Founder Basics: Sales Pipeline Management

In this article, we'll explain what a sales pipeline is, what stages it has, and how to manage it efficiently.

Six years ago, the Harvard Business Review published an interesting article with a provoking headline that reads: Companies with a Formal Sales Process Generate More Revenue. In the article, we learned that nearly half of the executives included in the study believed that their company is inefficient in managing the sales process.

But that was a long time ago. You would think that by now, business owners and sales executives found a way to overcome this issue. Unfortunately, no. Last year, Forbes revealed that enterprises miss the equivalent of up to 10% of annual sales in lost opportunities due to bad management.

So, what lies at the heart of the problem? 

Sales pipeline management is a challenging issue because of its complexity. The process depends on the successful integration of several semi-independent operations into an efficient pipeline that produces results. However, each of these operations that are dedicated to  a distinctive step of the sales process, could end up being a liability that hinders the whole process.

Therefore, as a business owner or a sales lead, it’s important to know the nitty-gritty details of everything that goes into sales pipeline management. And, in this article, you’ll learn what a sales pipeline is, what the stages that make up the sales pipeline are, and how to manage the sales pipeline efficiently - we’ll provide you with a step-by-step overview of all aspects of this process.

What Is a Sales Pipeline?

The term sales pipeline encompases all the efforts and activities of the sales department that guide a person from their initial contact with your business to making a sale/closing a deal. It’s usually referred to as a visual representation of each stage of the sales process. 

The sales pipeline is also a useful way for sales reps to track multiple potential buyers as they move from one stage of the sales process to another. Tracking their journey allows sales reps to make better decisions, optimize their time, and increase closing rates. 

Normally, the sales pipeline is a somewhat personalized process that matches the company’s goals, target persona, and product characteristics. For example, the steps of sales pipelines of a company that offers tech gadgets ranging from $25 to $50 and a company that offers software solutions for enterprises ranging from $1,000 to $3,000 per year will be very different.  

Still, the foundation of almost all sales pipelines follow a similar logic and serve as a good  template over which you can build and manage your own sales pipeline.

Do You Need a Sales Pipeline?

As a new business owner, you may wonder whether you actually need a sales pipeline. Is hiring a great sales team not enough?

If you're serious about your business and want to grow, then no, hiring a great sales team is not enough. And, don’t get the wrong impression - the sales team might do an excellent job with or without a sales pipeline, but scaling up and meeting sales goals are two very difficult mountains to climb. Without transparency and standardization of the sales practices that the sales pipeline provides, you’re putting your sales team at risk of failure.

It may be better to demonstrate the importance of sales pipelines by providing specific reasons for its use.

  • Sales pipelines provide insights into the current status of all the accounts of each sales representative or the whole sales team;
  • Sales pipelines let you analyze how many leads you need to make a sale, and based on that, you can set realistic goals; 
  • Based on the sales pipeline, sales reps can make reports and forecasts;
  • With a defined sales pipeline, you can identify weaknesses and precisely pinpoint where things function suboptimally;
  • Sales pipelines can help you set benchmarks for your businesses based on current trends that you can use in your projections;
  • Evaluating and managing sales representatives also becomes easier and more transparent with the data from the sales pipeline;
  • Creating a sales pipeline can help secure the growth of revenue, according to the statistics we provided in the beginning of the article;
  • Finally, a sales pipeline streamlines the sales process, which in turn, reduces costs.

Sales Pipeline vs. Sales Funnel

Before we continue, let’s make sure there’s no confusion concerning some commonly used terms in the sales community. More specifically, let’s briefly explain the differences between a sales pipeline and a sales funnel. Many people think these two terms mean the same thing or something similar, but that’s not true.

The confusion comes from the fact that both concepts describe the flow of prospects through the process of sale; the divergence owes to the fact that they do so from two very different perspectives.

The sales pipeline describes all the actions of the sales team, which are categorized as a set of stages through which the lead moves on their way to making a purchase and becoming a customer. In the next section, we’ll focus on each stage of the sales pipeline.

