Sales pipeline stages are the steps within the sales cycle that represent activities needed to move a prospect from initial contact to buying your product or service. There are eight sales pipeline stages every sales team should have, including tasks like prospecting, lead qualification, and product delivery, which can be tracked using your CRM software.
This article covers each sales pipeline stage and demonstrates how CRM tools can automate pipeline activities from beginning to end. CRM tools like Pipedrive, not only help sales teams visualize each sales pipeline stage, they also help sales teams become more efficient by automating sales pipeline activities. Increase your team’s sales and efficiencies today by signing up for a free trial with Pipedrive.
The 8 sales pipeline stages every sales team should include:
Every sales pipeline begins with prospecting or lead generation. Prospecting is when salespeople find potential customers to buy their company’s product or service. Lead generation is when marketing efforts generate interest in products and produces leads for the sales team. Both are key because more targeted leads in your pipeline mean more opportunities to close deals.
Here are a few ways to generate leads and prospects:
Prospecting and Lead Generation
There are several prospect and lead generation methods that salespeople and business owners use to build their database of leads. These methods range from in-person networking to creating high-value online content that entices target audience members to give you their contact details.
Below are several ways business owners and salespeople generate leads or prospects:
- Networking (in-person) – You can find out a lot about a prospect simply by talking to them. You can quickly determine if someone is your ideal customer or if he or she is a potential source of referrals.
- Cold Outreach – Cold outreach activities like cold calling or cold emailing can be effective for contacting prospects you don’t know. You can also reach out to target audience members on social media or group forums.
- Social Selling – This is where salespeople use social media to research, provide value and connect with their ideal customers. The goal is to establish enough rapport to engage the prospect outside of social media.
- Advertising – Business owners and salespeople should generate interest through advertisements. Unlike networking, cold outreach, or social selling, this method should prompt a large number of targeted prospects to contact you or your business.
- Content Marketing – Similar to advertising, content marketing prompts prospects to contact you. Unlike advertising, content marketing involves creating items like e-books or videos that the target audience finds valuable enough to make contact with you.
- Events & Trade Shows – Events and trade shows are great for prospecting because your target audience is in one place, ideally to learn more about a topic closely related to your product or service. You can be a sponsor or attend and aggressively network.
If you’re looking to generate leads from your website, try using automated live chat software like Freshchat. Freshchat helps your lead generation process by engaging visitors who are about to leave your website or are close to making a purchase, qualifies them as leads, and auto-uploads the leads into a CRM. It gives you the ability to customize chatbot conversations and workflows, so you dictate how the bot interacts with your website visitors. Best of all, Freshchat has a 21-day free trial, so you can see if it works for you — commitment free.
2. Qualifying and Managing Leads
Once you’ve generated leads, the next stage in the sales pipeline is to qualify and manage them by making sure they are the right fit for your product or service, by making sure they fit your target market criteria, have a need for your product, and are willing and able to buy it. For more information on qualifying leads, read our article on Marketing and Sales Qualified Leads.
Managing your leads keeps your most promising leads at the top of your to-do list, and you must make sure contact and other information is kept up to date. The best way to do this is in a CRM tool where you can house and update information and set activity reminders for tasks you need to complete to manage your leads.
Here are some steps you should take to qualify and manage your leads:
1. Ensure Leads Represent Your Target Audience
As a business owner, you should incorporate your target audience and buyer persona details from your sales strategy into your sales process. Your sales team should know exactly who to target when they are prospecting. This helps them quickly eliminate unqualified prospects. It’s a good idea to provide them with a cheat sheet of target audience criteria and qualifying questions.
Ensuring your leads represent your target audience can be time-consuming and requires a lot of research. A CRM tool can help your sales team gather more prospect information in less time by pulling in data available on the web and populating it into your CRM tool. This frees up their time for more customer- and prospect-facing activities. You can even use Trello as a CRM.
Pipedrive has a feature called Smart Contact Data that helps reduce the amount of time salespeople spend on prospect research. This feature allows salespeople to begin qualifying leads by accessing information about your prospect from online sources such as LinkedIn, Google Plus, and other sources. All you need is an email address and public data.
