New to building and managing a sales pipeline or need to brush up on why it is important?
You’re in the right place.
Here, we’ll introduce to you what a sales pipeline is, which sales metrics to measure, why a well-managed pipeline is critical for your company’s bottom line, and how to coach your reps to enter accurate data into your CRM.
(For even more detailed information on pipeline management, check out our FREE eBook: The Definitive Guide to Pipeline Management.)
What is a Sales Pipeline?
A sales pipeline is a systematic way of measuring all the current opportunities your sales team is working on. Opportunities flow in to your pipeline via marketing, outbound sales, channel partners, and referrals. These opportunities are nurtured by your sales reps and progress through your pipeline from stage to stage. Pipeline stages are structured uniquely depending on the company. In order to guarantee consistency across your whole team, you must have well-defined sales stages, clear criteria for what those stages are, and a consistent process for how a lead or opportunity moves from one stage to the next. (We recommend putting this information into a sales playbook accessible to your reps at all times.) Opportunities flow out of your pipeline by either winning – turning into deals – or losing.
Measuring your sales pipeline means noting every single interaction your reps have with every opportunity in your CRM software. Keep track of:
Number of opportunities in the current pipeline
Average opportunity size (average dollar value of opps that have historically closed-won)
Average opportunity age (average amount of time an opp spends in your pipeline before it close-wins)
Lead-to-conversion ratio (average percentage of opps that close-win, based on historical data)
Sales pipeline metrics are sometimes presented in spreadsheet form, but sales managers tend to have a hard time analyzing the data in this form. Many businesses are investing in pipeline management software (like InsightSquared) to evaluate pipeline data in seconds rather than hours.[contentblock id=93 img=gcb.png]
Why do we need a sales pipeline?
The sales pipeline is the best indicator of a company’s health. Data-driven sales pipeline management and analysis is critical to the long-term success of small- to medium-sized businesses. It…
Makes it easier for sales managers to review and manage open opportunities. Tracking your deals is so much easier when your reps record sales activities in a concrete and systematic way. As time passes, your team will build a pipeline history record, which tracks all the opportunities your sales force has pursued. Study your pipeline history to see how it trends over time. Your pipeline history report will provide a more accurate look at what size and age your typical winning opportunities are, as well as the number of open opportunities necessary for your team to hit its goals. If you manage the pipeline well, you will stay organized and feel more in control of your sales figures.
Improves forecast accuracy. Your team’s sales pipeline features all of your reps’ opportunities at once. Armed with your pipeline history report by team and by individual rep, you can analyze the 4 key forecasting metrics that will impact the accuracy of your sales forecasts most. As your pipeline data grows, your forecasts will be more and more accurate.
Allows your reps to track their own opportunities so they can take ownership of their sales performance. Reps will not know how they are doing in comparison to the rest of the team without a sales pipeline. If you coach your reps to keep clean data and manage the pipeline well, they will stay organized and can focus more time on strategic issues.
How can I get my reps to enter pipeline data consistently and accurately?
You are ultimately responsible for the overall health of the data your sales reps enter into your CRM. It should be a no-brainer: you cannot get quality, actionable data if the data is inaccurate. Garbage in, garbage out.
If your reps are accustomed to a low level of data integrity, it can be difficult to get them to adhere to a new standard. The trick is to keep them accountable for reliable data entry. Start by holding weekly one-on-one sessions with each of your reps to go over their individual performance using data from their CRM. By spending a lot of time using data analysis in individual meetings, you will emphasize the importance of accurate data entry.[contentblock id=18 img=html.png]