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In my early days covering business news, I struggled to understand why some companies financially flopped while others succeeded. I’d seen companies that had a unique offering in the market fail to realize their full potential. It all seemed so random.
It wasn’t until years later, when I worked with that had a sales pipeline system, that I truly understood the power of organized, visual sales tracking. And the data backs up that feeling — companies with well-optimized sales pipelines reported a 28% higher revenue growth rate compared to those with poorly managed pipelines.
This guide will discuss how to build and manage a sales pipeline and tell you why you need to invest in a robust sales pipeline management system for maximum results.
But first, let’s find out what a sales pipeline is.
Table of Contents
- What is a sales pipeline?
- How to Build a Sales Pipeline
- How to Run a Sales Pipeline Review
- How to Clean Up Your Sales Pipeline
- Sales Pipeline Analysis: Key Sales Pipeline Metrics to Track
- An Easy Sales Pipeline Template
- Build Your Sales Pipeline Today
What is a sales pipeline?
A sales pipeline is a visual representation of the steps a potential customer goes through, from initial contact to closing a deal. It shows the stages of your sales process and helps track prospects as they move from one stage to the next.
Sales processes vary for each company and even for different products within the same company. Therefore, you need a unique sales pipeline that mirrors the typical buyer's journey for your specific context.
Each prospect moves through the sales pipeline at a different rate based on their level of interest, urgency, and amount of research they've done on a product or service. Adjusting your pipeline to accommodate these differences ensures a more effective and personalized sales approach.
Some prospects may even skip stages. For example, suppose an excited buyer reaches out through a referral and proactively introduces you to the budget authority before you ask. In that case, you'd move the deal straight from “initial connect” to "meeting with the decision-maker."
The sales pipeline allows reps and managers to forecast revenue by determining the stage of the sales process prospects are in and projecting how many of them will close within a specific timeframe.
Typical Sales Pipeline Stages
While the specific stages can vary depending on your industry and sales process, a typical sales pipeline includes the following stages:
Prospecting
This is the initial stage where you identify potential customers. For example, if you are selling software, you might look for companies that could benefit from your product.
Lead Qualification
Here, you determine whether the prospects you identified are a good fit for your product or service. This might involve assessing their needs, budget, and decision-making authority.
Pro tip: Implement a “reverse qualification” approach. Instead of focusing solely on qualifying leads, actively look for reasons to disqualify them. This counterintuitive method helps you quickly identify poor fits, saves time, and allows you to concentrate on truly promising prospects.
Initial Contact
This involves reaching out to the qualified leads through emails, phone calls, or meetings. The goal is to understand the lead's needs better and provide valuable information about the product or service. This stage helps build trust and prepares the lead for a deeper engagement.
Proposal
Here, a formal proposal summarizing the product’s benefits, pricing, and terms is presented to the lead. The proposal should be tailored to the lead’s needs and highlight the product or service's competitive advantages. This stage is about making a compelling case for why the lead should choose your solution.
Negotiation/Commitment
This stage involves negotiating the final terms of the deal, such as pricing, contract details, and delivery timelines. Both parties work towards a mutually beneficial agreement. Effective negotiation is key to resolving any objections and finalizing the terms of the sale.
Closing (Or Lost)
This is the final stage, where the deal is either won or lost. If successful, you secure the customer's commitment and finalize the agreement.
If unsuccessful, you mark the opportunity as lost and try to understand why, so you can improve your process for future opportunities.
Sales Pipeline vs. Sales Forecast vs. Sales Funnel
People often confuse “sales pipelines” with “sales forecasts,” but they are completely different.
A sales pipeline is a visual representation of where prospects are in the sales process. It tracks potential customers from initial contact through various stages until the deal is closed or lost.
On the other hand, a sales forecast estimates the future sales revenue for a specific time period, usually based on historical data, market trends, and current pipeline information.
For example, if a sales forecast anticipates missing your quota, you should double down on selling activities. But if it estimates a 150% growth compared to the last month, you'd want to scale back your efforts and start laying the groundwork for an equally successful next month.