On the other hand, the sales funnel represents the quantity and conversion rates of prospects. It, too, looks at the customers’ journey, but from the perspective of a prospect. In other words, it looks at how many leads go through all the sales pipeline stages and become customers.

Moreover, the name “funnel” is indicative of its converging nature. In the beginning, the sales funnel is very wide because it needs to reach as many prospects as possible, but as the prospect progresses through the sales process, it becomes increasingly narrow - leads are being qualified and filtered out. Finally, from the initial pool of prospects you had at the beginning of the sales funnel, you end up with a fraction who then turn into closed deals. 

Here’s what you need to remember.

Sales Pipeline 

Point of view: brand-centered

Focus: what are the stages a lead goes through to become a customer?

Insight: value and quantity of deals at a specific moment


  • Awareness;
  • Interest;
  • Desire;
  • Action.

Sales Funnel

Point of view: customer-centered

Focus: how many prospects make it through the sales pipeline stages and become customers?

Insight: quantity and conversion rates of prospects through stages


  • Prospecting;
  • Qualifying leads;
  • Initial Offer;
  • Negotiation;
  • Closing the deal.

The Stages of a Sales Pipeline

We’ve said that leveraging a sales pipeline will help you develop a data-driven understanding of the sales process. But, to achieve this, you need to identify, define, and track all the stages that a typical customer goes through before making a purchase.

To help you out, we’ll break down the most frequently used stages in the tech field, which we believe are important and you should identify and monitor. However, keep in mind that your customers might not go through all of these stages. For instance, for some companies, the sales process includes: prospecting, lead qualification, proposal, closed deal, post-purchasing actions. On the other hand, for others, the process might include some additional stages. Keep this in mind when creating your own sales pipeline - something we’ll cover in the next section.

Stage 1: Prospecting

Prospecting is the first step in the sales process. It basically means to identify potential customers and employ marketing techniques to find and reach new prospects. Keep in mind that these are people who fit your target personae, but they’re still not qualified leads, which brings us to the next stage.

Stage 2: Lead Qualification

While prospecting refers to activities intended for reaching an audience, lead qualification is going over the prospects that showed interest in your brand or products and filtering them out. These can be people who’ve clicked on an ad, downloaded a PDF from your website, or left their email on your subscription prompt. Based on previously defined criteria, sales reps go through these initial pools of unqualified leads and turn them into opportunities or discard them. 

Stage 3: Initial Meeting

The leads who are classified as opportunities are usually contacted and asked for a meeting. Agreeing to a meeting or a demo presentation is a good indicator that the potential customer wants to make a purchase.

Stage 4: Proposal

In this next stage, account executives contact customers or clients and based on the previous meetings and some other factors, like urgency and the prospect’s needs and budget, they make an offer. In this step, some prospects may give up, withdraw, or simply discontinue the communication, while others move further down the pipeline.

Stage 5: Negotiation and Commitment

The fifth step is negotiating the offer and coming to do business. While many B2B businesses working with expensive services and products really go through this process, most DTC businesses have fixed offers that can’t be changed - and thus skip this step.

Stage 6: Closed Deal

Finally, the sixth stage consists of prospects who’ve decided to take action and have made a purchase. Here, sales reps make contracts or exchange contact information with customers. This opens the door for post-purchase actions and retention strategies.

Stage 7: Post-Purchase Actions

Finally, most companies engage in some form of a post-purchase action with the goal of customer retention, securing a positive experience, receiving a public review, word-of-mouth referral, or promoting other products and services.

Sales Pipeline Management: Definition

Now that you know all the details concerning the sales pipeline, we can use that knowledge to talk about management. Commonly, the sales pipeline management is defined as tracking and evaluating each prospect through every stage of the sales process with the goal of understanding and improving the company’s sales practices.

However, in this theoretical approach there are a lot of things implied, but not explicitly said. For example, how can we understand sales processes? What specific action do we need to take?

