This guide has everything you need to know about the sales pipeline management.
If you are just starting your B2B marketing career, I'll show you how to build effective B2B sales funnel from scratch.
And if you're a B2B marketing veteran?
I'll reveal advanced tips and methods that you can apply to increase conversion of every stage in your sales funnel.
If you want to grow your B2B sales pipeline and accelerate sales, you'll love this guide.
Let's get started
Chapter 1 - Sales Pipeline Fundamentals
Quite often I hear the question: what's the difference between sales pipeline and sales funnel?
In some cases, you might hear the answer that sales funnel is a visual display of conversion rates through the pipeline stages.
I don't like to overcomplicate things and can say for sure that both sales pipeline and sales funnel are the sequence of actions your leads take from the initial contact to signing the contract.
The main purpose of the sales pipeline is to divide the sales process into microstages to improve the win deals ratio, shorten the sales cycle and accelerate sales.
This way you can see where exactly you are losing leads and what part of the sales process should be fixed or improved.
While the definition "sales pipeline" is more common for B2B space, the "sales funnel" definition is often used in digital and B2C marketing.
The biggest mistake here I see is thinking about both of them as a visualization of the lead-generation process and the customer journey.
This isn't true.
Customer journey consists of:
- Marketing funnel which is responsible for driving and qualifying leads
- Sales funnel which is responsible for lead nurturing and closing deals
- Post-sales funnel, which is responsible for retention
- Referral funnel, which is responsible for generating referrals or getting recommendations
As you see, this is very different from the AIDA model, which is traditionally used to describe the lead generation process.
Let’s dive into a history to find the answer.
Who invented sales funnel?
In 1898, Elias St. Elmo Lewis created the Purchase Funnel, which is known as AIDA. The purpose of the purchase funnel was to describe a sales process that consisted of 4 steps:
Awareness - A lead becomes aware of your product via advertising or word-of-mouth, etc.
Interest - If it seems to be relevant and useful to the lead, he expresses interest in the product.
Desire - this is the stage when the lead understands all the benefits of the product and wants to buy it
Action – The lead actually buys the product.
Elias St. Elmo Lewis used the funnel metaphor to visualize these 4 steps. Wide at the top, narrow at the bottom, it shows how many leads are dropped at each stage.
AIDA was a universal tool for mapping the lead generation process for almost a century, but times have changed.
Today we live in the much more competitive world.
The sales cycles are much longer.
The decision-making process is more complicated.
97% of B2B leads (I'll reveal these stats a bit later) aren't actively seeking for a solution and aren't sales-ready.
All this means that the modern B2B sales funnel is very far from the primary model described by Mr. Lewis.
Why AIDA-based sales pipeline can ruin your sales process
What’s wrong with AIDA-based sales pipeline?
AIDA doesn’t show:
- Why and where exactly we lost a lead
- Which channel generated non-targeted traffic
- What part of the sales process should be fixed
At the same time, AIDA relies on the old principle of driving all leads to the sales team, because a sales pro can sell anything to everybody.
Remember, that "sell me this pen" and "always be selling" mantras? 🙂
Well, of course, you can try to hire a new Wolf From The Wall-Street, but don't neglect the stats (provided by) Hubspot :
- 63% of people requesting information on your company will not purchase for at least three months – and 20% will take more than 12 months to buy.
- 50% of leads are qualified, but not yet ready to buy.
- 57% of the buyer’s journey is completed before the buyer talks to sales.
- 61% of B2B marketers send all leads directly to Sales; however, only 27% of those leads will be qualified
- Only 25% of leads are legitimate and should advance to sales.
- 91% of customers say they’d give referrals. Only 11% of salespeople ask for referrals. But 83% of consumers are comfortable making a referral after a positive experience.
The bottom line:
If you use AIDA-based sales pipeline, you miss at list 75% of opportunities.
Did you notice the last fact about the referrals?
This is another common sales process mistake.