While sales pipelines and forecasts are distinct, they are closely related. An accurate and well-managed pipeline is crucial for creating reliable sales forecasts. Once you've started tracking your sales pipeline, that data can allow you to create a forecast using sales forecasting software like Sales Hub.
People also often use “sales pipeline” and “sales funnel” interchangeably.
However, a sales funnel suggests that the number of prospects you're working with will drop consistently as the sales process continues.
This leads to a false belief that you need three times as many prospects at the top of your funnel as at the bottom. For instance, a sales manager following this philosophy would ask his rep to connect with 300 buyers to close 100 deals.
Sales educator and expert Jeff Hoffman clears this misconception by calling a sales pipeline a wide-mouth cocktail glass instead of an evenly shaped funnel.
You may have a ton of prospects entering your pipeline, but the vast majority drops off after the qualification stage. After prospects have passed the critical point, most should become customers.
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How to Build a Sales Pipeline
Building a sales pipeline is crucial for any brand looking to grow and increase their revenue. Data shows that companies with robust and scalable sales pipelines are able to handle a 40% increase in lead volume without compromising on performance or quality of engagement.
I’ve seen many businesses create sales pipelines in my coverage, and each time, the process has been slightly different but equally rewarding.
How long will it take you to build your own sales pipeline? The answer depends on your product, base, sales team, and marketing resources.
Here are the basic steps to building a sales pipeline.
1. Define the stages of your sales pipeline.
While copying a template might be the quickest way to define your sales pipeline stages, developing your own is worth the time and effort.
After all, the pipeline stages must match your prospect's buying journey to help you track progress and predict revenue effectively. However, customers undergo a typical process:
- Awareness. The buyer realizes they have a pain point or opportunity.
- Consideration. The buyer defines their paint point, develops evaluation criteria, and researches potential approaches.
- Decision. The buyer has finalized their strategy and compares vendors/specific solutions.
To illustrate, check out this hypothetical buyer's journey:
With that in mind, your sales pipeline stages might be:
- Connect. The buyer engages with your company through an email from a salesperson, a webinar, or a piece of content.
- Appointment set. The buyer agrees to a meeting to learn more about how you can help them.
- Appointment completed. They attended the meeting, and you confirmed the next steps.
- Solution proposed. The buyer wants to use your product to solve their pain point or capitalize on their opportunity.
- Proposal sent. The buyer reviews your proposal or contract.
Note that this is a standard explanation: the more complex your product is, the longer your sales cycle will take — and the more sales pipeline stages there may be.
2. Identify how many opportunities continue through each stage.
You should know how long prospects spend in each stage — both across the board and for closed/won deals. For example, the average prospect may spend two weeks in the demo stage, while those who eventually buy spend three weeks.
You should also know the percentage of opportunities that advance to the next stage.
And it's critical to establish yield probability (or conversion rate) per stage. Perhaps prospects are 75% likely to buy in the demo stage and 90% likely to buy in the negotiation stage. Once you've assigned these percentages to each stage, you can develop monthly or quarterly revenue estimates.
Knowing these benchmarks will help your reps and sales managers predict which opportunities will likely close.
3. Calculate the opportunities you need to hit your goals.
Now you can work backward to determine how many opportunities you need in each pipeline stage. Start with your target monthly or quarterly revenue divided by your average deal size, so you know how many deals you need to win.
Next, divide your target deal number by your yield probability per stage. If you need to win 135 deals, and your reps typically close 90% of deals in the negotiation stage, 150 opportunities must reach that stage in a month.
Repeat this process for every stage. Once you have total milestones, you can divide these goals by salesperson.
Here's an example from Bob Marsh, CEO of LevelEleven. Assume you need 2,000 deals per year to hit your target bookings.
