Sales Tips

Sales Pipeline Stages: A Breakdown

Sales Pipeline Stages
Dan Virgillito

Whether you’re aware of this or not, your company’s sales pipeline is the road that every prospect drives down to become a customer, and sales pipeline stages help pave that road.

Each stage allows sales reps to visualize the sales process and know what actions are needed to move prospects along the path to purchase.

But while every company—and every sales rep—follows procedures unique to them, their sales pipeline stages are actually quite similar.

Salespeople identify new prospects, work to engage them, and evaluate whether they’re the right fit before working to finalize the deal.

Here’s something else most companies have in common: their sales pipeline stages aren’t well defined. Plus, many businesses make the mistake of basing their sales pipeline on a series of activities rather than stages.

According to The Demand Creator, confusing activities for sales pipeline stages is one of the three mistakes that account for 80% of the issues with pipeline structures.

When this happens, one stage blurs into another, and the pipeline is no longer an effective tool for mapping out the sales process.

In this guide, we’re going to define the basic stages of a sales pipeline and look at what you should be doing at each stage to help potential customers progress through the sales cycle.

What are the fundamental sales pipeline stages?

Because no two sales processes are alike, every business will have different stages in their sales pipelines. That said, most will have at least these three stages:

1. Prospecting

        The first stage is about identifying the best leads for your business. It’s critical to the whole process because the quality of leads entering your pipeline will affect its performance in terms of results, revenue, and conversion.

        So where do you start? How do you actually find people who will buy your product or service down the road?

        If you really want to be good at prospecting, here are the main keys:

        Create an ideal customer profile (ICP).

          An ideal customer profile or ICP is an impersonation of your potential customers based on key demographics like age, industry, profession, location, yearly earnings, factors that influence their buying decisions.

          Use data from your CRM software to look at the characteristics of your email or contact list and use any recurring traits or patterns to inform your ICP.

          Here’s a sample ICP:

          ideal customer profile

          Collaborate with (indirect) competitors.

          It might also be a good idea to form alliances with companies selling different items to the same people. This approach is known to provide some major benefits.

          For instance, you’ll both get access to each other’s “circle of leads,” doubling the number of people you can engage with and sell to. Secondly, you might find ways to work together and prospect more effectively.

          Produce explainer videos.

            Generating inbound leads improves your prospecting. (Inbound leads are never cold!) Explainer videos are perfect for this. They’re short, concise, and quickly explain who you are and how you can solve a customer’s pain points.

            And since videos generate 1,200% more shares than images and text combined, you can also expect to see greater reach and engagement.

            Here’s one from DocuSign for inspiration:

            2. Qualification

            This is one of the most critical sales pipeline stages. Once leads enter your pipeline, sales reps should work to determine if they have the need, authority, and budget to make a purchase—a process referred to as “lead qualification.”

            Again, “qualifying leads” could mean something different based on your industry, but in most instances, it implies that a lead has been well-researched and vetted by your salespeople, and is likely to become a paying customer.

            Without proper qualification, you’ll be spending equal time on all leads, whether they’re the right fit for your company or not.

            That can result in missed opportunities; if you don’t know who your high-value prospects are, you’ll lose the chance to sell to them.

            Research shows that 67% of lost sales are a consequence of salespeople not efficiently qualifying their prospects before taking them through the sales process.

            While the specific lead qualification plan that a rep follows will depend on the company’s pre-defined criteria, here are three solid qualification tactics that can help you identify who is a customer in the making.

            Establish a lead scoring mechanism.

              Lead scoring ranks a prospect’s sales-readiness by using a point system: you award points to them for the actions they take, such as visiting your landing page and clicking your links.

              You also give points for demographic data such as their location, age, and income.

              Accumulated points give your sales department the visibility to qualify the right leads (those with the highest scores) right away.

              Bonus tip: if you’re using Copper or another similar CRM, you can integrate it with a lead scoring application through Zapier, which will automate all of this work for you.

              zapier lead integration

              Ask the right questions.

              As part of the lead qualification strategy, you should identify what a prospect wants and what challenges they’re trying to overcome. This can be best achieved by asking the right questions.

              Typical qualification questions to ask include:

              Have you ever used a product/service like ours before?

              Based on what you’ve heard so far, do you think our offering could help address your pain points?

              Have you tried another solution in the past? If so, why didn’t it work?

              Use BANT.

                One of the most popular frameworks for further qualifying leads is described by the easy-to-remember acronym ’BANT.”

                BANT stands for:

                Budget: Can a prospect afford your offering?

                Authority: Do they have purchasing power?

                Need: Does the prospect need your product or service?

                Timeline: When are they looking to buy?

                By qualifying prospects with BANT (or another qualification framework) you’ll be able to gain more insight on whether or not a lead is worth pursuing further.

