What is a Sales Pipeline?

What is a Sales Pipeline?
What is a Sales Pipeline?

As a new business owner or sales manager, you’ve probably got only one goal in mind: sell, sell, sell. But the sales process is a little more complicated than it seems, and customers are sure to be off-put by overly-eager-yet-disorgainzed salespeople.

A sales pipeline structures a business’s sales processes, helping the business expand operations, train new sales reps, and scale up efficiently. An effective sales pipeline can be the difference between a dozen sales and a few hundred. If you’ve just started your business and have never heard of a sales pipeline before, don’t worry. This guide will provide all the details on what a sales pipeline is, why it’s important, and how you can start building one for your own business.

Defining a Sales Pipeline

A sales pipeline is a sequential overview of the steps your business and sales reps take during the sales process: the sequence of actions a sales professional takes to sell to a single customer, starting from when they first discover a new lead all the way to the end of the sale and follow-up interactions. Potential customers (leads) go into the pipeline and come out on the other side as customers.

Just like how pipes are hidden within the walls of your house, a sales pipeline describes the internal processes in your company – in other words, rather than what the customer sees, it describes what sales reps inside the company for the sake of the sale, even if they don’t directly interact with the customer. This could include actions such as logging interactions in the CRM or compiling research on the potential customer.

Sales pipelines are usually used more by B2B businesses where reps sell to one customer at a time. On the other hand, B2C companies tend to use sales funnels that track multiple customers per stage.

What Are the Stages of a Sales Pipeline?

A sales pipeline usually has seven stages: prospecting, lead qualification, meeting scheduling, proposal, negotiation, closing, and follow-up. This number can increase or decrease depending on a company’s specific industry and activities, so it’s important to pay close attention to your sales pipeline management and tailor your sales pipeline accordingly to your unique business.

  • Prospecting

The first step of selling is to find a potential buyer, or lead, for your business. Each business targets a specific market segment and type of customer, so it’s unlikely that new ready-to-buy customers are simply going to walk up to your doorstep. Instead, your sales reps will have to work to discover leads that fit your ideal customer profile, a process called prospecting.

Your sales rep can source leads through outbound lead generation tactics such as cold calling or email campaigns, or inbound lead generation tactics such as advertisements or SEO.

  • Lead Qualification

Once a lead has been identified, sales reps then need to research and talk to the lead to qualify them, checking to see if they’re ready to make a purchase or not.

Different companies have different criteria for qualifying their leads, but at the very least, a sales rep should determine if the lead has:

  • The budget to afford the product
  • The authority to make the purchase by themself
  • The need for the product
  • The pressure to make a purchase within a certain timeframe

These four criteria are referred to as the BANT criteria (Budget, Authority, Need, and Timeframe), and can be used as a framework to quickly determine if a lead is a good target to pursue further or not. If they meet all four criteria, there’s a high chance of making a sale.

  • Meeting Scheduling

If the qualified lead shows interest in the product when the sales rep reaches out to them, the next step is to schedule a meeting with the lead to give a demonstration or presentation of the product.

This meeting highlights the value of your company’s product and includes specific details on how the product can help meet the client’s unique needs. It’s also a chance for sales reps to answer any questions the potential customer may have.

  • Proposal

If the meeting goes well, your sales representative should then present a sales proposal, the precursor to a final contract. The proposal should summarize all the benefits the rep went over in the meeting, refute any potential objections the client has, and highlight how the investment would be well worth the money.

  • Negotiation

From the proposal, the client will likely want to negotiate the scope of the proffered deal to better fit their unique situation. They may attempt to bargain the price down or reduce the scope of the offering.

Your sales rep should work together with the client to reach an agreeable compromise, but sales managers should also take care to set limits to the concessions and discounts reps can give – if the rep gives too much away, your company might be stuck fulfilling a deal for a net loss rather than making a profit.

  • Closing

Once both sides are satisfied with the negotiation, draw up a final contract and have both parties sign to complete the sale. Congratulations!

  • Follow-up

Post-sale, your company should follow up with the customer to ensure their order was fulfilled to their satisfaction. If they’re satisfied with your company, they might come back as a loyal customer or refer their friends to your business, starting the whole cycle all over again.

Why Are Sales Pipelines Important?

Though you’re not legally required to have one, there are quite a few benefits to having a sales pipeline.

  • Optimizes your sales department

A clearly-outlined sales pipeline standardizes your sales process, making a repeatable set of instructions that all of your sales professionals can follow to make a successful sale. It cuts down on inefficiencies and ensures that your reps only act in ways that will contribute to an eventual sale.

For example, by closely observing your sales pipeline, you might determine that your reps tend to lose sales opportunities during the negotiation stage. With that knowledge, you might allocate more time, resources, and training into negotiation tools and training to close that gap, ensuring that more sales opportunities make it to the other side as customers.

Not only does standardizing your sales activities mean your business will make more consistent sales, but it also means that as you improve your sales pipeline, your sales reps’ successful conversion rates will also only continue to improve.

  • Makes sales activities scalable

In the same vein as the last benefit, a clearly-defined sales pipeline helps you scale your sales department and operations efficiently. As your company grows, a sales pipeline provides a clear and repeatable formula for success that can be repeated ad infinitum.

As your business grows and you hire new sales reps, having a sales pipeline with clearly-defined steps helps you teach new employees the best sales techniques, helping them get out into the field faster and make more sales. It will also tell you exactly how much time and money is needed at each step to sell to each new customer, so you can easily calculate how many resources you’ll need to allocate in order to reach your company’s goals.

  • Helps decision-makers strategize

Finally, with a birds-eye view of the sales process, managers can clearly see how sales actions might affect and be affected by other departments in the company. This helps the business owner and other decision-makers align sales and marketing activities, communicate the sales department’s monetary needs to the financial department, and ensure that the sales department’s activities support the company’s ideal brand image and growth goals.


Creating an efficient sales pipeline is an important part of setting up your sales department, outlining repeatable steps to complete a sale. By carefully planning and monitoring your sales pipeline, you can optimize your sales department, scale up activities, and make strategic changes that ensure your business closes more sales than ever before, setting it up for long-term sales success.

Leave a Comment