- 2,000 deals/year = 167 deals per month
- 8,000 proposals/year = 667 proposals per month
- 32,000 meetings/year = 640 meetings per week
- 64,000 calls/year = 256 calls per day
If you have a 100-person team, that translates to:
- 167 deals per month/100 reps = 2 deals per month
- 667 proposals per month/100 reps = 7 proposals per month
- 640 meetings per week/100 reps = 7 meetings per week
- 256 conversations per day/100 reps = 3 calls per day
Salespeople can use these benchmarks to measure their progress against the targets.
Keep in mind that every rep‘s conversion rates will vary by stage. For example, if one of your salespeople struggles to prospect but has an excellent demo-to-close rate, they’ll need fewer initial meetings than their peers to meet the quota.
4. Understand the commonalities between opportunities that convert.
Next, pinpoint the common characteristics of opportunities that convert for every stage. These include the rep's actions (like sending a follow-up email) and prospect responses (agreeing to a demo).
Knowing these patterns will help optimize your sales process for better closing rates.
5. Create or adapt your sales process around this data.
Create a sales process or update your existing one around these actions and numbers. A strong sales process helps reps consistently close deals by giving them a proven framework to follow.
By incorporating your sales pipeline data, you can shift your sales process to move your prospects and opportunities closer to close.
6. Continuously add leads to your pipeline.
Establishing a sales process isn’t enough, though. As many reps aren‘t too big on prospecting, it’s easy to end up with a dry sales pipeline once you build one.
Since many sales teams focus more on closing deals, they tend to forget prospecting for the upcoming month, and when the next month comes, they’re way behind their schedule.
In an ideal sales pipeline, you should always have more opportunities in the prospecting part than in the closing part. That's because the number of prospects in each stage progressively decreases while the probability of closing progressively increases.
Even if you have enough leads for a month, it’s good to have a diversified prospecting strategy, so you keep adding new leads for upcoming months.
It shouldn’t always include traditional methods like cold calling; you can encourage reps to try multiple strategies. For example, HubSpot research shows that social media effectively finds new leads for 56% of sales professionals.
Lead generation and prospecting tools can also help by aggregating potential leads and tracking their status. That way, you always know how many leads you‘ve got and what stage they’re in.
7. Maintain the health of your pipeline.
Of prospects, 60% say no four times before saying yes. Still, nearly half of salespeople never follow up. This indicates that you‘ll definitely lose leads if you don’t establish a five (or more) step follow-up process throughout your sales pipeline.
Give your team a system for following up with leads, including timing, cadence, and contact method. Set clear expectations like:
- Every inbound lead is contacted within six hours or less.
- Every lead receives 10-12 touches spread out over one month.
- Every lead receives various email, phone, and social media touches.
- Every touch includes new information or resources.
If there are any relevant digital assets your organization manages for this purpose, they should be easily accessible to the sales team. Making these resources readily available can streamline follow-up efforts and ensure consistency in communication.
A uniform follow-up strategy helps your reps maintain clean pipelines by telling them when to disqualify prospects. If a prospect hasn't responded by the last touch, they should be removed from the pipeline.
8. Clean your sales pipeline regularly.
Cleaning up your pipeline is critical if you want an accurate sales forecast. That‘s because most forecasts use each opportunity’s stage to determine how likely it is to close — not its age.
Suppose you sent a proposal for a $2,000 deal to the buyer one month ago. Since then, he hasn‘t returned any of your calls or emails, which suggests you’re not getting his business.
However, since opportunities in the negotiation stage have a 90% close rate, your sales forecast would count this deal as $1,800 in potential revenue in the next month.
That means your sales forecast is $1,800 off. Similarly, every stale deal will further widen the gap between expectations and reality.
How to Run a Sales Pipeline Review
Do you know why doctors recommend annual health check-ups? They help catch potential health issues early before they become a major problem.
The same principle applies to your sales pipeline. Regularly reviewing and cleaning your pipeline is crucial. Just as doctors look for early signs of trouble, you should monitor your pipeline to identify bottlenecks and inactive leads.
Here is how I’ve seen companies carry out regular sales pipeline reviews, ensuring each part plays a crucial role in optimizing sales efforts.