AIDA's last stage is an Action – the moment when you close the deal in your sales pipeline, but, as I mentioned in the beginning, the sales process doesn't end here.
We have post-sales funnel where track the customer satisfaction, help with implementation, educate the customer on how to get the maximum of the product or service, for the purpose of retention and repeat sales.
Only when we are sure that customer is satisfied, we can ask for the recommendation or referral.
Here is a great case study on how Sales Hacker implemented this approach and grew their sales pipeline with high-quality referrals.
The problem of low-quality leads
The next mistake is low-quality leads.
By default, AIDA means that we should sell to every lead.
Such approach jeopardizes your marketing budget management, because every marketing campaign that generated leads at suitable costs, counts as effective.
Not all leads are equal.
If the lead doesn’t fit ideal customer profile, you'd stop this campaign.
In other case, chances your company will be involved in the war between sales and marketing are very high.
The last problem with AIDA-based sales pipeline is the absence of lead nurturing.
AIDA principle is driving immediately generated leads to the sales team, but not all leads are sales-ready.
As you saw in the stats above, 83% of leads aren’t ready to negotiate with you in the first 3 months after the marketing qualification.
They need more information about your company and products. They need to buy on your company and have a clear vision of the benefits they’ll get.
That’s why missing lead nurturing can drastically decrease your win deals ratio.
Chapter 2 - Sales Process Stages
Remember, I told in the beginning that the sales funnel is just the part of the customer journey?
This infographic will show you exactly what I mean.
The customer journey demonstrates the way your customers move from becoming aware about their problems to referring your company.
Leads appear in the sales pipeline when they were, at list, marketing qualified (Getting the contacts stage).
This means we know exactly whether generated lead fits our ideal customer profile and what market segment he belongs to.
After the lead was marketing qualified, the next sales process stage is lead nurturing.
What is lead nurturing
Marketo describes it as the process of developing relationships with buyers at every stage of the sales funnel and through every step of the buyer’s journey.
It focuses marketing and communication efforts on listening to the needs of prospects and providing the information and answers they need.
The goals of the lead nurturing are:
- Building relationship and credibility
- Learning more about his challenges and goals
- Helping leads to identify the problem
- Warming up the interest in our solution
- Overcoming beforehand the possible objections and doubts
- Demonstrating all the benefits of our product
But the main purpose of the lead nurturing is to transfer to the sales team sales-qualified and sales-ready leads.
Just look at these facts, which underline the importance of the lead nurturing:
- On average, 50% of the leads in every market are not yet ready to buy (Marketo).
- Almost 80% of new leads never become sales (MarketingSherpa).
- Companies that excel at lead nurturing generate 50% more sales-ready leads at a 33% lower cost (Marketo).
- Nurtured leads make 47% larger purchases than non-nurtured leads (The Annuitas Group).
Here is a caveat:
The efficiency of lead nurturing depends on proper segmentation.
This often perplexes B2B marketers as they have too many criteria for proper segmentation but can’t apply them during marketing qualification.
Nobody wants to fill in similar web form to reach you out or download an ebook.
You should choose 2-4 criteria which will help you to segment a lead and qualify him.
Other qualification and segmentation work can be done via progressive profiling.
Progressive profiling is a process of gathering information about a lead during a lead- nurturing campaign for future sales qualification.
Here is an Unbounce example.
1. A prospect visits your website and downloads an ebook.
They submit their name, email address and company name through your web form.
2. After receiving a few drip emails, the same person clicks a CTA to register for a webinar.
A dynamic web form asks this time to fill in their industry, company size and a custom question about the software they need.
Dynamic web forms present unique fields to each prospect based on the information you already have (or don’t have) in your database.
3. Not long after the webinar, the lead requests a demo.
This time, you can ask them to specify a budget they have for this product and how urgently do they need it.
Here I just nailed the lead generation process where the lead raises a hand and tells: "I'm sales-ready".
