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If there’s one type of DIY job I avoid at all costs, it’s plumbing. My theory is that you can avoid getting electrocuted while you’re working with wiring, but good luck staying dry when you’re fixing the sink. So, imagine my surprise that after avoiding the trades entirely and choosing a career in software, I still find myself talking about pipes.

I’m Cody Pierson, and I run a small team of SMB-focused RevOps specialists laser-focused on working with HubSpot. Whether my clients are trying to get a better handle on conversion rates, improve the customer experience or just help the sales reps close deals, the conversation often turns to the sales pipeline.

What is a Sales Pipeline?

There are a lot of titles given to the path a potential customer walks on the way to becoming a customer. Buyer’s journey, customer lifecycle, and conversion pathway are just a few. Like all of those, a sales pipeline is just an abstraction of the series of steps you expect your ideal prospect to take after they’ve expressed interest in what you’re offering and before they become a customer.

So, what makes sales pipeline stages different from those other journey mapping tools? The main difference is that sales pipeline stages are built to provide members of the sales team with step-by-step direction based on where a potential customer is in the sales process. 

For example, the actions your team will be taking for someone in the prospecting stage will be different from those in the qualification stage. However, they’re all designed to help sales reps reach decision-makers and turn new leads into closed deals as quickly and efficiently as possible.

Speaking of the stages of a sales pipeline, they are the most distinctive element of a sales pipeline but there are other common elements, including:

  • 5 – 10 distinct different stages, depending on process complexity;
  • Different close probabilities for each stage;
  • Different required fields or properties depending on the current stage;

So, what happens if your organization has multiple divisions or lines of business that don’t neatly fit into a single process? You simply create multiple pipelines. A pipeline is an organizational tool, not a set of commandments. It’s very common for organizations to have multiple pipelines in their CRM. For example, one pipeline for new business and a separate pipeline for renewals or recurring business.

Sales Funnel vs Sales Pipeline

You may have noted that in my list of common abstractions of a customer journey I neglected to mention the ubiquitous sales funnel. That was deliberate because, unlike some of the other more marketing-oriented tools to plot customer progress, there is a lot of overlap between the purposes of a sales pipeline and a sales funnel. However, they ultimately have very distinct purposes.

The biggest difference is that a sales pipeline is specific, while a sales funnel is general. A sales pipeline is a specific set of steps, stages, questions, scripts, and actions which move deals from one fixed point in your process to the next.

On the other hand, a sales funnel represents the reality that there will be some attrition amongst those deals as they move through the process. After all, it’s only natural that you will give more demos than you will sign contracts.

The most notable point of overlap is that both typically involve a metric based on how likely the deal is to close. (i.e. We expect to close 40% of deals at the ‘Quoted’ stage.) That probability is where the specificity of a sales pipeline meets the reality of attrition represented by the sales funnel. However, the reality is that every organization has a sales funnel – whether they choose to define it or not – while only your organization has your specific sales pipeline.

The Stages of a Sales Pipeline

We’ve already established that a hallmark of a sales pipeline is that it’s specific to an organization and its processes. However, even in the world of bespoke pipelines there are trends and commonalities which can be helpful to understand. So, we’re going to take a look at common stages within a sales pipeline and the information, approaches and pitfalls that go along with them.

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Lead Generation

If Closed Won is Oz, Lead Generation is a dilapidated Kansas bungalow landing in Munchkinland. This is the stage where Deals generated by marketing, prospecting, or networking start their journey. It’s for deals in this stage to have nothing more than an associated company and/or contact, some demographic information and a few notes or sales activities representing their engagement so far (i.e. attended a webinar, downloaded a case study, etc.)

It’s also very common for this step of the sales pipeline to become a graveyard of potential. If the marketing team feels their responsibilities have ended at this point and the sales team lacks faith in the deals being created, it’s only a matter of time until you end up with a host of potential sales opportunities which aren’t being actioned due to the low probability of conversion and the often-unclear reasons for a deal being created in this bucket.

Generally, you’ll be looking at a probability to close of 10 – 20% and next steps that involve routing the deal to the right rep or team or rejecting unsuitable leads provided by marketing. Some organizations forgo this stage entirely, since much of the work can be accomplished via automation and, even if the process is manual, deals should only spend a matter of hours in ‘Lead Generation’.

Lead Qualification

Once a lead has been accepted by your team the next step always involves qualifying it via a more detailed review of the particulars of the deal to determine whether it is worth pursuing. This might be as simple as a rubric that can be filled in by a few minutes of LinkedIn research for information on headcount, annual revenue, and other demographic information that will help you understand whether the prospect is a fit for your offering.

On the other hand, it can also involve members of your team—typically junior ones—reaching out to have conversations with prospects to assess fit based on specific needs, budgets and timelines.

