What is a Sales Pipeline?

The term "pipeline" gets thrown around every day, but you might now know quite what it means. We're here to explain how it works, why it's important, and how to design yours.
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Do you have a well-defined sales pipeline?

If the answer is "no," then you are probably losing out on a surprising number of sales. Even if you do have a pipeline, if you aren't sure that you're using it efficiently then that could be just as bad.

A pipeline is pretty much what it sounds like: a pathway through which you push your prospects. Think about the plumbing which guides water to your sink, shower, and toilet. That "pipeline" starts from some source, gets pushed through a sanitation system, gets redirected in some facilities, follows the literal pipeline to your house, and then moved to whichever device it should.

The sales pipeline is similar, in that your prospects get moved from one step to another, and finally get pushed out of the pipeline. The basic sales pipeline has 3 steps, with that final step being a sale:

Prospect --> Qualified Lead --> Sale completed

Every single sales process is some variation on this. A potential sale is a prospect, and after some interaction is moved into a "qualified" status, where they are considered likely to buy. Finally, they either buy or don't buy, moving them out of the pipeline.

This is, of course, a very basic pipeline, and it's up to you to determine what steps your business needs.

Wait, so why is this important?

Because this is your business. The pipeline directs customers towards the sale, and makes sure that they hit each necessary step along the way. With a pipeline, you only spend time doing that which is necessary. Which means you save time. And therefore money.

Imagine if you tried to close on every single prospect who came your way: you would be insane (and very quickly out of business)! That's because many of those prospects (for whatever reason) will never buy. This is why the qualifying stage of the pipeline exists. In that step you weed out those customers who will never buy, and then results in a net gain of time.

Take a minute and consider what the stages of your pipeline are. You definitely have some sort of pipeline you're using, but you might not be thinking about it. If not, then you could be wasting time by accidentally skipping over stages of the pipeline, or wondering what the next move should be. In a well-defined pipeline, you won't even need to ask these questions any longer, the pipeline will have your answer for you.

Pipeline Stage Template:

Stage name:

  • Prospect


  • Contact lead and get more info on what they are looking for
  • Provide info on our product


  • If they are a good fit, move into "Qualified Lead" status
  • If not interested/bad fit, move to "Dropped" status
  • If not interested at the moment, move to "Follow-up" status

Designing your pipeline

Think about the stages you have and/or want in your pipeline. Each stage involves taking a specific action, and then moving the lead to another stage based upon the result. It's simple!

Use the template at right to come up with the stages of your pipeline, and the actions and results within each stage. While you want a stage for each important part of your sales process, don't get too complicated. This is a tool you want to use, and the more easy it is to understand, the more likely you are to understand it.

Once you have these steps, make a flowchart for yourself, indicating how leads move from one stage to another. This will help clarify in your mind how your sales pipeline works functionally.

Now that you understand your pipeline, it's time to use it! Over the next couple of weeks, track your sales through the pipeline. Make a note whenever you move somebody on. If necessary, change your steps to meet new demands and improve your process. Over time, you might realize that you need a pipeline in order to follow up with established customers, too. All in all, a pipeline should help keep you organized and on top of your game--there are plenty of tools out there to help you create a pipeline that works for you and your business!

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