Besides this, you can also track the signals of sales-readiness by implementing lead scoring.
Lead scoring is a process of applying values from 0 to 100 to the lead’s data and behavior.
That means you can set up a level (e.g., 80 points) that indicates when the lead is hot and sales-ready.
How does lead scoring actually work?
The first step is marketing qualification.
The more the lead fits the ideal customer profile (ICP), the more points he gets.
For example, we have 3 criteria for marketing qualification:
- Job title
- Company size
Our ideal customer is the CEO of mid-sized (50-100) MarTech company.
For every criterion our lead fits ICP, he gains points.
The second step is deciding what actions can tell us the lead became more interested in our product.
Here are some examples:
- Visited a pricing page - 8 points
- Registered for the webinar - 10 points
- Clicked a link to a product-related article in a weekly newsletter - 3 points
Here is a pitfall many B2B marketers meet:
Lead scoring without negative scoring can lead to the wrong sales decisions.
We should always track the warning signals of disinterest.
That means you take away points for non-targeted actions like:
- Unsubscribed from the weekly newsletter
- Visited career page
- No website activity for the last 3 months
The last step in the lead-scoring process is to set up a level (e.g. 75 points) which will notify us that the lead is sales-ready and should be driven to the sales qualification.
The sales qualification is the last sales process stage before driving the lead to the sales team.
At this stage, we gather additional information about the lead and decide what kind of proposal we'd send him.
For this purpose, we can use discovery calls or events like webinars, demonstrations applying BANT methodology (or others like ANUM, MEDDIC or CHAMPS, depending on your business).
The BANT method helps us to identify whether generated lead:
- Is the decision-maker?
- Has a budget?
- Has a problem our product can solve?
- Needs the solution quickly?
If the lead fits the sales-qualification criteria, he must be transferred to the sales team.
Chapter 3 - Sales Pipeline Development
The first thing we should look on before sales pipeline development is a sales cycle.
The sales cycle is the timeframe from marketing qualification to signing a contract.
It can be described as a formula:
lead nurturing (days) + sales qualification (days) + sales process (days) = sales cycle.
This metric helps us to identify a timeframe for the lead-nurturing campaigns.
You can easily calculate it in your CRM:
The date of “Sales qualified” stage – the date of lead creation.
Let’s look at the specific example:
- The lead was marketing-qualified on 1.05.2017 and appeared in the MQL stage in our CRM
- On 1.07.2017, the lead was moved to the sales qualification stage
- On 17.07.2017, the lead was moved to the negotiation stage
- On 1.08.2017, the deal was closed.
What’s the length of the sales cycle?
92 days (1.08.2017 – 1.05.2017).
The lead nurturing process in our example lasted 2 months or 61 days (1.07.2017 – 1.05.2017).
The only one question you might have here:
What exactly should we do during this 61 days?
What campaigns should we run?
What content should we send?
I'll dive deeply into the details in a minute.
The first step you'd take is to divide your sales process into microstages.
Microstages are the actions that clients usually take between the first contact with your company and the closed deal.
I deliberately wrote clients, not leads!
We should analyze only successfully closed deals to figure out these actions.
Here’s an example.
A prospect visited our website, downloaded the guide, and is marketing qualified.
Then, after 5 days he asked for a consultation.
After 2 weeks, he asked us to send the product specification.
A week later, he asked for case studies.
Two weeks later, the lead initiated a meeting.
Each of these actions is so-called microstage.
Avoiding or skipping one of these microstages (something sales and marketing teams regularly do) can drastically decrease the number of sales-ready leads and increase the sales cycle length.
Figuring out the microstages besides ideal customer profile, marketing, and sales criteria, is the best way to marketing and sales alignment.
As well, it helps to understand the proper length for lead nurturing and apply lead scoring.
Map of the information needs
Now let’s answer the second question:
What content should we send at every microstage?
I use a tool called the map of the information needs.
