage will eventuate as a sale. These are your close ratios and should be determined following a review of your past performance data. Another typical model of close ratios might look like this:

– 10% Prospecting/Qualification 
– 20% Needs Analysis/Value Proposition 
– 30% Proposal Sent 
– 50% Identifying Additional Decision Makers 
– 60% Second Demo (Post Proposal) 
– 70% Negotiation / Review 
– 90% Proof of Concept 
– 100% Closed Won 
– 0% Closed Lost

Throw a couple more metrics into the mix, namely the average number days prospects spend at each pipeline stage (your sales velocity), average deal size and the number of deals in each pipeline stage, and you’re armed with a tool that can not only predict future revenue outcomes, but can identify bottlenecks in your sales process. The weighted pipeline highlights prospect gaps to meet your targets, and can show you where to dial up your sales prospecting or marketing activities. Try our Sales Pipeline Grader to see how healthy your pipeline is.

Sales Pipeline Management Tips:

1. Whether for use across a team or just as your own personal tool, it is essential you achieve buy in on the value the sales pipeline tool provides. Rather than being another big brother control tool in the sales management kit, it should be considered a living, breathing device that demonstrates which prospects and activities need prioritising. And like a canary in a coal mine, can provide advance warning when problems lie ahead and evasive action is required. A well-administered pipeline gives you an overview of all your open prospects so you are better equipped to recognise priorities and ensure you capitalise on the most promising prospects. 
 

2. To allow for consistency of forecasting, develop and agree upon clearly defined of parameters for each pipeline stage and get every rep in your team to manage and maintain their own pipeline report. The group pipeline is the sum of these parts. 
 

3. Review your conversion metrics once a quarter to keep the pipeline’s predicative capabilities in peak health. 
 

4. Encourage the team to be as honest as possible about which stage each prospect is at in the pipeline and the current status of close ratios. The more accurate you are, the more potent the pipeline becomes. You’re only kidding yourself if you fudge these inputs. You might have a healthy looking pipeline as a result, but it will have little bearing on real world revenue. 
 

5. Encourage the team to keep their pipeline report updated and to provide a weekly analysis to management, not only on anticipated revenue but also where leakage exists. Updating the pipeline live makes it less of a chore, allows for real time analysis and keeps the team motivated as they own their destiny. Using the pipeline tool to identify bottlenecks and leakage can also be a great way highlight where sales strategy changes are required and upskilling and training needed.

Hubspot/Sales Management Association research shows that companies that spend at least three hours per month talking with reps about their pipeline had an 11% revenue advantage over those that didn’t. What more needs to be said about the power of pipeline reporting and supporting pipeline management meetings. 

Ultimately, whether you are using a spreadsheet or a more complex sales CRM to drive your pipeline visualisation, if you pay constant attention to pipeline value, content and movement, you’re on the right track!