                How to do BANT right

                3. Proposal

                Now, the moment of truth.

                The proposal stage of the pipeline is the where you ask your prospect to become a customer and hope they’ll give you their business.

                Once you’ve qualified the lead, it’s time to send them a detailed proposal laying out what will be offered, at what price, and for how long.

                Sales reps can also throw in a few concept demos/explainer videos to demonstrate your product.

                In fact, your performance at this stage can make all the difference between winning a sale and losing one.

                When executed properly, proposals not only help close the deal but also make the sale larger than it otherwise would have been.

                Here are a few tips to help you get through the stage smoothly.

                Log activities.

                  Why do prospects sometimes get stuck at the proposal stage?

                  Perhaps the lead is waiting for approval from higher management; perhaps there’s a lot of back and forth on pricing; or maybe they’re still considering other solutions.

                  Whatever the case, try using your CRM’s activity log/activity attribute feature to see all the interactions your company has had with the prospect and how long it’s been since someone from your team made contact with them.

                  Keeping tabs on the last activity date and the action you took (like a phone call or meeting) will help you identify if there’s a need to resend the proposal or reach out with a new one.

                  Here’s a snapshot of how activity logs appear in Copper.

                  copper activity logs

                  Give multiple options.

                  Instead of offering just one option or solution, provide multiple choices for your lead to choose from.

                  By doing so, you’ll empower them to make a decision between two or more products, which can help prevent them from looking at alternatives from other companies.

                  Also, you’ll be able to include higher level (read: more expensive) solutions in your proposal, which may lead to prospects choosing pricier options than you initially expected.

                  Keep it simple.

                    Sales proposals written in plain English are always the most powerful ones.

                    If you use a lot of big words and technical jargon, your prospect will probably find it difficult to understand it, and it will ultimately go to waste.

                    Here’s an example:

                    sales proposal example

                    It briefly and clearly summarizes the offer—the opportunity to become a BraneTeamBiolabs’ distributor—in easy-to-understand language.

                    4. Closing

                    The last of the sales pipeline stages is always reserved for closing deals.

                    The only leads who should enter this final stage are the ones who’ve signed a contract—they’re now a paying customer.

                    In an ideal world, every closing should end with a sale. However, this isn’t always the case. Regardless of the outcome, though, the key to the closing stage is a follow-up.

                    If you’ve managed a sale, you need to follow up with high-quality add-ons/updates, ongoing support, and excellent customer service.

                    Whatever you offered in your proposal, do it with perfection and even surpass expectations in a way that your sales can multiply through referrals given by your new customers.

                    If you lost a sale, don’t write a prospect off yet. Preferences change. Find ways to stay top-of-mind without irritating them. Here are a few ways to do just that.

                    Maintain and nurture relationships.

                      If a prospect found your deal good enough to enter the closing stage, there’s a big chance they’ll be a good opportunity in the future.

                      Do your best to maintain the relationship and nurture it through occasional follow-ups.

                      This means it’s more crucial than ever to have a solid CRM in place that can support your sales pipeline stages in the Relationship Era.

                      Carefully review your previous interactions.

                        It can help to review your emails, call recordings, and presentation material—be as unbiased as you can.

                        Yes, it will be uncomfortable at the start, but once you get past that barrier, you’ll notice important variations in the way you present your solution.

                        Also, listen to how the prospects responded. Over time, you’ll be able to determine the vocal indicators and interest (or lack of interest).

                        When combined with your other post-sale research, you can correct the path of a lead who’s leaving before it’s too late.

                        Ask for feedback.

                          Lose or win, how diligent are you in gathering feedback from your prospects about why they did or didn’t buy your offering?

                          There’s a lot to learn—whether you want to know what appeals most to your potential customers, or identify weaknesses you hadn’t even recognized.

                          Even if you ask for feedback and just get one reply, it’ll help you improve.

                          It also shows respect for the prospect’s judgment (i.e. “Can you teach me something?”) and sets you apart as a company with a passion for excelling and winning the next time.

                          With tools like SurveyMonkey and Client Heartbeat, you can collect information by surveying prospects, measuring, and tracking customer experience and identifying those who are unhappy.

                          client heartbeat

                          Polish up your sales pipeline today.

                          It’s true that you can go out and attract prospects and close deals without clearly defined pipeline stages.

                          But it’s also unlikely that you’ll be able to scale your sales to their full potential without data and a strategy in place.

                          And at the end of the day, boosting your sales’ bottom line requires a systemized and purposeful plan for every stage in your pipeline.

                          From the initial contact with a lead, to prospecting, to qualification, to proposal and finally to a sale—you need a basic sales pipeline structure. What does yours look like?