2. Assess the Prospect’s Decision-Making Ability
The next thing you want to do is to make sure your prospect has the influence and or authority to make a decision on whether or not to purchase your product or service. One of the most frustrating things is to spend a lot of time and energy with a prospect only to find out they need to get permission from other people to make a purchase.
Here are a few ways to assess a prospect’s decision-making ability:
- Confirm prospect’s role and title – Roles and titles are valuable in determining who your decision-makers and influencers are. Try to pinpoint all decision-makers and influencers relevant to your deal.
- Research organizational structure – Find out as much as you can about your prospect’s organizational structure. This can also provide clues as to your contact’s ability to make buying decisions within the organization structure.
- Ask probing questions about the decision-making process – The more you know about an organization’s decision-making process, the better positioned you are to pinpoint the decision-makers and influencers you’ll need to build relationships with.
3. Assess the Prospect’s Financial Viability
Once you’ve determined your prospect’s decision-making ability or influence, you need to make sure they are able to buy your product. Two ways you can do this include asking the prospect directly about their buying power and searching online for company financial data.
4. Conduct a Preliminary Needs Assessment
The last thing you want to do is to assess the needs of your prospect. There’s no need to go into extreme detail at this point. You just want to make sure there is a strong need for your product. The greater the need, the higher the chances of making a sale.
Here are a few ways to do a high-level needs assessment:
- Conversation with the prospect – Talk to your prospect about what they are looking for and why they are interested in your product. Explore how they feel and exactly what they feel the problem is.
- Clues online – Depending on your product or service, you may be able to find clues online that point to prospect needs, such as negative Yelp reviews or number of social media followers.
- Listening to online chatter – Social media and online forums have given people a platform to vent. See if you can find any online chatter specific to your prospect or specific to people similar to your prospect.
5. Manage and Work Your Leads
After you have qualified your leads, they must be managed and followed-up on in a systematic way. You must be able to document and update information about your prospects. You must also be able to follow-up and communicate with them to move them along the sales process. For more information on lead and contact management, read our article on the Best Contact Management Software.
Using a CRM tool to manage leads saves time and allows you to focus on building relationships. You’re also able to focus on moving prospects through your pipeline as quickly and efficiently as possible. CRM software like Pipedrive help salespeople and small business owners to manage and follow-up on leads with features like activity reminders.
When you have a healthy pipeline filled with leads, it can be difficult to remember to follow-up or engage in other selling activities. Pipedrive makes this easy by letting you establish follow-up and activity reminders at frequencies you can choose ahead of time.
Which CRM Software is Right for You?
3. Initial Meeting
Now that you’ve qualified your leads, it’s time to have an initial meeting. It is during this meeting that you set the stage for who you are and what you have to offer. It is also during this meeting that you get to know your prospect, their needs, and pain points better.
Here are some things you can do to prepare for and execute an initial meeting:
Develop a Call (or Meeting) Plan
Before meeting with your prospect, you need a call or meeting plan. This is your plan of action that lays the groundwork for when you meet with or speak to your prospect. It keeps you organized, increases your confidence, and prepares you to set the tone for the meeting.
You should not spend a lot of time on your call plan, but here are some things to include:
- Define the purpose of your meeting – The first thing you want to do is to define the purpose of your meeting. Your initial meeting should be about getting to know your prospect, establishing rapport, and beginning to understand their needs and pain points
- Establish your desired outcome – Articulate what you want to come out of this initial meeting. It could be another more formal meeting or the opportunity to offer a proposal. Whatever you want, articulate it so that you are focused on this outcome.
- Plan how you will move the prospect to next pipeline stage – Your call or meeting plan should also include your plan to move your prospect into the next stage of your pipeline. Note the activities you will engage in to get closer to a closed deal.
- Organize intel from lead qualification – Your meeting should be centered around getting more familiar with your prospect’s needs. Organizing any information you were able to gather from qualifying your prospect will make you more prepared for your initial meeting.
- Prepare agenda topics and questions – Prepare agenda topics and questions in advance and use them to steer conversations and the flow of the meeting.
CRM tools like Pipedrive allow you to add key contacts to your deals. Keeping track of your key contacts is important when developing your call or meeting plan because your meeting will be based on their needs. Find out more about how Pipedrive can help by signing up for a free trial.