1. Gather relevant data.
First, companies gather all the necessary data from their CRM and sales tools. This includes details on current leads, conversion rates, deal sizes, and how long leads spend in each stage. Successful businesses I’ve covered have accurate and up-to-date data. That’s vital because it forms the foundation of their analyses.
In my experience, the best teams ensure all data is current and comprehensive to avoid making decisions based on outdated or incomplete information. Detailed reports and analytics give mteamse a clear picture of their pipeline’s health and identify areas needing attention. Without this data, the review process would be ineffective and based on guesswork.
2. Prepare a clear agenda and structure.
Before the review, I suggest creating a structured agenda that outlines specific topics to cover. I recommend using a framework like the Create-Advance-Close model to organize the discussion.
For example, if I were a salesperson, I would allocate time to discuss new deals entering the pipeline (Create), deals progressing through stages (Advance), and deals nearing closure (Close). I would also ensure that clear time limits are set for each section to maintain focus. Without this, reps can easily go off on a tangent and turn the review session into extended coaching sessions.
This structure helps ensure the meeting stays on track and covers all crucial aspects of the pipeline, from lead generation to deal closure.
3. Review key pipeline metrics.
I recommend starting your meeting by examining essential pipeline metrics. I would focus on metrics that provide actionable insights, such as the number of qualified leads, MQL to SQL conversion rates, win rate, average deal size, and sales cycle length.
I suggest that teams discuss any significant changes or trends in these metrics compared to previous periods. This data-driven approach sets the tone for an objective discussion and helps identify areas that require attention.
I’m always prepared to dive deeper into metrics that show concerning trends or unexpected changes.
4. Analyze deal movement and stagnation.
Identifying bottlenecks is one of the most important steps. Teams then look at where leads are getting stuck or dropping out and try to understand why. This might be due to inadequate follow-up, poor lead quality, or issues with a sales pitch.
Pointing out these obstacles helps the team take targeted actions to resolve them, ensuring smoother transitions through each pipeline stage.
5. Update and adjust strategies.
Based on the insights gained, I’ve noticed successful teams update their sales strategies and processes. This could involve revising qualification criteria, enhancing sales pitches, or implementing new tools.
It’s important to communicate these changes clearly to the team and provide any necessary training. Regular updates keep your pipeline dynamic and responsive to market changes, ensuring we stay competitive.
6. Create an accountability mechanism for reps and managers.
One major pitfall in pipeline reviews is the lack of accountability for both reps and managers.
So before teams conclude a review, they ensure to establish clear action items for each participant. These should be specific, measurable, and time-bound.
I’ve noticed that business-savvy teams assign ownership for each action item and set deadlines. Additionally, they agree on how progress will be tracked and when these items will be reviewed next.
This step ensures that the insights gained during the review translate into concrete actions that move deals forward.
Sales Pipeline Reviews vs. Sales Forecast Reviews
Both forecast reviews and pipeline reviews are critical to your team‘s success, but make sure you’re not tackling them both in the same meeting.
A forecast review should focus on the deals likely to close in a given time period. This meeting helps managers predict whether their team will hit its quota.
The purpose of a sales pipeline review is to help deals move through the sales process as efficiently as possible. An effective sales pipeline review looks at fresh sales opportunities.
I’ve noticed sales managers often make the mistake of jumping in to help in the later stages of the sales process, but by this time, it's often too late for them to influence the outcome of a deal. If they truly want to make an impact, they should help reps strategize while the opportunity is still new.
How to Clean Up Your Sales Pipeline
I've always believed that a clean, well-organized sales pipeline is the key to maximizing efficiency and closing more deals. Firms with structured pipelines achieved a 16% higher win rate, indicating that a clear and organized pipeline directly contributes to closing more deals.
Over the years, I‘ve seen systematic approaches keep pipelines neat and tidy, and I’m excited to share these tips with you.
1. Review and remove stagnant leads.
Identify leads that have been in the same stage for too long. These stagnant leads are unlikely to convert and only clutter your pipeline.
