A sales pipeline is a set of stages that sales prospects progress through as they move toward becoming a customer. The sales pipeline provides sales reps, managers, and executives with a visual representation of where sales prospects, leads, and contacts are within the sales process. Sales pipelines enable leaders and reps to make accurate forecasts and predict the amount of revenue that will be generated within a given period of time.
The sales pipeline differs from company to company, but they typically consist of the following stages: uncontacted, contacted, qualified, meeting set, demo held, and closing.
Your sales pipeline should be closely aligned with your sales process so you can properly track prospects as they move through the pipeline. Your pipeline is simply the leads that your salespeople are working on, grouped by where they are within the sales process.
The sales pipeline should begin with cold, or uncontacted leads that have not been touched by anyone within the organization. Once a rep is able to engage with them, they enter the “contacted” group. Next, if the prospect meets minimum buying requirements, they are be deemed qualified, a meeting time is set, and they are usually passed to an account executive where a demo is given or meeting is held. They then move to the closing stage where the account executive attempts to sign new business.
Important metrics used to measure the sales pipeline include: number of qualified leads, win rate, average deal size, cost of acquisition (CAC), customer lifetime value (LTV), and the average sales cycle length.
Sales pipelines are related to, but differ from sales funnels. A sales funnel depicts the conversion rate of prospects that pass through the stages of your sales pipeline.
Therefore a sales pipeline shows where your prospects are in your sales process, and a sales funnel shows how many prospects move to, or fall out of, each stage.