Sales Pipeline Management: Best Practices
Salespeople often obsess over growing a big, beautiful sales pipeline. “Fill pipeline with hot leads” or “fill pipeline with best-fit prospects” are recurrent tasks at the top of the to-do list. While well-intentioned, that often means salespeople will dedicate too much time to sales prospecting instead of thinking about how to get prospects to flow through the pipeline.
For that reason, pipeline management should be a necessity for salespeople. Unfortunately, that’s not the case for many, and pipeline management is often neglected or poorly executed, which could mean that your organization is leaving money on the table. In fact, a study referenced in Harvard Business Review found that three specific pipeline management practices were associated with higher revenue growth—28 percent higher revenue growth to be precise. That’s a pretty substantial difference!
So, to help you avoid leaving that money on the table, we’ll be walking you through pipeline management practices you need to be adhering to if you want to ensure that you’re doing all that you can to facilitate your salespeople hitting, and even exceeding, their quotas. Let's get into it!
What is sales pipeline management?
At Vainu, we conceptualize a sales pipeline as a map. A map that shows the journey that a salesperson will go on when making a sale. It clearly outlines the different stages of that journey and shows the salesperson where they are now, where they need to go next, and what they need to do to get there. Based on that definition, sales pipeline management is the act of overseeing, tracking, analyzing, and facilitating that journey.
Often salespeople will fall into the trap of forecasting when they should actually be managing—that’s something that you want to do your best to avoid.
In practice, that means the first step of the sales pipeline management process is primarily concerned with evaluation and asking questions. This includes asking questions like:
- Why are some opportunities moving to the next stage but others are not?
- What can we do on our end to make opportunities less likely to become stuck and more likely to advance to the next stage?
- Which initiatives are working well and which are working less well?
- Do we need to change anything in our process to improve the efficacy of our pipelines?
The goal of management is then to propose a hypothesis and suggest a course of action that could prove to be the solution to those problems. At the end of the day, that’s what management is all about—getting things to succeed. Speaking of getting things to succeed, let’s dive into the three management best practices you adopt to maximize the efficacy of your sales pipeline.
Best practice #1: Design the sales pipeline
It should almost go without saying that an important part of effective sales pipeline management is the design of the pipeline itself. The design includes, but is not limited to, how the pipeline’s stages are measured and how the structure of the pipeline actually works to improve the performance of salespeople. In fact, an 18 percent difference in revenue growth was found between companies that defined a formal sales process and companies that didn’t. So, if you still haven’t gotten around to formalizing your sales pipeline, this is a sign that it’s about time that you sat down and got it done.
In the same way we created a sales pipeline unique to Vainu, you should take the time to create a sales pipeline that is representative of your particular organization and the archetypal sales process that your salespeople experience. Make sure that your stages are clearly defined, distinct, and logically follow after each other—don’t leave anything up for interpretation! Maybe in the process you’ll spot a stage that your sales team is missing that could work to improve your performance, or perhaps it’s the complete opposite, and your sales pipeline has too many stages, which can’t accurately be measured, don’t drive the performance of your salespeople, and actually work to confuse your salespeople instead of helping them.
We keep our sales pipeline short but sweet, with us only distinguishing between steps that we believe indicate a significant development in the salesperson’s relationship with the prospect. In practice, it looks a little like this:
- Step 1: Prospecting
- Step 2: Outreach
- Step 3: First meeting (discovery)
- Step 4: Second meeting (demo)
- Step 5: Proposal
- Step 6: Offer
Best practice #2: Allocate time for pipeline management
Shockingly, actually spending time managing your sales pipeline is integral to its success. Who’d have thought? As a matter of fact, Harvard Business Review reported that companies that spent at least three hours per month managing their salespeople’s pipeline saw 11 percent greater revenue growth than those that spent fewer than three hours per month. The takeaway from this shouldn’t be that three hours is some magic number. The optimal amount of time to allocate to pipeline management might actually be somewhat unimportant—what matters more is how you spend the time.
Often salespeople will fall into the trap of forecasting when they should actually be managing—that’s something that you want to do your best to avoid. Don’t misunderstand, forecasting definitely has its time and place, but it should be separate from your pipeline management time. Don’t spend your pipeline management time talking about close dates, probabilities, or deal sizes. Instead, spend that time evaluating the quality of existing opportunities, discussing the overall health of your salespeople’s pipelines and what they can do to keep companies moving through the sales pipeline. That’s a major key to successful pipeline management.
Keep your sales opportunities moving through the pipeline
So, what can you do to attempt to keep your sales opportunities moving through the pipeline? Well, you should have your organization’s marketing material at your disposal, which means that you can communicate with your opportunities through your organization’s blogs and articles. Some pieces of content might even have been created for the express purpose of communicating your organization’s offering and outlining how it benefits customers. That information is probably something that your potential customers would find pretty instructive.
As mentioned earlier, instead of so much time being spent on forecasting and attempting to predict future events, time should be spent analyzing—finding out what’s working and what isn’t. If you want some insight into how you could go about analyzing the performance of your sales pipeline, check out our Mathematics for B2B Sales ebook. Besides helping you assess the performance of your pipeline, the ebook also introduces seven ways to improve your sales figures, as well as giving sales directors and team leaders some helpful tips on how to better coach their salespeople.