Use your CRM to filter out these leads based on inactivity. Once identified, either remove them or move them to a nurture campaign if there’s potential for future engagement. Research shows that 79% of leads never convert into sales due to a lack of lead nurturing. This means that if you nurture them, they might convert into a sale.
Regularly clearing out these leads keeps your pipeline dynamic and focused on active prospects.
2. Re-qualify existing leads.
Sometimes, leads may not have needed to be properly qualified initially. Go through your current leads and reassess their fit based on updated criteria like budget, authority, need, and timeline (BANT).
This re-qualification process helps ensure that only the most promising leads remain in your pipeline. It also provides an opportunity to update any outdated information, improving your overall sales strategy.
3. Update contact information.
Research shows that 8 out of 10 deals are lost because decision-makers were changed. As a sales rep, you’ll need to keep tabs on your prospects and personnel changes in their business.
Suppose a critical stakeholder leaves the company before closing the deal. In that case, you might need to move the deal back to the qualification stage until you identify the next decision-maker. Always verify close dates to ensure they match your instincts.
Double-check opportunity dollar values as well. If these are too high, your sales forecast will be overly optimistic. Too low, and you‘ll think you’re further from your goal than you really are.
4. Follow up with cold leads.
Leads can sometimes go cold if they haven’t been contacted recently. Implement a follow-up strategy to re-engage these leads. Send personalized emails or make follow-up calls to check in and revive interest.
If a lead remains unresponsive after several attempts, consider removing them from your active pipeline. This ensures you focus on leads that are more likely to convert.
Pro tip: I recommend using automation tools to handle routine tasks like follow-up emails and data entry. Automation reduces the chances of human error and frees up your time for more strategic activities. Set up automated workflows in your CRM to ensure consistent follow-up and lead nurturing. This keeps your pipeline moving smoothly and ensures no lead falls through the cracks.
Sales Pipeline Analysis: Key Sales Pipeline Metrics to Track
When reviewing your pipeline, you should know some baseline metrics to help determine whether your pipeline is healthy. Use these metrics to gauge the health of your sales pipeline — and, from there, the health of your team, department, and business.
As your salespeople become more knowledgeable, your marketing team learns which channels to use to attract the best-fit prospects, and as your business becomes more well-known, your sales cycle should decrease.
While there are many sales pipeline analysis metrics to consider, I've narrowed it down to six key indicators that provide the most valuable insights for optimizing sales performance and forecasting.
1. Number of Qualified Leads
Tracking the number of qualified leads entering your pipeline each month is crucial. This metric shows if your lead generation efforts are effective. For example, if you receive 200 leads in a month and qualify 50 of them, your qualification rate is 25%.
This metric will help you understand the quality of your leads and adjust your marketing strategies accordingly.
Use this metric to gauge the workload and identify if you have enough opportunities to meet your sales targets.
Pro tip: Ensure the deals are evenly distributed across different stages to prevent bottlenecks.
2. MQL to SQL Conversion Rates
MQL to SQL conversion rate measures the percentage of marketing-qualified leads that become sales-qualified leads. It’s a reliable way to assess lead quality and indicates the success of your lead generation campaigns.
The ideal MQL to SQL conversion rate is about 13%. This means that for every 100 MQLs, a marketing campaign should aim to convert at least 13 into SQLs.
To calculate, divide the number of leads that advance by the total number of leads at the initial stage and multiply by 100.
You can use this metric to identify strengths and weaknesses in your sales process and to optimize each stage for better conversion.
3. Win Rate
Win rate measures the percentage of closed deals out of the total opportunities. It helps gauge the effectiveness of your sales process and team performance.
The win rate percentage is calculated by dividing the number of closed deals by the number of leads, opportunities, or meetings. This can also be done for each stage of the sales process.
For example, if you had 50 opportunities and closed 10 deals, your win rate is 20%. This metric indicates your overall sales effectiveness.
4. Average Deal Size
Average deal size indicates the typical value of closed deals.
