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What Are Sales Pipelines and How Do You Build One?

Posted in:  Sales and Marketing Management

When many people think of sales, they often picture the sell and the close. However, to truly be successful in the sales arena, you need to take a universal look at the process from start to finish. What steps are taken to take a buyer from prospect to loyal customer? To maximise sales, it’s essential to analyse this journey through what’s called a sales pipeline.

In this article, we’ll explain in detail just what a sales pipeline is, how it works, and what it can do for your company’s bottom line.

What Is a Sales Pipeline?

A sales pipeline is a visual representation of where your prospects are in the sales process. Picture a pipeline as a flowing river – any blockages or pollution in one part of the stream will eventually translate into issues for other parts. They can give an overview of a forecast for a sales rep, or show how close a rep or even a team is to reaching their sales quota.

A sales pipeline takes a holistic approach to sales. No piece of the process is independent from any other – they are all interconnected and flow together. Using a sales pipeline, you can get a good idea of how much your sales team may close within a given period of time, be it weekly, quarterly, monthly, or quarterly.

Sales Funnel vs Sales Pipeline

Some people equate a sales pipeline with a sales funnel, but these are two different things. A sales funnel is focused on the journey of the prospect from potential to customer – it ends when a potential customer is sold. A sales pipeline is used to follow all stages of the sales process from start to finish, including post-purchase. It is more comprehensive than the funnel.

What Are Good Sales Pipelines?

Let’s take a look at what makes a good sales pipeline. We’ll identify who should set up and review it, review the stages, and discuss how a good sales pipeline can benefit a business.

Who Should Set Up a Sales Pipeline?

Typically the sales pipeline is set up by the sales manager. However, it is imperative to include the entire sales team in the process. The pipeline is built and maintained for their benefit, and it just makes sense that they should be closely involved.

Flexibility is a quality that should be incorporated into your sales pipeline. Gather input from your sales team, and be ready to incorporate any new suggestions from your reps.

What Are the Stages of a Sales Pipeline?

  • Stage One: Prospecting. This includes advertising and marketing to inform potential consumers, as well as showcase your product. Knowing your customer is key here.
  • Stage Two: Lead Qualification. This step is used to determine if your lead is the ideal buyer for your product. Do they have the authority, need, and budget to buy? If so, the lead is hot. If not, the lead is cold and can be set aside for the time to focus on the hot leads.
  • Stage Three: Demo or Sales Call. This is simply when a sales rep makes first contact with a lead. This can be done via email, the phone, or even social media.
  • Stage Four: Proposal. This is the “sale” piece, when the proposal is made by the sales rep. Cost is provided, as well as advantages of their product over the competition.
  • Stage Five: Negotiation and Customer Commitment. This is straightforward – it’s simply offering negotiations (if possible) and getting the customer to agree to purchase.
  • Stage Six: Signing the Contract. Physical commitment – signing a contract, or payment.
  • Stage Seven: Post Purchase. It’s not just enough to make a sale, you want to build brand loyalty. This can be done by offering special offers to repeat customers, or offering content that your customers find valuable.

What Does Pipeline Mean in Business?

Creating and maintaining a sales pipeline means greater revenue for your business. Analytical tools are one of the most valuable resources in sales, and a pipeline allows you a bird’s eye view of the entire process.

A sales team using a pipeline, with a knowledgeable leader managing it, has a distinct advantage over a team that tries to sell without one.

How Do You Create a Pipeline for Your Organisation?

Given that a sales pipeline is an indispensable tool for creating revenue for your business, how do you go about setting one up? There are several simple steps that you can follow to ensure that your sales pipeline captures every lead.

1.) Identify both your customers and your pipeline stages

First, you’ll want to create a picture of your ideal buyer, or your ideal customer profile (ICP). Depending on your company, you may have just one, or you may have several. When you’ve created a detailed vision of this customer, think about their journey through the sales stages. They should adhere pretty closely to the stages we named earlier, but time and approach may vary based on consumer type and sales rep. Really take the time to get a clear picture, or the sales pipeline won’t be as effective as it can be.

2.) Identify activities for each stage

The stages as a whole are fairly basic, and you’ll want to personalise them to your own sales approach. For example, prospecting can be cold calls or targeted internet ads, or even attending industry events for face-to-face sales. Sit down with your team and ID how you define each stage so that everyone is on the same page.

3.) Decide on a length of time for each stage of the pipeline, as well as the pipeline as a whole

An average sales cycle length is the period of time that passes from first contact with a prospect to closing the deal. Measure an ideal length of time (based on both past experience and future goals) for each stage. This will help you to understand when certain areas of the sales process are problematic or need help.

4.) Identify the ideal size of your pipeline

Sit down and create the ideal size for your pipeline. Use your target revenue (monthly or quarterly, however you decide to define it) and then divide that number by the price of your average deal. This determines how many deals you’ll need to close to reach your revenue goal.

Finally, divide your number of deals by the average conversion rates for each stage. This will tell you how many prospects (you won’t convert them all), are required to get you to your financial goal.

5.) Decide on which performance measures to use

There are a large variety of performance measures to follow – which you track comes down to which are most useful for your company. These include things like the number of leads, number of sales, pipeline velocity, conversion rate, sales length cycle per rep, etc.

Deals in the Pipeline: This is simply the number of sales available in the pipeline. These are the opportunities available to the sales reps.

Conversion rate: This is the number of leads that have become sales. This is calculated by dividing the number of sales made by the total number of leads in the pipeline. Looking at this number can identify whether the sales rep is simply finding leads, or making sales.

Sales length cycle: How long does a sales rep need to run a prospect through each stage? And how long is a prospect in the pipeline?

Pipeline value: This is the amount of money available in the pipeline from sales.

What Tools Do You Need to Build and Maintain a Pipeline?

There is no point in using a sales pipeline if you aren’t monitoring the health and quality of the pipeline moving forward. Revisit the pipeline frequently, and avoid the following mistakes when maintaining it.

Avoid common mistakes

  • Don’t let the sales cycle go too long. Streamline and cut time where it’s feasible
  • Don’t undershoot the number of leads needed – this allows the pipeline to dry up
  • Don’t leave sales reps on their own – coordinate!
  • Don’t underestimate or overestimate your lead. Check for understanding before moving to the next stage
  • Don’t hyperfocus on one stage at the expense of the others

Clear communication

Make sure that you talk to your team at every stage of the process. There’s no point in having a perfect sales pipeline if you aren’t working it together.

Regular follow up

In most cases, each prospect requires several follow-ups before a deal is finally closed. And even then you want to continue to follow up to create not just a one-time buyer, but a loyal customer.


The most efficient way to manage your sales pipeline is to use sales engagement tools and automated data entry to track and file your leads and sales. Don’t waste valuable planning and selling time doing this work by hand. There are too many quality products on the market to neglect using software for the grunt work.


In sales, the ideal is not just to barely reach a sales quota. You want to exceed your number, and steadily grow over time. Using a sales pipeline can be the difference between the status quo and a really dynamic and successful sales team.