Finalize Meeting Logistics
Once you have completed your call plan, you need to finalize the meeting logistics such as date, time, and location. For some initial meetings, it may be appropriate to schedule a video or conference call. For others, in-person meetings are appropriate. Once you’ve determined where the meeting will take place, you will need to coordinate the technology or venue details and share them with your prospect.
Conduct Initial Meeting
Now you’re prepared and ready to conduct the initial meeting. Remember, one of the main reasons you are meeting with the prospect is to establish rapport and to begin understanding their needs and pain points so that you can develop a sales proposal. Throughout your meeting, this should be your overarching focus.
Here are some best practices for conducting your initial meeting:
- Show up early – To show your prospects that you want to do business with them and you respect their time, show up early so that your meeting starts on time. This applies to in-person onsite meetings as well as video conferences or conference calls.
- Find common interests (personal or professional) – People tend to do business with other people they know and like. Find common interests, whether they be personal or professional. Be authentic and find something interesting—personal or professional—you share with your prospect.
- Use an agenda and plan questions to stay focused – You want your meeting to flow as smoothly as possible and you want to stay focused. Your agenda and questions you prepare ahead of time should help you do this.
- Uncover needs and pain points – While it is important to use your agenda and questions to stay focused, it is equally important to be open-minded and listen to your prospects. During this meeting, one of your top priorities is to uncover your prospect’s needs and pain points.
- Identify additional stakeholders and influencers – The initial meeting also presents a good time to identify additional stakeholders and influencers. You can ask if there’s anyone else who needs to evaluate any proposals or test your product or service.
- Wrap-up meeting on time with clear next steps – One of the most important things you can do is end your meeting on time with clear next steps.
After the meeting is over, it is important to follow-up with everyone involved in your meeting. How you follow-up is just as important as how you conduct the actual meeting. It demonstrates how much you actually care about your prospect’s needs and how organized you are.
Here are a few post-meeting follow-up best practices:
- Thank-you – Always send a thank-you email or other communication to show your prospect you appreciate their time and you look forward to engaging with them further.
- Recap – Always provide a recap of your meeting. Recaps are good reminders of what was covered in the meeting, and they show how organized you are and how much you understand and care about your prospect’s business.
- Next Steps – Always provide next steps. Your prospects expect you to lead them to the next stage of exploring how you will help them address their pain points.
Because you are so busy with all of your selling activities, follow-up activities can slip through the cracks. CRM tools like Pipedrive help you schedule and execute key follow-up tasks. You can also save time by creating and using email templates so that you don’t have to craft all of your follow-up emails from scratch. For follow-up email templates and ideas, see our article on Follow-up Templates for Any Situation.
4. Define Prospect Needs
It is important to tailor your proposal so that it clearly addresses the needs and pain points of your prospect. Therefore, before sending your prospect an offer or proposal, you must first review insights you’ve already gathered during the initial meeting, explore their needs further, and articulate how your product will solve their problem.
Take a Deep Dive into the Prospect’s Needs
By now, you should have a pretty good understanding of your prospect’s needs. At this point, you should spend some time really understanding your prospect’s needs and pain points. You will be in the best position to make a sale if you not only understand their needs but also look at things from their perspective.
Here are three things you can do to take a deep dive:
- Conduct a comprehensive needs assessment – One way to do a deep dive is to do an in-person needs assessment. A needs assessment is where you explore your prospect’s needs and pain points in more detail than in the previous stages.
- Send a survey – The most efficient way to do this is to use a survey tool like Survey Monkey, where your prospect can answer questions around their needs.
- Schedule interviews with key stakeholders – Another way to do a deep dive is to interview key stakeholders. You can use questions from your needs assessment to guide your interviews.
Articulate the Prospect’s Needs
After you’ve performed an assessment, you are now ready to gather all of the information you have compiled and articulate your prospect’s needs. The best way to do this is to summarize their needs and pain points using their words. Using a CRM tool will help you organize and access this information when you need it. A CRM tool like Pipedrive will allow you to create detailed notes and attach documents and survey responses to your prospect’s records.
Another thing you’ll want to do is use data you’ve gathered over time across multiple opportunities to segment your prospects and customers. One of the best ways to do this is to create customer profiles for key decision-makers and stakeholders.
