What is a Sales Pipeline?


what is a sales pipeline

If you’re unsure about the importance of a sales pipeline to boost profits, consider the following: Hubspot reports that a structured approach boosts a small business’s performance by 33 percent. 

Business owners who ask what a sales pipeline is should understand that it’s a visual representation of the entire process from lead generation to closing.   

What is a Sales Pipeline?

These visually represent the customer journey–from first contact to final sale. This is an excellent way of tracking individual sales prospects and deals. Small businesses have limited resources, so a streamlined pipeline optimizes their team efforts.

Sales pipelines are often confused with sales funnels. Though they’re similar, there are some key differences. If you’re wondering what is a sales funnel vs pipeline, a pipeline generally tracks individual deals, while a sales funnel gives a broader overview of the entire process.

The Key Components of a Sales Pipeline

Sales pipelines can track individual deals and their progress so teams can predict future profits. These look a bit different for each industry and business. But here are several components to know:

Sales Pipeline Stages Explained

There are some key stages prospects go through, such as negotiation, proposal, discovery, and closing. Each stage represents one milestone in a buyer’s journey through the sales pipelines.

The activities of a sales team include prospecting, cold calling for product demonstrations and proposals, and following up on leads. Specific metrics for measuring progress include conversion rates, win rates, and deal sizes.

These components interact together to manage the activity of a team and track their progress toward sales targets.

Here’s some information on each of the typical stages involved:

Lead Generation 

This part of the process is about generating potential leads interested in the service or product. Businesses need to utilize strategies like social media, content marketing, and networking. The end goal is to build a database of qualified leads.

Lead Qualification

It’s essential to use the BANT (budget, authority, need, timeline) criteria here to determine the quality of the leads. Conducting surveys and conversations is the best method to identify the best ones.

Need Analysis 

This is part of the process where you pin down the prospect’s challenges and requirements. In-depth discovery meetings are one method for gaining insights.

Proposal and Presentation  

The objective is to present compelling solutions that meet prospects’ needs. Developing a customized proposal is the best strategy for advancing the sales process.

Negotiation and Closing 

At this stage, the sales team can negotiate pricing, terms and contract details to close the sale.

Follow Up

Finally, making sure the customer is satisfied fosters repeat business through loyalty.

StageDescriptionKey ActivitiesEnd Goal
Lead GenerationThis part of the process is about generating potential leads interested in the service or product. Businesses need to utilize strategies like social media, content marketing, and networking. The end goal is to build a database of qualified leads.Utilizing social media, content marketing, and networking to build a lead database.Build a database of qualified leads.
Lead QualificationIt's essential to use the BANT (budget, authority, need, timeline) criteria here to determine the quality of the leads. Conducting surveys and conversations is the best method to identify the best ones.Using BANT criteria and conducting surveys/conversations for lead qualification.Identify the most promising leads.
Need AnalysisThis is part of the process where you pin down the prospect's challenges and requirements. In-depth discovery meetings are one method for gaining insights.Conducting in-depth discovery meetings to understand prospects' challenges and needs.Understand prospects' specific needs.
Proposal and PresentationThe objective is to present compelling solutions that meet prospects' needs. Developing a customized proposal is the best strategy for advancing the sales process.Developing and presenting customized proposals to meet prospects' needs.Advance the sales process with a tailored solution.
Negotiation and ClosingAt this stage, the sales team can negotiate pricing, terms and contract details to close the sale.Negotiating terms and details to close sales.Successfully close the sale.
Follow UpFinally, making sure the customer is satisfied fosters repeat business through loyalty.Maintaining customer satisfaction for loyalty and repeat business.Foster customer loyalty and repeat business.

The Role of the Sales Team in Managing the Sales Pipeline

The role of a sales team in managing the sales pipeline is pivotal to the success of a business’s revenue-generating efforts. The sales team is responsible for guiding potential leads through each stage of the pipeline, from initial contact to the final sale and beyond. Their expertise in understanding customer needs, presenting solutions, and closing deals is crucial for converting prospects into loyal customers. By actively managing the sales pipeline, the sales team ensures a steady flow of business, optimizes sales strategies and fosters long-term customer relationships.