In practice, the responsibilities of a sales pipeline manager include:

  • creating a sales pipeline;
  • maintaining a sales pipeline (keeping the sales pipeline full, filling the gaps, cleaning the pipeline, etc.);
  • identifying and tracking metrics for the sales pipeline;
  • optimizing the sales pipeline;
  • fixing sales pipeline issues as they come along the way;
  • reviewing and reporting about your sales pipeline performance and results.

The successful management of a sales pipeline involves principles, standardized practices, and tools for each aspect of the sales process.

How to Manage the Sales Pipeline

The lack of standardized practices in the sales process not only puts the sales team at risk of failure but it also costs the company many missed opportunities. Managing the sales pipeline means keeping everything in order so that these things don’t happen. It also means staying on top of everything to make sure the process runs smoothly throughout the whole year. This way, the sales reps will be able to meet the sales quota and reach the company's goals.

But, where to begin? 

Getting a template online that promises extremely high conversion rates is easy but not effective. Your customers or clients are unique, and if you want to do things right, you have to look at the data from your company and build your way from there.

To help you out, we’ve put together a six-step guide that shows what constitutes the sales pipeline management process and how to excel in each of these steps.

Pre-Management Tasks: Mapping Out Your Customers’ Journey

Before we start describing the activities that go into the management process, let’s briefly discuss the tasks you need to take care of before a sales pipeline can even be created. 

It’s said that the strongest sales pipeline is shaped based on your business goals and target persona. In other words, creating the sales pipeline should be a data-driven process powered by insights regarding your customers’ behavior and what your company wants to achieve in a specific time frame.

Assuming that you know the company’s goals and expectations, you’re left to figure out your customers’ behavior. Understanding customer’s behavior is best achieved through a technique called customer journey mapping. For this, you need to take on a buyer-centric point of view and ask yourself: 

  • Why do customers interact with my brand?
  • What are their needs, interests, or pain points? 
  • What can I offer them to meet those needs, interests or pain points?
  • How can I make sure that they consider my product/solution?
  • What will convince potential customers that my product/solution is the best fit for them?

The answers to these questions give you a better understanding of the sales funnel and a clearer picture of how your target persona progresses through the awareness, interest, desire, and action stages.

With this information, you can start developing a sales pipeline, which is the first step in your management journey.

Creating the Sales Pipeline

As a manager, you need to evaluate the internal sales process and identify how much of the typical stages in a sales pipeline work for your business. Then, you need to decide whether you would add, remove, or customize specific stages. The decisions should stem from your customer journey map, sales funnel information, and the current performance of your sales process.

When creating the sales pipeline, there are three metrics you need to consider: overall conversion rate, stage conversion rate, and pipeline velocity. 

The overall conversion rate defines what percentage of the opportunities that pass through your sales pipeline end up as customers or clients (closed deals). 

The stage conversion rates define what percentage of opportunities pass from one stage to another. For example, in the first stage, the rate defines how many of the leads generated by the marketing team reach the qualification stage. In the second stage, the rate defines how many of the qualified leads reach the meeting stage, and so on.

Finally, the pipeline velocity defines how fast prospects move through your pipeline. You can also look at pipeline velocity as an overall process or stage-by-stage, which will help you identify what stage customers spend more time in. Interpreting the stage velocity within the context could help you identify a problem or a suboptimal performance in a particular stage.

Creating the sales pipeline is a lengthy process that sometimes requires re-structuring the stages if the above-mentioned metrics paint a grim picture when compared with your goals - a target number of opportunities at each stage or closed deal to meet quotas.

Take your time and do extensive research, both internal and external. For internal research, identify what the opportunities that ended up as closed deals have in common. For external research, look for examples and reports within your industry.

Maintaining the Sales Pipeline

Maintaining a sales pipeline takes a lot of work, even if you’re happy with the effectiveness of your newly-created sales pipeline. Good management requires a lot of attention, involvement, regular evaluations, and making organizational decisions in a timely manner.

To be more specific, there are four important aspects of the maintenance process.

Keeping the Sales Pipeline Full

Prospecting is an ongoing and highly-active stage. Make sure you allocate enough resources here, so that marketers or sales reps can keep bringing in new leads. Balance out acquisition and retention strategies to increase the number of opportunities even further while reducing costs at the same time.

