The Importance of a Sales Pipeline

As a business owner, it’s likely you’ll understand the concept of a sales pipeline, but how important is it? How healthy is your sales pipeline? Does your sales pipeline affect your ability to succeed? In this blog post we’ll explain how important a sales pipeline really is…sales pipeline

Before we delve into how important a sales pipeline is, we need to understand what a sales pipeline is.

So, what is a sales pipeline?

A sales pipeline is many things. It’s a visual representation of your sales process, monitoring and measuring the individual steps your sales team take from initial contact with a potential customer, to qualifying it into an opportunity, through to the final sale. It shows the potential sales your business could convert. It’s a list that details of the stage of each deal and it is a measurement of your success, and therefore, the best indicator of your company’s health.

Your sales pipeline should contain the following information:

  • The overall number of deals in your pipeline
  • The size of each deal
  • The stage of each deal
  • Weighted value

Why is it important?

We would all love it for a prospect to approach us and make a purchase instantly. However, usually it takes a little longer. We often need to nurture a lead, educate them in how our product or service can help them – This is where the sales pipeline comes in.

  • By adding a prospect or lead to your sales pipeline, you can track each stage and begin to understand how long it take to close a sale.
  • Tracking your sales performance will enable you to be proactive rather than reactive to fluctuations in sales. It’ll also highlight potential issues allowing you to address them in order to increase your sales performance.
  • It helps you manage the health of your business. For example, if you’ve got deals in the pipeline this month rather than the five needed to hit your company average, you instantly know that you’ve got to find three more new opportunities to maintain a consistent level of business.
  • You can monitor the progress you’re making and see positive results, such as when the average size of your deals in your pipeline increase.
  • By managing your sales pipeline effectively you can optimise your sales process. Your sales pipeline should have no more than 5-6 steps:
    1. Step 1: Initial contact
    2. Step 2: Qualification
    3. Step 3: Meeting
    4. Step 4: Proposal
    5. Step 5: Close

Through your sales pipeline you can measure the success of your sales team and monitor targets. You can then give credit where it’s due and review your sales strategy depending on what’s in the pipeline.

However…

A study conducted by Vantage Point Performance and the Sales Management Association revealed that 44% of executives think their business is ineffective at managing their sales pipeline.

What’s important to note, is that an ineffective sales pipeline could result in missed opportunities, wasted man hours, a disengaged workforce as progress isn’t monitored and it could ultimately harm your reputation.

Need help managing your sales pipeline? Get in touch to see how we can help.


CRM Insights helps businesses attract, win and retain more customers. Whether you need to improve your existing CRM system, commission a new one, or convert more of your leads, we give you friendly, cost-effective advice and support. From our base in Peterborough, we’re in easy reach of Huntingdon and Cambridge, and work with a wide range of clients across eastern England.
Contact us here or give us a call on 01733 902340 if you need help planning and implementing your CRM strategy.