Best practice #3: Train your salespeople in pipeline management
Fun fact: 61 percent of executives don’t believe that their sales managers have been adequately trained in pipeline management. That’s a pretty dire statistic, but it does help to explain why sales teams might fall into the trap of not effectively managing their pipelines—they don’t know how. With it being found that companies that trained their sales managers in pipeline management experienced 9 percent faster revenue growth than those that didn’t, there is a good case for doing something about that.
It wouldn’t be very informative of me to simply tell you to “train your sales teams” and leave it at that. I mean, what exactly is it that you’re supposed to train them to do? So, here is the most important skill for your sales teams to be trained in, so that they are able to effectively assess and manage their salespeople’s pipeline.
Evaluating pipeline health
The health of your salespeople’s pipelines is ultimately going to be predictive of your financial success. For that reason, your sales managers, and the salespeople themselves, should possess the knowledge necessary to be able to critically evaluate the health of a pipeline. Don’t get the size of your pipeline confused with its health! Contrary to popular belief, bigger is not always better—at least not when it comes to sales pipelines.
According to Vantage Point Performance, there are three characteristics to focus on when assessing the health of a sales pipeline: size, shape, and content. These three characteristics are interlinked, so it is important that you consider them holistically.
As previously stated, bigger is not always better, and there is a pretty simple reason to believe this maxim when it comes to sales pipelines: a larger pipeline will mean that there is less time for a salesperson to focus on nurturing customers and closing the most desirable deals. Smaller pipelines are often associated with a higher concentration of high-quality prospects, as any “bad” cases have already been weeded out in the early stages of the pipeline. This means that the productiveness of each salesperson’s pipeline rises, as they aren’t wasting their time on cases that aren’t going to close.
When managing a sales pipeline, it is therefore important to discard this notion that a pipeline needs to be as big as possible, and instead start tailoring the ideal size of each pipeline to the individual salesperson, by taking into account their individual working capacity, and the shape and content of the pipeline.
Typically, when talking about a sales pipeline, the image that appears in most salespeople’s heads is that of a funnel. That might be because of the term sales funnel, which illustrates the sales processes in that way. However, that is just that—a descriptive illustration. It is not indicative of the shape that your pipeline should be, and it would be incorrect to see it as a foregone conclusion. Funnily enough, the ideal shape of a sales pipeline would be that of a pipe: perfect conversion and no waste.
The shape of your eventual pipeline will ultimately depend on your product, the industry you’re operating within, and the exact design of your pipeline. As a general rule of thumb, there tends to be a substantial drop-off in the early stages of our sales pipelines than the typical funnel model would suggest there should. You might think that this significant drop-off early is a problem, but I’m here to tell you that it is not—it’s actually a very good thing. Removing bad leads from your pipeline early means that you don’t get bogged down and continue spending time on them is a good thing. Sure, it might make the conversion rate of the early stages of your pipeline seem low, but trimming the fat early will mean you have more time and energy to make sure that your conversion rates in the later stages are higher, which is where a high conversion rate is the most important.
You’re likely familiar with the adage “quality over quantity”. Would it come as a surprise to you if I told you that it also applied to the contents of your sales pipeline? Ultimately, a big pipeline isn’t worth much if it’s packed with cases that aren’t aligned with your organization’s goals. What matters is that your pipeline is full of the right type of cases!
So, use your allocated three hours of pipeline management time as an opportunity to remove weak sales opportunities from your pipeline. Prioritization of your time and energy is a key component of effective sales pipeline management. It’s important to put on your realist-goggles and stop being driven by hopeless optimism. It’s often more productive to dump bad deals and free up the associated mental headspace so that you can go look for new and better opportunities.
Here at Vainu, we often talk about our ideal customer profile (ICP) customers. They’re the cases that we want to see in our pipelines, because they are the organizations that we can provide the most value for, which means that they are often associated with larger deal sizes and higher conversion rates. If you’ve yet to take the time to consider your ICP, you should read our Ideal Customer Profile article, which talks you through it. Or, if you just want some help better articulating your ICP, feel free to download our Ideal Customer Profile template.
By considering all three of these characteristics when evaluating the health of sales pipelines, rather than solely focusing on size, you’ll be able to develop a better and more comprehensive understanding of pipelines and thus be more informed when you come to making decisions about how to manage them.
Now that you’re aware of the considerations that you should be having when evaluating the state of your sales pipeline, it’s important to ask how you can influence the performance of your sales pipeline, and a big part of that is ensuring that your salespeople are doing the right things.
If you’re in the market for an easy way to keep track of your, or your team’s, sales activities, you should consider downloading our Sales Activity Tracking template and implementing it into your, or your salespeople’s, workflows. With this template, it’ll be easy for you to get an overview of the stages of the sales pipeline where the majority of time is being dedicated and identify areas for improvement. Maybe the reason that a salesperson isn’t hitting their sales quota is simply because they are spending a disproportionate amount of time on prospecting instead of pushing in-progress deals over the finish line? That’s an easy enough problem to fix, but you won’t know about it until you start tracking sales activities.