A question we often get asked is How do you set stages in your sales pipeline? I’m giving an answer in this post, but let me first back up and explain why defining sales stages is important in the first place.
Early on in my sales career, I realized a couple fundamental truths about how sales work. These truths are:
1. You can’t control results.
2. You have complete control over activities you do.
3. When you put effort into activity, results improve.
Easy enough when you work on your own. For teams some ground rules are needed. Otherwise you may have people doing more activities, but without results improving, because they are not doing the right activities. A team needs a shared understanding of the optimal sales process and speak the same language, if you will.
For example, if the best practice is to make initial contact, identify needs as the next step and then send a quote, you don’t want some of your sales people sending out lots and lots of quotes without asking customers about their needs first.
Sales pipeline gives you more control over sales
Working with the sales pipeline model helps you define the best process for sales and measure what gets done. You can then start managing sales activities at key stages within your sales process, and ensure that the whole team focuses on things that give the best result.
A typical sales pipeline might look like this:
If leads go through the sales cycle in this order, and you increase the quantity of leads in these key stages, you’re guaranteed to sell more.
Sales pipeline stages will differ in each and every business based upon the sales approach, the product/service sold, decision making process of prospects, and other factors. No one sales pipeline design fits all.
How to define sales pipeline Stages that suit your business?
1. Think through your customers’ buying process and the main decision points from customers’ point of view. Then write down the matching Sales Stages for your team. It should take no longer than 10 minutes.
2. Discuss the Stages with your team. Get input and initial understanding.
3. Spend some time checking that your Stages match all your typical sales scenarios. This is best done in a smaller group.
4. Review the Stages with your team. Make sure everyone understands the aim of defining sales stages and agree on measuring activities at each stage.
5. Revise the sales stages in 1-2 months. If a stage seems to be confusing then rename, delete or add new ones to reflect what is really happening with your sales pipeline.
I’ve defined sales cycle stages. What next?
The power of sales cycle management is the ability to establish activity expectations and put measurements in place to identify and fix leaks in the sales pipeline. Defining sales stages gives you a good baseline and common understanding. Once this is done, there are numerous ways to improve and optimise the sales process. We’ve given sales pipeline tips on this blog before, and will continue to do so.