The sales world is abuzz with talk of the "sales pipeline." Here's a definition -- plus 4 key components with corresponding tips -- from expert Timo Rein, co-founder and CEO of Pipedrive.
Sales is Hard
Take it from me; I’ve done it for the better part of 15 years. I started selling books door-to-door and ended up growing a small company into a market leader purely through active sales. It’s given me a fair few grey hairs over the time, but the lessons I learned have helped me to build the company I run today.
I’m here to share with you the concept of the sales pipeline, and how making the most of the sales pipeline can help you grow your company.
The 4 Levers of the Sales Pipeline
Let's start off with a brief definition.
A sales pipeline is a systematic approach to selling a product or service.
You can think of it as the place where you do the real sales work -- it's the hustle you control, which hurls you towards sales superstar status. It’s also the main view in Pipedrive, the CRM we’re building.
In the sales pipeline, there are four key metrics, or levers:
Number of deals in your pipeline (#)
Average size of a deal in your pipeline ($)
Average percentage of deals that successfully makes it through the pipeline, or lead-to-customer conversion ratio
Average time deals stay in the pipeline before they are won, or sales velocity (days)
Like with everything in sales, there are no marvelous magic tricks for getting better at your job. However, managed right, these 4 levers of the sales pipeline will increase your revenue, and that’s because of the systematic approach you’re going to take with these principles.
Add more juice to your pipeline. Make more deals.
Manipulating the first lever of the sales pipeline is all about new conversations: in order to get more deals out of the far end, you need to add more to the front.
Someone once asked legendary comedian Jerry Seinfeld to share the secret behind his productivity and success. His answer was simple: the secret to becoming a good comedian is writing better jokes, and the secret behind writing better jokes is writing them every single day.
What he did was create a chain of activities that he never broke. Uninspired? He still wrote jokes. Having a bad day? He still wrote jokes. If you’re contemplating whether it’s useful to add new prospects to your pipeline, make that parallel. In order to succeed, you need to add new prospects every single day, regardless of all else.
Go for XL. Increase the size of your deals.
Every salesperson has pondered how to get bigger deals, but I want to tell you one story in particular. It's a story about a phrase that made hundreds of thousands in the year it was first said, and hundreds of millions since. A phrase so famous that you and every single one of your friends has heard it.
It goes: "Would you like fries with that?”
McDonald’s hit the jackpot with this simple question prompting upselling, and so can you. Getting bigger deals takes the right mindset -- you need to be able to visualize landing bigger companies with bigger budgets. But you also have to learn how companies purchase and bundle your offering with logical add-ons. (Like fries. Everyone wants fries.)
Work systematically to increase your conversion rate.
Even if you're new to sales, you know that a sales pipeline always has holes in it. Not all prospects in your pipeline will buy from you. However, working systematically with your potential customers can patch many of those holes.
I used to work with a sales rep who was able close 50% of his prospects. The feedback from his customers went along the lines of, “Although your prices are slightly higher, we felt that you really understood us, what we were looking for, and put forward a solution that reflected just that.” The case in point tells us an important lesson -- know your customers better than your competitors do. Learn how your prospect company operates, who its decision-makers and gatekeepers are, and what their purchasing process is like. Then you’ll have tools act in the way that’ll make closing the deal most likely.
Increase your sales velocity.
When it comes to revenue, the speed at which deals flow through your sales pipeline matters. Think of it this way. You can cover a whole lot more distance when you’re driving at a 100mph than by doing 50mph. That’s the premise for the final lever: Get your deals flowing faster.
Knowing your customer better than your competitors remains the mantra here. You’ve got to make sure you’re having sales talks with the right people (hint: the ones making decisions). But even more importantly, it’s vital to reduce the human tendency to “wait” and “think about it.” Next time you hear that, simply answer, “Great, let me know what you’d like to think about, and I can give you the information to help the process.” A little push never hurt.
If you have a deal that’s been sitting in your pipeline for longer than you normal sales cycle, then it’s time to flush. It feels counterintuitive, but recognizing lost deals early on and removing them from your pipeline will help you increase your sales velocity... and make you focus on deals you can close.
Put the 4 Levers into Action
See what a sales pipeline can do for you.
If you haven’t used the sales pipeline, maybe it’s time you gave it a go. When you put these 4 levers into action, and if you do it well, then you really can grow your sales.
We’ve seen it work for companies large and small. Try it and see for yourself.
Contributor: Timo Rein is the co-founder and CEO of Pipedrive. Timo has 15+ years of sales pipeline experience as a salesman, sales manager, and software entrepreneur. Before co-founding Pipedrive he helped to build a leading sales and management training house in the Baltics and was among the top 1% of door-to-door salesmen with Southwestern Company.
Image credits: Microphone © aarstudio -
Fotolia.com. Fries via
free images. Deal flow and odometer via
Pipedrive. Rusty pipeline via