Some techniques for increasing closed deals include: upselling, cross-selling, social-selling, and referrals.

Filling the Gaps

Finding and filling gaps is an important element of maintenance, and skipping it could impair the effectiveness of the whole pipeline significantly. If you think of the sales pipeline as a continuous process, you’ll be able to identify gaps as stages, processes, or activities that work suboptimally compared to others.

Common reasons for gaps in the pipeline: low volume (the pipeline is not full), attrition, bottleneck issues, and latency.

Sometimes, finding the cause for a gap in your sales pipeline will be a piece of cake, but other times, the troubleshooting process won’t yield results. Be patient yet persistent. Go through all the data and try to look at the big picture. Something will stand out, sooner or later.

Cleaning the Sales Pipeline

A clean pipeline is a transparent one. This means that you should be able to have an uncluttered view of the prospects through all stages of the sales process. Additionally, a clean pipeline decreases the chances of having an undefined gap.

Here are a few tips on how to maintain your sales pipeline clean:

  • Limit your pipeline stages. Less is more, so don’t think that a lot of stages equal a superior pipeline.
  • Close the gaps and match the rhythm of work of all stages.
  • Invest time and effort into improving communication within the sales team. A lot of misunderstandings between colleagues unnecessarily clutter the pipeline. 
  • Make sure everyone works in accordance with the standardized practices. 

Streamlining the Process With Sales Pipeline Tools

Another way to make the sales pipeline more effective is by using sophisticated tools that have the power to automate and streamline a lot of activities. 

While there are plenty of tools out there, and we don’t discourage you to explore and try, the following solutions are our favorites!

Finding the Right Metrics for Your Sales Pipeline

If you want to find out more about analytics and why it’s such an important part of all management processes, please click on link above to read our separate article on the topic.

In the meantime, managers should track and gather insights from the following metrics:

  • The average number of prospects in your sales pipeline at any given time;
  • Conversion rates - overall and stage-specific;
  • Pipeline velocity - overall and stage-specific;
  • Average value of an account/deal;
  • Sales pipeline value - how much revenue can all the opportunities within the pipeline generate?;
  • Sales lead response time - the time from the initial contact that the sales rep makes with a qualified lead to the moment they respond;
  • Closed deals rate.

Solving Issues and Optimizing Processes

From time to time, unexpected issues will pop up and you need to be prepared to make changes and solve them as quickly as possible. Alternatively, when those issues are out of your control, make sure you quickly adapt to stay relevant on the market. The pandemic is a good example of an unexpected obstacle that was outside the control of business owners and managers. Many businesses were affected, but those who adapted and found new ways to reach customers and create demand survived.

For other more common issues, always consult with your whole sales team, brainstorm ideas, and propose actions for overcoming the issue.

Some common issues that might arise include:

  • the gatekeeper problem;
  • too many bad leads;
  • bad time management;
  • slow sales process.

Reviewing Your Sales Pipeline and Creating Reports

Finally, keeping everything well-documented is one of the smartest decisions you can ever make. Moreover, you’ll be prepared to defend your decisions and convince investors or directors that the sales department is on the right track and business is booming.

Therefore, making a pipeline review is essential, especially if you’re unsatisfied with the sales processes. Reports of unmet goals, slow processes, wrong decisions, or even mismanaged stages are just as valuable as the reports of which you’re proud.

A Few Words Before You Go…

The sales pipeline management is an ongoing, complex process that covers a lot of responsibilities. All these responsibilities are crucial for meeting goals and scaling your business. Therefore, we hope that you feel more confident to create and manage a pipeline after reading our article. There are a lot of specific stages and areas that can be tweaked to better fit your model, but if you follow your guide, you’ll never miss anything important.

If you want to keep learning, don’t forget to visit our blog and subscribe to our newsletter. On the other hand, if you have a more specific issue in mind, don’t hesitate to contact us! Our team back at Redwhale will be delighted to help you out!

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