Here is the process I use to create the map:
1. Sales team interview
I ask the sales team:
- What objections do leads usually have at each micro-stage?
- What questions do they ask about our products?
- What information do they require at each micro-stage?
The second part of the process is a brainstorming session where marketers share and discuss content suggestions with the sales team.
Let’s return to the example above.
The lead has downloaded the guide, and after 2 weeks has asked for the consultation.
At the consultation, he asked about the differences between our product and others and whether this product is a good fit for his company.
What do these questions mean?
They mean that our lead doesn’t know or is not sure how he’ll benefit from our product. As well, he doubts whether our product is a good fit for his company.
What kind of content can we send in this case?
Here are some ideas:
- Detailed comparison report between our and competitive product
- A case study of how one of our customers from the lead's market segment successfully used our product
- How to article which answers lead's question or helps to solve his problem featuring our product in a native and unobtrusive way
This approach not only helps to build a relationship with the leads but also helps to shorten the sales cycle by consequently sending relevant to the specific microstage content without waiting when the lead will ask for it.
Chapter 4 - Sales pipeline management
In the previous chapters, I covered the process of the sales pipeline development. In this chapter, I'll share with you a tool I use for the sales pipeline management - Active Campaign.
Active Campaign has CRM and sales automation, marketing automation, email marketing features and dozens of integrations. It is pure gold for the pipeline management.
Of course, there are other advanced marketing and sales automation solutions like Hubspot, Pardot, and InfusionSoft, but I prefer Active Campaign for its simplicity.
Below I'll make a quick review of how you can manage your B2B sales funnel with the Active Campaign.
The biggest inconvenience with modern CRM is an absence of the web forms as a feature or the lack of features: they don’t redirect user to the custom URL after form submission or don't have custom fields.
You need to find another tool for the web forms and integrate it with CRM via Zapier.
With Active Campaign, you can build as many web forms as you need, set up custom redirects after form submission, add tags (I forgot to tell you that Active Campaign is a tag-based system) and add them to specific lead-nurturing campaigns.
Best of all, you can create pop-ups, floating bars, and floating boxes directly in Active Campaign.
As for custom fields, you can choose simple text field radio buttons, hidden fields, drop-down menus, multi-selection lists, and date. This makes Active Campaign web forms perfect for marketing and sales qualification.
All the collected data will be stored in the contact’s profile.
Sales pipeline management
Pipeline management in Active Campaign is similar to any modern CRM.
It has a drag-and-drop feature and a live desk with all opportunities. You can upload or download your list of contacts.
The feature I like most is a built-in sales automation process (which some CRM make available only in enterprise packages)m which tracks the lead’s behavior (like website visits, content downloaded, or links shared).
You can easily leverage it for lead nurturing and lead scoring.
You can set up an automated process when the lead should be driven to the next microstage in your sales funnel and add tasks to the sales team based on the lead’s activity.
This awesome and valuable feature helps you minimize the human factor in the early stages of the sales process.
Like I mentioned earlier, Active Campaign simplifies the lead nurturing process with features as email marketing, website messages, and SMS.
Also, Active Campaign is a tag-based system so you can add or remove tags for every lead action.
This helps you to create hyper-targeted segments and drastically improve the efficiency of the lead nurturing process.
Active Campaign has a very simple and easy process to apply lead scoring.
You just add a score based on behavior or the lead’s characteristics in your automation. Active Campaign immediately displays it in the lead’s profile.
All the data updates in real time, so your sales team will immediately be notified of every sales-ready lead.
Enroll in free crash course to Active Campaign to learn how to leverage marketing and sales automation, and effectively manage your sales pipeline.
Chapter 5 - Sales Pipeline Metrics
“If you can’t measure it, you can’t manage it.”
Peter Drucker’s famous quote is especially true when it comes to the sales funnel metrics.
What are the most important metrics?
As a rule of thumb, we know the formula to increase sales:
Sales = customers (leads x close ratio) x deal size x transactions.