Key responsibilities include:

  • Lead Generation: Identifying and attracting potential leads through various marketing strategies and tools.
  • Lead Qualification: Evaluating leads based on predefined criteria to ensure they have the potential to become customers.
  • Need Analysis: Engaging with prospects to understand their challenges, requirements, and preferences.
  • Proposal and Presentation: Crafting tailored proposals and presentations that address the specific needs of prospects.
  • Negotiation and Closing: Handling objections, negotiating terms, and closing deals efficiently to increase the conversion rate.
  • Follow-Up: Maintaining contact with customers post-sale to ensure satisfaction and encourage repeat business and referrals.

Best Practices for Sales Pipeline Management

Several steps are involved in successful sales pipeline management. Review the following sales tips to improve your processes.

Outline The Process  

Define every part of your sales process so you can find potential customers and decide on the actions needed to move them to the next stage.

Targeting Leads 

Quality over quantity is best. A lead scoring tool will help you find the ones most likely to convert.

Combining outbound and inbound marketing strategies will help ensure you have a steady flow of leads. Consider networking events, email campaigns, social media, and content marketing.

Maintaining a Pipeline 

Customer relationship management (CRM) and other sales pipeline management tools help you organize and automate the process. CRMs help you manage tasks and provide valuable insights into the sales funnel.

Look for patterns from successful deals and areas you need to improve by leveraging data analytics.  

Leveraging Technology to Enhance Your Sales Pipeline

Technology, in general, and CRM systems are excellent tools. They help to define how well your small business is doing.

  • You can get real-time updates on a sales pipeline with a CRM. 
  • CRMs are also an excellent place to store sales-related data, such as opportunities and customer interactions. 
  • These tools can also capture prospects from email inquiries, social media website forms, and other sources.
  • CRMs are excellent at logging sales activities like meetings, calls, and emails.

These tools often have features like document storage and shared calendars so your sales team can coordinate and communicate. Some even have built-in messaging.

Maintaining a Healthy Sales Pipeline

Tweaking your sales pipeline is essential so the sales department at your small business can grow. Identifying blockages is a good way of pinpointing where prospects drop off. By continually evaluating the sales pipeline, sales leaders can allocate resources and provide accurate sales forecasts.

Several methods are effective, including assessing the conversion rate at each stage in the process. A high-level overview can be obtained by looking at the overall conversion rate.

Sales managers can also compare their sales cycle to industry benchmarks and assess average deal sizes. 

FAQs: What is a Sales Pipeline

Here are some answers to frequently asked questions about how to build a sales pipeline.

How can sales reps contribute to a healthy sales pipeline?

Sales reps should consistently nurture different leads and upgrade CRM data.

What are some strategies to build a strong sales pipeline?

Improving sales processes can include engaging in nurturing activities and targeting lead-generation tactics.

How does understanding the sales cycle contribute to better sales pipeline management?

A deep understanding of the sales cycle enables teams to align their actions and strategies with all the different phases.

How can managers ensure teams are focusing on the right sales pipeline focuses?

Managers should adopt clear, measurable goals. They should also review key performance indicators regularly. 

How does refining the sales process enhance sales pipeline efficiency?

Refining the sales process streamlines all the activities. Bottlenecks are reduced, and leads are converted. This provides opportunities that are more manageable and predictable, and in the end, more deals close. 

Image: Envato Elements



Rob Starr Rob Starr is a staff writer for Small Business Trends and has been a member of the team for 7 years. He is a graduate of Ryerson University in Toronto with a Bachelor of Journalism degree. His print credentials include employment with various Toronto area newspapers and three works of fiction: The Apple Lady (2004), Creekwater (2006) and Sophistry By Degrees (2008) published by Stonegarden Press In California.