What Is a Sales Pipeline and How Do You Build a Successful One?

Written by Coursera • Updated on

Discover how a sales pipeline can help businesses drive sales and the steps to building one for your business.

[Featured image] A woman in a white blazer shakes hands with a sales lead from her company's sales pipeline.

A sales pipeline is a company’s system of leading customers through a sales process, from generating and qualifying leads to closing sales and engaging with customers after they make a purchase. A sales pipeline also indicates where the best opportunities lie, in terms of which sales are likely to close and where sales teams should put their efforts. 

With a strong sales pipeline, you also can track customers’ progress and stay abreast of trouble spots in the sales process, such as lack of follow-up with warm leads or a low conversion rate. Ultimately, a sales pipeline can make it easier to predict future revenue and reach your sales goals. 

A sales pipeline shares similarities with concepts like sales funnel and customer journey. All three concepts deal with what customers are doing and experiencing at a specific stage. Here are some important distinctions to keep in mind: 

Sales pipelineSales funnel Customer journey
The process sales teams use to lead prospects toward a purchase.The path prospects follow toward becoming customers.Encompasses a customer’s engagement with a brand at every touchpoint.
Stages include generating leads, qualifying leads, nurturing leads, closing deals, etc.Stages include awareness, consideration, purchase, and loyalty.A customer journey can be mapped using the stages of a sales funnel.
Focuses on the sales team’s process of closing dealsFocuses on customers’ decision-making about your brand or productFocuses on customers’ experiences with your brand

Sales pipeline stages 

You may find that sales pipeline stages vary from company to company, depending on their specific needs, customer base, and processes. Some sales pipeline stages may be common to all businesses, as explored below: 

  • Prospecting: Actions you might take to reach out to potential buyers and generate leads 

  • Qualifying: Process of determining which leads meet the requirements for making a purchase

 

  • Contacting: The moment a sales team member contacts a qualified lead to understand their needs. This might involve scheduling a sales call or product demo.

  • Nurturing relationships: Developing and strengthening relationships with prospects at every stage in their journey  

  • Offering a proposal: Pitching products or services  

  • Negotiating: Strategic conversation between the sales team and a customer to determine the exact price, services rendered, and other details of the deal 

  • Closing the sale: The moment when a customer commits and makes the purchase  

  • Offering a post-purchase experience: Efforts to engage customers and offer support after they’ve made a purchase   

  • Following up with cold leads: Reaching out to unresponsive leads to re-engage them and gauge their level of interest in making a purchase  

How to build a sales pipeline

Before you begin building a sales pipeline, there are several things you’ll need, including details about your target market, buyer personas, products and prices, and sales team. Consult your business documents, such as your business plan, marketing plan, and brand strategy, and update them as needed to have the latest information about your business top of mind. 

Then, follow the steps below to build a sales pipeline.   

1. Identify prospective buyers.

Review your customer relationship management (CRM) system, as well as social media, email inbox, and other places where you might store customer information. Identify prospects—people who have shown interest in your products or services—and label them according to where they might be in their customer journey. 

In addition, review your buyer personas. The specific problems or pain points your typical customers experience may determine how you segment and position them along your sales pipeline. For example, you may have customers who are adults with and without children. Both personas may consider different factors when purchasing products and services. 

Read more: What Is Customer Segmentation? + How to Reach Customer Segments

2. List the stages of your pipeline. 

With your prospective buyer information handy, begin listing every stage of your sales pipeline, using the list of stages above as a guide. Be mindful of the specific needs of your business. For example, selling clothing through an e-commerce website may not need to include proposal and negotiating stages. Or, you may have several components of a nurture sequence that you’ll need to list in your pipeline.

Then, refine your prospective buyer labels to match the stages you identified and begin filling the sales pipeline with prospects. 

3. Identify and assign tasks for each stage.

Work with your sales team to identify the specific tasks and actions to complete at each stage. For example, during the prospecting stage, tasks might include asking current customers for referrals, reviewing your list of followers on social media, or emailing potential buyers.

Then, assign tasks to members of your sales team according to their strengths and experiences. 

4. Determine the sales cycle length.

The time it typically takes to close a sale is an important factor when building a sales pipeline. Consider past sales, the skills of your sales team, the complexity and price of your products, and any other factors that affect the sales cycle length. 

Then, refine your pipeline stages and list of tasks to accommodate the sales cycle. For example, you may need more time and additional tasks in the negotiation phase for high-priced products purchased by more than one stakeholder. 

5. Define sales pipeline metrics. 

To evaluate the effectiveness of your sales pipeline, you’ll need to identify which metrics you’ll be monitoring. These might include: 

  • The number of deals in your pipeline at a given moment 

  • Which stages of the pipeline have the most deals

  • The number of qualified leads

  • Average win rate (the number of qualified leads who become customers) 

  • The customer acquisition cost 

Sales pipeline key takeaways and best practices 

Remember: A sales pipeline is a company’s system of leading customers through a sales process and can help you track customers’ progress, predict future revenue, and drive sales. While companies may design their pipelines to include different stages, some of the stages that are common to most businesses include: generating leads, qualifying leads, nurturing leads, and closing deals.

Keep these sales pipeline best practices in mind: 

  • Regularly monitor your metrics, such as monthly, quarterly, or every six months. 

  • Refine your sales pipeline over time as your customer base and business needs change. 

  • Use CRM tools to organize customer data and automate some of your sales processes.  

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