Customer Profiles are only useful if you can use them as you’re engaging in selling activities. Pipedrive allows you to create customer profiles and then associate the appropriate customer profile to specific prospects or customers. For more information on how to set this up in Pipedrive, visit Pipedrive and sign up for a free trial.
Connect the Prospect’s Needs to Your Product
The last thing you should do is to make the connection between what your prospect needs and how your product or service meets those needs. Taking time to do this makes it easier to develop a compelling offer. If your offer or proposal is based on your prospect’s needs and addresses their pain points, you have a higher likelihood of making a sale.
5. Making an Offer
Once you have defined your prospect’s needs, you are now positioned to make a compelling offer. At this stage, you should decide on the type of offer to make to your customer and then work on how to make it compelling.
Decide on Offer Type
There are several different strategies businesses use to make their offers more compelling to potential customers. These strategies are designed to remove risks to the prospect, such as hidden pricing, unknown performance, or unclear deliverables, and therefore proactively overcome common buying objections.
Here are examples of a few offers you could make to your prospects:
- Free trial to product adoption – This is where you let your prospect test drive your product for a period of time. Once that period is over, they must pay for the product in order to continue using it.
- Freemium offer – This type of offer allows prospects to use a version of the product for free and if they want to upgrade, they must pay for it.
- Quote for purchase – Many companies with more complex products and services send quotes to prospects. These quotes are based on conversations salespeople have had with their prospects.
- Formal proposal and contract – Usually, more complicated deals require proposals and contracts. Once the salespeople have gathered all of the requirements, a proposal and/or contract is drafted and sent to the prospect as an offer.
Make Your Offer Compelling
As you are creating your offer, make it compelling so your prospect will want to buy your product or service. To make it compelling, center it around their needs and how your product or service meets their needs and solves their problems. Also, make sure the terms and pricing are what you’ve discussed and in line with what they are expecting so they will have more confidence in your offer.
Here are a few things you can do to make your offer compelling:
- Acknowledge prospect needs – Your offer must be about your prospect and not about your product. Make your prospect needs front and center in your offer. When you talk about your product, demonstrate how it solves their problems.
- Prioritize prospect needs – Prioritize features and benefits based on the urgency of your prospect’s needs. Doing this will keep them engaged in your proposal and will make it more appealing.
- Clearly outline pricing, terms, and conditions – Making your terms, conditions, and pricing clear and simple make your offer more compelling.
- Offer incentives that add value to the prospect – Most people like sales incentives, but the best incentives are those that add value and address a pain point or need. Offer incentives that have high perceived value to your prospects.
6. Negotiating Terms or Finalizing Proposals
You’ve done a great job of understanding your prospect’s needs, you’ve built a solid relationship with them, and the offer you’ve made is compelling. In many cases, the prospect will be ready to buy, but in a lot of cases, you have to be prepared to address concerns, meet additional needs, make small tweaks to a proposal, or negotiate terms. The benefit of doing this will be to create a proposal that is exactly what your customer is looking for.
If you find yourself in any of these situations, here are a few things you can do:
Listen to and Understand Your Prospect
At this stage, if your prospect wants to make changes to a proposal or to terms previously discussed, find out what is prompting the changes. Really try to understand where they are coming from. By really listening to what they are telling you, you may uncover additional opportunities or discover better ways to meet their needs.
Ask Clarifying Questions Based on Their Needs and Concerns
Asking questions to further explore your prospect’s needs will give you more insight into why they want to make changes to a proposal. If you don’t ask clarifying questions, you run the risk of having a different set of expectations than your prospect. If this happens, you may end up selling your prospect a solution that doesn’t address their pain points or desires.
Explore Mutually Beneficial Terms
Sometimes to close deals, it is tempting to accept terms that are less than favorable. Instead of settling, seek terms that are mutually beneficial. These are terms that you and your customer will be happy with and where you both will feel like you’ve won the deal.
To do this, focus on the value your product or service provides. The value you should focus on is what addresses your customer’s pain points or strong desires. If possible, help the customer quantify the value in measurable terms, like time and money saved or revenue made and clients gained. Then illustrate how these gains are worth the agreed-upon terms.
Centralize Your Negotiation Communications
Depending on the type of proposal and how close your offer is to meeting their needs, this stage could require a quick phone call or a simple email. Conversely, it could require multiple meetings, multiple emails and extensive updates to a proposal by different people.