Calculation: Total revenue from all deals / Number of deals. For example, if you have $500,000 in total revenue from 50 deals, the average deal size is $500,000 / 50 = $10,000.
Knowing your average deal size helps you set realistic sales targets and forecasts and can guide your focus toward higher-value opportunities. To increase it, focus on increasing this metric by upselling and cross-selling.
5. Sales Cycle Length
Sales cycle length measures the average time it takes to close a deal from the initial contact to closing.
Calculation: Total number of days to close all deals / Number of deals. If it takes 1,000 days to close 50 deals, the average sales cycle length is 1,000 / 50 = 20 days.
This metric helps identify inefficiencies in your sales process and areas for improvement, aiming to shorten the cycle and close deals faster.
6. Sales Pipeline Velocity
Pipeline velocity is one of the key sales pipeline analysis metrics, and it measures the speed at which leads move through your sales pipeline.
Calculate it using the formula: (Number of Opportunities x Win Rate x Average Deal Size) / Sales Cycle Length.
For instance, suppose you have 50 opportunities in your sales pipeline. Your average win rate is 40%, and your average deal size is $10,000. And, the sales process usually takes 70 days, from initial contact to the signed proposal.
Your pipeline velocity = 50 x .4 x 10,000 / 70, or $2,587.14.
That means approximately $2,587.14 is moving through your sales pipeline every day. Obviously, the higher your velocity, the better.
So, how can you increase the pipeline velocity?
You can pull four main levers, and unsurprisingly, they correlate to the four factors of the equation.
- The number of total opportunities. Increase your prospecting efforts to get more opportunities.
- Win rate. One-on-one weekly coaching helps sales reps deliver high performance. You can improve this metric by investing in sales training and enablement.
- Deal size. Help your reps sell bigger deals by teaching them how to upsell, cross-sell, or target larger customers.
- Sales cycle. Have a well-defined sales process and ensure reps follow it. Leave room to test new strategies like the growth of AI or buyers’ preference for virtual shopping and adapt accordingly to reduce your sales cycle.
An Easy Sales Pipeline Template
A sales pipeline template lets you set up your pipeline in a spreadsheet. Simply plug in each deal, its expected value, and the probability of closing, and you'll get the weighted average for that deal.
This sales pipeline template also has columns for the assigned salesperson, the prospect's contact information, and the next steps.
Download HubSpot’s Free Sales Pipeline Template
While you can manage your sales pipeline in an Excel spreadsheet, using a CRM is much easier. The HubSpot CRM gives you an up-to-date view of your sales pipeline, multiple ways to sort your deals, automatic activity tracking (so you don't need to log calls or emails manually), and detailed contact records for every lead.
Sales Pipeline Report
The next step in managing your sales pipeline is creating reports. Using reports, you can predict when opportunities will close and get a clearer picture of the pipeline's health. But what should you include in your sales pipeline report?
- The number of opportunities in the pipeline. This is an excellent indicator of whether a pipeline has enough opportunities to meet revenue goals and quotas.
- Opportunity sizes. If an opportunity closes, how much value will it provide to the sales team?
- Close date for each opportunity. This tells you when an opportunity might close. It also allows salespeople and managers to forecast expected revenue.
- An overview of the pipeline over time. Is your pipeline growing? Zooming out and looking at the pipeline history will show you the answer.
Build Your Sales Pipeline Today
Mastering your sales pipeline means mastering your results. The sales pipeline benefits the entire organization, not just the sales team. When everyone aligns around revenue goals, every team succeeds.
A well-managed pipeline is dynamic, requiring constant attention, regular reviews, and adaptability to market changes and customer behaviors. Successful sales leaders and reps view their pipeline as a strategic asset, not just a reporting tool.
Whether your business faces disruption from new competitors, major opportunities, industry shifts, or internal changes, use these tips and the sales pipeline template to forecast your deals effectively.
Free Sales Metrics Calculator
A free, interactive template to calculate your sales KPIs.
- Average Deal Size
- Customer Acquisition Cost (CAC)
- Customer Lifetime Value (CLV)
- And more!
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