Now that we’ve established what a basic sales pipeline should look like, it’s time to build and customize one for your business.
Your sales pipeline will likely follow a similar flow, but could include some additional steps unique to your company type.
The actions and activities taken by your sales reps determine the specific flow of your pipeline. Here’s what information you’ll need to maximize your pipeline’s effectiveness.
Organize your leads:
At the top of your sales funnel you’ll (hopefully!) have a large volume of leads. Before the digital era, sales leaders might have organized these leads in a rolodex. But software has largely replaced the rolodex — and made it about 1000x more efficient.
You’ll want to store the same details for each of your digital leads that their business card in your rolodex might have contained — name, contact info, company type at a minimum. You might also consider adding notes around how the lead found you, what stage in the pipeline they’re in, if you have a past history with them, and more.
This information can be organized into a spreadsheet if you’re working with a smaller list, and in fact Airtable provides a pretty darn effective template for free.
However, sometimes data can become so expansive that a spreadsheet is no longer sufficient. Or, you just might not be a “spreadsheet person.” If that’s the case, we recommend using a CRM (Customer Relationship Manager) to keep yourself organized.
CRMs are a great way to automate your sales pipeline as well as sync prospect information. We’ll touch on CRMs more in depth later in this chapter.
Outline the buyer’s journey:
When outlining the buyer’s journey of your typical customer, first look at entry and exit points. Where are customers making initial contact with you? When and where do your leads turn cold?
You can also look at the buyer journey in terms of timing. When are prospects open to contacts from your sales rep? When are your prospects ready to buy? How long is it taking them to move from stage to stage to stage.
You can use these stages to define the ones in your pipeline, as well as build the actions your reps should take in response to each customer action.
Outline sales activities for each stage in the buyer’s journey:
When outlining your buyer’s journey it may be beneficial to take note of what your prospects react best to. What form of outreach has the most success and which channels draw in the most prospects?
Use this information to guide your sales activities. If you notice that cold emailing is producing the most qualified leads, incorporate this activity into a particular stage in your pipeline.
Eventually you’ll want to turn this analysis into a standard playbook or sequence of sales activities per customer profile that your team can replicate over and over again when a lead matches that particular profile.
Determine the number of stages in your pipeline:
The pipeline we described contains seven stages. Although we don’t recommend excluding any of the stages listed, your pipeline can definitely contain more steps.
If your product involves a fairly complex or longer sales cycle, you may want to consider a demo or trial stage, for example. Not only does a demo or trial bridge make your customer more informed about your product or service, but your level of effort catering to their needs may be the push that makes them choose you.
Reverse-engineer your lead generation needs:
At the end of this exercise, you should have a pretty good idea of the number of leads you need at each stage of your pipeline to reach your revenue goals.
It’s important to determine at least a hypothesis of these numbers before beginning your sales activities, so that you’ll be able to benchmark and project your success even before you start actually closing deals. Keep these goals in mind so that you can identify particular stages of weakness or strength and that your resources are used efficiently.
Let’s walk through an example.
Let’s say your target quarterly revenue is $300,000.
Number of Deals Needed
Take this value and divide it by the average value of each deal. Let’s say your average deal value is $4,000. ($300,000 ÷ $4,000 = 75). This number (75) is the number of deals your team needs to close each quarter to reach that revenue amount.
SQL Conversion Rate
Next, take into account the conversion rate at each stage in your sales pipeline. To keep things simple, let’s assume that 50% of SQLs who receive your offer end up closing. This means you need to be making 75 ÷ 0.5 offers, or 150 offers per quarter.
SQL to Offer Rate
Going one step further up the pipeline, let’s say that you only end up making offers to 50% of SQLs. So you need 150 ÷ 0.5, or 300 SQLs per quarter.
MQL to SQL Conversion Rate
Let’s also say that 50% of MQLs convert to SQLs. That would mean 300 ÷ 0.5 or 600 MQLs per quarter.
Lead to MQL Rate
And finally, let’s say 10% of leads you reach out to become MQLs. If that’s the case, you’d need 600 ÷ 0.1, or 6,000 leads per quarter to reach your $300,000 revenue target.
The key thing to note here is that it’s generally much easier to increase your conversion rates incrementally at each stage of the sales pipeline than it is to radically increase the volume of leads at the top of your sales funnel.
Taking a hard look at where you can be more effective with leads who are already in your pipeline is at least as important as trying to grow the number of leads at the top of your funnel (see “Managing Your Pipeline”).