No matter how complex this stage is in your business, you will want to use CRM software like Pipedrive to keep all of your conversations and suggested proposal changes and comments in one centralized location. Consolidated communication helps you to create a final proposal your prospect is ready to sign.
7. Closing the Deal
After the terms and conditions are finalized, you are ready to close the deal. This could be as simple as your prospect going to a landing page and entering their credit card information, or as complex as agreeing to terms and conditions and having multiple people sign-off on a contract. No matter how complex, you want to keep the momentum going and your new customer happy.
Here are a few things you can do to keep your customers happy at this stage:
Make the Payment Process Easy and Simple
Within your proposal or offer, incorporate a way to make the payment process easy and simple. There are hundreds of secure, fast and simple ways to accept payments. Choose something that will get your deal closed the fastest and that will work for your customer.
Make Signing Contracts and Proposals Easy
If your contracts and proposals use clear language that reflects the agreed-upon terms, your prospect will be more likely to sign your contract or agree to your proposal. Once they are in agreement with the terms, make it easy for them to actually sign and deliver the necessary documents to you.
Have Thank-You’s and Acknowledgements Ready to Go
One critical step at this stage is saying thank you. No matter how big or small a deal is, new customers feel good when their business is appreciated. CRM tools like Pipedrive make it easy to send acknowledgments with email templates and follow-up reminders.
Make Deal Document Storage Easy
When you’ve closed a deal, it is a good idea to store documents (such as contracts, invoices, purchase orders) and signed agreements right away. Ideally, you’d want to make sure that you could access them at any time in case you or your colleagues need to refer back to them.
8. Delivering the Product
Of all the pipeline stages, this one presents the best opportunity to solidify customer relationships and even transform them into partnerships. Here is where you should be asking for referrals and identify opportunities for additional business with your new customer. Doing these things will strengthen your relationship and increase your revenue.
Here are a few things you should do to capitalize on opportunities during this stage:
Continue Strategic Communications
Throughout each pipeline stage, you have sent emails, made phone calls, or sent text messages to your prospects so that they can get to know you, your company, and your product over a period of time. These efforts should not stop after your deal is won. It is a good practice to keep in touch with key contacts by providing them with relevant, valuable and timely information.
CRM tools such as Pipedrive can help you plan when and how often you communicate with customers and prospects. They can even help you save time by using email template features so that you don’t always have to draft emails from scratch.
Build New Relationships
Another thing you should do is build new relationships within your new account. When you have multiple positive relationships within your new client’s business, you create more customer loyalty. Ask your primary contacts to introduce you to their colleagues. New contacts can mean new business.
Identify Opportunities for Upsells and New Business
The product delivery stage is the perfect stage to identify opportunities for upsells and new business. You’ve already sold a product or service to them, so they are more likely to buy other products and services than a prospect at the beginning of the sales pipeline. If you’ll be spending a significant amount of time with your new customer after a sale, use the time spent to uncover additional ways you can add value.
Ask for Referrals
The best time to ask for referrals is when your new customer has received their product. Happy customers are more likely to refer you to people they know. If you’ve provided tremendous value throughout the sales cycle and have been more of a trusted advisor than a salesperson, they’ll give you contact information for members of their network and will even make introductions.
Frequently Asked Questions (FAQs)
What Is a Sales Pipeline?
A sales pipeline represents the number of potential deals or opportunities a salesperson has to close business within a certain time frame. It can include potential sales from new prospects or new business from current customers.
How Does a Sales Pipeline Work?
A sales pipeline works by helping salespeople, sales managers, and business owners visualize, categorize, and track the stages of their potential deals. It is helpful for pinpointing the most urgent activities necessary to close deals.
What Are Sales Pipeline Stages?
Sales pipeline stages represent the progression of activities a deal or opportunity goes through before it becomes a won or closed deal. The stages begin with prospecting and conclude with product delivery.
Sales pipeline stages begin with prospecting and end with delivering a product or service that meets your prospect’s needs. Each stage consists of activities that must be complete in order to move the potential deal to the next stage.
CRM tools like Pipedrive allow you to automate and simplify tasks associated with each sales pipeline stage. It can also help you clearly visualize each stage within your pipelines. To create your own visual pipeline in Pipedrive, sign-up for a free trial.