Based on this formula we can highlight 5 important metrics.
5 Important B2B Sales Funnel Metrics
1) Number of active opportunities
This metric shows you what sales volume you can expect at the end of the month based on the average close ratio and the length of your sales cycle.
As well, you can calculate how many marketing-qualified leads should be generated to achieve a sales quota.
2) The average deal size
This is another metric you can play with to upsell existing customers besides generating more leads.
3) Close ratio
The close ratio is the average percentage of successfully closed deals per months.
You can apply the close ratio to every micro stage in your sales pipeline to optimize them and increase the average close ratio.
4) Sales cycle
This metric shows how much time leads spend at each microstage. You can add to your marketing plan specific actions to shorten the period of every microstage, and, as a result, shorten the lengths of your sales cycle.
5) Number of sales qualified leads
As B2B marketers, our main goal is driving more sales-ready high-quality leads to the sales team.
So why shouldn't we measure it?
Let’s figure out how each of these metrics can help us to increase the conversion rate of the B2B sales funnel.
In addition to this guide I've added bonus materials that you can get for free: Sales Pipeline Velocity calculator + PDF copy of this guide.
Based on the previous stats, we can easily calculate how many marketing-qualified leads (MQL) we should generate this month to achieve a sales quota.
This metric helps us analyze the effectiveness of every channel and tool we’ve used:
- How many MQLs have we generated from each channel?
- Which channels didn't generate the expected number of MQLs?
- Should we reallocate and reinvest the marketing budget in more effective channels and tools?
Another metric which influences the sales quota is the average deal size.
How can we influence it?
Here are some ideas.
As a seller, you always have different solutions with different pricing packages.
As a rule of thumb, there are always three tiers: basic, standard and premium.
Basic tier means we sell only the solution the lead needs, at the lowest price.
Standard tier means our standard proposal.
Premium tier means higher prices with more advanced features.
Why do some leads choose premium tiers and some don’t?
Only because they have a budget?
One reason why leads choose premium packages is that they know and understand all the benefits and see the ROI of the premium solution.
That’s why it’s so important to demonstrate all the benefits of your premium solutions during lead-nurturing campaigns.
Some leads will always ask you to send them more information about premium products, which gives you a chance to increase the average deal size.
The close ratio is the most important metric for B2B marketers when it comes to the B2B sales funnel optimization.
Usually, this metric is used only by the sales team to analyze the effectiveness of their work.
But as B2B marketers, we must also analyze the close ratio of every microstage in our sales process.
What are the benefits?
Let’s look at the specific example.
Imagine you generated 100 marketing-qualified leads last month.
You have a basic lead nurturing campaign, which only demonstrates the benefits of your products and drives leads to sales qualification.
Only 5 leads passed through sales qualification.
You decide to divide the sales funnel into microstages, and after few months figure out the next situation.
- 25% of leads after sending the guide
- 30% of leads after consultation
- 20% of leads after sending the specification
- 20% of leads after sending the case study.
This means that only 5% of your marketing qualified leads got to the sales qualification.
Now we have a clear picture of what we can fix in our sales process.
Here are some ideas on how to improve this sales funnel:
- Update your guide and include the clear benefits of your product, testimonials and case studies
- Add more details to your case study:
- What problem did your customer have when he reached you out?
- What exactly did you do to solve the problem?
- What results did you achieve at every step?
- How much time did it take?
- What was the budget?
- Listen to consultations and demos. Check whether all the answers are helpful to customers.
- Do customers understand everything?
- Does your teammate drive the lead to the next micro-stage by offering them the next steps?
Now it's your turn.
I hope this guide gave you insights on how to grow your B2B sales pipeline and accelerate sales.
Now I’d like to hear your take:
What is the first thing you'll work on after reading this guide?
Are you going to divide your sales process into microstages?
Maybe, you'll start implementing lead nurturing?
Either way, let me know in the comments below.