At Vantage Point Performance, we recommend that sales organizations have between six and 10 sales pipeline stages. But is there an ideal number in that range?
Not really. Bear in mind that your sales pipeline stages should mirror your prospect’s buying process. So the more or fewer steps your buyers go through to make a purchase, the more or fewer your sales pipeline stages.
However, I find that regardless of how well sales organizations think they’re putting themselves in the prospects’ shoes to design their sales pipelines, they’re still primarily using a seller’s perspective.
For example, say a potential customer is looking at your website, and they complete a form. After their information is received by a salesperson, they call the lead and qualify them a bit with a few initial questions. Maybe the salesperson then puts together a proposal and sends it along.
In this situation, I’m guessing that most salespeople would consider that prospect to have advanced three stages in the sales pipeline -- stranger to lead, lead to qualified lead, and proposal issued.
But there’s a slight problem: Absolutely nothing has changed from the prospect’s point of view. Just because they filled out a form and gave a salesperson some preliminary information doesn’t mean they’re any more likely to buy from your company than when they first visited your website. In fact, just as hard as the seller is trying to qualify the buyer, the buyer is probably trying equally as hard to disqualify the seller.
And how much engagement does it take from the buyer to receive a proposal? Not much. It’s clear that these sales pipeline stages do not match up to the buying process.
To design sales pipeline stages that are better aligned with the buying process, I recommend that sales leaders think about them as a matter of increasing buyer commitment.
Actions that demonstrate greater commitment on behalf of the prospect might be agreeing to another, more in-depth phone call. It could be providing the salesperson with more detailed information required for a customized demo or proposal. Perhaps it’s an introduction from the original point of contact to additional colleagues who together comprise the selection team. All of these could be milestones that show the customer is more and more engaged with the company and is increasingly interested in buying from them.
But these sample milestones might not be appropriate pipeline stages at every company. Since every target audience is different, sales leadership should kick off the sales pipeline design process by somehow studying the company’s buyers.
There are a few ways an organization could go about this. The least costly would be to get your salespeople together and have a conversation about what they’ve observed in their deals. If you ask the right questions, you can probably walk away with a solid understanding of the buying process.
Two additional options are to interview willing customers, or conduct a buyer and/or customer survey. Ask customers when they really started getting serious about buying from your company, and what excited them throughout. Ask buyers what hurdles they need to get over to buy from you, and how they would do that.
Regardless of how you determine the buying process and associated milestones, it’s important to correctly design your sales pipeline since a deal receives more weight in the sales forecast as it moves through the stages. Poor sales pipeline health and deals that don’t truly reflect an increasing commitment to buy could make for wildly inaccurate forecasts and missed revenue targets, which, needless to say, spells trouble for the entire organization.
Originally published Sep 11, 2014 12:00:00 PM, updated July 28 2017