Either way, this stage should involve your team populating additional fields with information about the prospect, ranking the deal based on what that information says about the fit and determining what next steps are best to move it forward. Also, most—if not all—of that information should be before the deal can move into the next stage.

Initial Contact

Demo, outreach, engagement, nurturing, follow-up; whatever the specific title applied to it, the Initial Contact stage is the first sales engagement based solely on moving the newly qualified lead towards becoming a customer. This is typically where the more senior members of the sales team get involved and, depending on your sales cycle and the specific needs of your process it’s common to see this single stage become various stages (i.e. first demo, second demo, discovery call, etc.)

This is often where sales enablement tools like outreach templates, decks and sales sheets, meeting scheduling tools and sales automation will make the biggest impact. It’s also a stage where the outcomes and next steps can be ambiguous.

The most important thing to define about deals at this stage is how long a deal can be idle before you decide it’s lost. After all, salespeople are eternal optimists, and you can easily clog your pipeline with deals that your team has been ‘having conversations with’ for months.

Proposal

This is the point in the pipeline where sales leaders really start to pay attention. Typically the official close probability is set to 60 - 70%, but if anything falls through at this point you can expect to have a conversation about why it didn’t work out.

An important thing to pin down is whether or not this stage means a proposal has been sent. That may seem obvious but in organizations where proposals can take weeks to develop that distinction can be very important, both for internal planning and for reporting.

Negotiation and Commitment

For most B2B organizations, this stage—also called Proposal Sent or Closing—is as good as calling something won. Generally, we're looking at an 80 - 90% close probability and a relatively quick turnaround for decisions. It’s a great place to be but it also means that people tend to play fast and loose with pipeline management at this point.

This stage will often get skipped because a deal will move from Proposal directly to won. Or salespeople will stop tracking sales activity against the deal since it’s basically a done deal. However, knowing which deals went off the rails right as they were pulling into the station can be incredibly valuable.

Opportunity Won

You did it! They’ve signed on the dotted line and you’re ready to start planning what to do with your commission check. However, you do still need to set the rest of your team up for success.

Information like kickoff dates, contract lengths, key contacts and any other information the fulfillment team needs to start the engagement off on the right foot should be required before the deal can be set to won. This will make it easier to facilitate those next steps via automation and it will mean the fulfillment team doesn;t need to ask questions your salespeople already know the answer to.

Follow Up and Retention

HubSpot has been preaching the gospel of the flywheel for a while now, which is just a fancy way of saying that delighting your existing customers is your best business development tool. That’s why Follow-Up and Retention is an incredibly important post-sale step in your pipeline, even if it’s not actually a step in your pipeline.

What I mean is that you don’t actually need to have a sales professional set a won deal to this stage. Often there will be workflows or campaigns designed to kick off when a deal is won (i.e. a new customer onboarding or lead nurturing email series). Alternatively, there might be rules in place to create a new deal three months before the end of the current contract or to request referrals, testimonials or reviews.

No matter what actions make the most sense, your team should be taking steps to ensure they happen consistently.

Tips for Successful Sales Pipeline Management

Use Fewer Stages

The most common with sales pipelines is that they’re simply too long. If there’s a stage that always gets skipped, drop it! If there’s a stage the team doesn’t understand, you probably don’t need it! A lot of organizations get trapped in a pipeline that doesn’t work for them, either because they stuck with the default setup or someone overcomplicated a simple pipeline. 

Require New Information at Each Stage

In the example pipeline I mentioned the types of information that could be collected at various stages. I focus on that because my rule of thumb is that every stage should require new information to be added to the deal.

It might sound restrictive but you need clear definitions of what each stage in your pipeline represents and the easiest way to do that is by requiring the answers to specific questions before a deal can move forward.

Pipelines and Pipe Dreams 

Earlier I defined a deal pipeline as “an abstraction of the series of steps you expect your ideal prospect to take after they’ve expressed interest in what you’re offering and before they become a customer.”

The operative word in that definition is expect. We all know that expectation and reality can be very different things. You will have deals that skip stages. You will have deals that get hung up for months for perfectly valid reasons. You will have deals that make you question whether you need a new pipeline.

There’s no way I can provide guidance for all the ways a pipeline can struggle to encompass all the different ways deals will evolve. The important thing is that you recognize a pipeline—like the Pirate’s Code—is more of a guideline than a set of commandments.

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Cody Pierson
By Cody Pierson

Cody Pierson is the founder of Hubcap Solutions, a small team of SMB-focused RevOps specialists laser-focused on working with HubSpot. They don’t run Google Ads. They don’t write social posts. They don’t develop websites. They help marketing and sales teams turn HubSpot into the force multiplier it’s meant to be. I started my career working with Microsoft Dynamics before pivoting to HubSpot five years ago. Since then I’ve worked in agencies and with clients in software, education, agriculture and beyond.