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How to Build and Optimize Your Sales Pipeline

Your sales pipeline is your sales team’s source of truth.

It gives you clarity on:

  • The number of leads you’re talking to and the deals associated with them.
  • The amount of future revenue your company will generate.
  • What actions your team members need to take next.

In short, your sales pipeline plays a critical role in closing more deals and growing your company.

In this guide, I’ll walk you through what a sales pipeline is, how it can help you improve your sales processes, best practices when creating your pipeline, and metrics to track to measure success.

Let’s jump in.

What is a sales pipeline?

Your sales pipeline is an overview of the stages in your sales process. It helps you and your team guide sales leads through the buying process until they become customers.

Many businesses use their CRM as a visual representation of their pipeline. This will give you a clear idea of how many leads you have in your pipeline, the potential revenue you have on the table, and how healthy your overall sales function is.

What stages are in a sales Pipeline?

Every business has a unique sales pipeline, but most follow a similar structure:

  1. Cold prospect
  2. Conversation started
  3. Demo/Initial meeting booked
  4. Proposal or contract being considered
  5. Deal closed

These pipeline stages will cover most situations, but you can add or remove pipeline stages to fit your sales team’s unique needs.

Benefits of having a sales pipeline for your sales team

1. Improves your context for conversations with leads

The first significant benefit to a sales pipeline is that it gives you a clear overview of where each lead is in the buying process.

If your team leaves notes on your CRM records about past interactions they’ve had with each lead, you can approach each conversation with full context and personalize the interaction as much as possible.

For example, if a lead replied to your cold email with specific questions, you can add those to your CRM record to inform other team members about the specific objections or pain points they were referencing.

You’d also want to bring any email marketing activity in the CRM to monitor their engagement with your marketing communication.

Pro tip: The Encharge integration with HubSpot syncs all email marketing activity to your CRM’s contact feed. 

2. Helps you create KPIs and targets for sales and marketing

Knowing how much revenue is in your sales pipeline helps you judge your business’s health and set future targets.

For example, if you know that in Q1, you were able to generate $20,000 in new annual recurring revenue by reaching out to 100 prospects per week and booking five sales meetings per week, you can reverse engineer those numbers to set new targets.

If you need to be booking more meetings, you know that the first thing you can do is build a bigger lead list of people to reach out to. If you need to close more deals, you can work on improving your demo call script or streamlining the proposals you send.

You can base your targets on accurate historical data and ensure it’s challenging but realistic for your team to hit and stay motivated.

3. Proves a clear way to structure reporting

Having a regularly updated sales pipeline means your team has a single source of truth for what happens in your sales department.

Most good CRM platforms will provide pipeline analytics, making it easy to get a quick overview of your key metrics or export data into a spreadsheet and dig into the details.

If you don’t have a straightforward way to measure your pipeline, you won’t be able to know what’s working and risk missing opportunities for improving your sales processes.

Best practices when building your sales pipeline

1. Make your sales pipeline stages specific

The most effective sales pipelines will be structured and clear to anyone who uses them – even if it’s a new hire or contractor you’re working with who has just started using your pipeline.

You could give each stage a specific name which helps your team know every lead’s status without asking questions for clarification.

For example, you could have sales pipeline stages with names like:

  • “Replied to cold email campaign”
  • “Demo meeting done”
  • “Awaiting proposal being signed”

The clearer you make your pipeline steps, the easier it is to ensure that you are not leaving revenue on the table by forgetting leads.

Your team will always know the next step to take, whether it’s preparing a proposal with pricing details, sending a follow-up email, or scheduling another call.

In some cases, you might not need steps like these. For example, if customers sign up through a self-service billing system, you won’t need to send proposals or do much pre-sales care. However, those leads will still be in your pipeline in some form, so adjust the steps to fit your unique business.

2. Have key actions that take place at each pipeline stage

Your sales pipeline can act as a starting point for your business’s standard operating procedures (SOPs) and processes.

For example, you could have an SOP that’s a checklist of actions someone needs to take after a lead has booked a meeting with you or after you’ve finished your first meeting.

An example of an SOP checklist for booking a demo call with a customer could be:

  1. Send a confirmation email with the date and time of the meeting
  2. Send an email one working day before the call with a case study
  3. Send a reminder email two hours before the call
  4. After the call, send a follow-up email with key points discussed on the call and set a date to follow-up
  5. Move the lead onto a specific lead nurturing campaign in Encharge

Of course, you can automate many of these processes if you use marketing automation with your CRM.

Making your sales pipeline steps simple to follow means it’s difficult to go wrong, and every lead goes through the same process.

You could use tools like Process Street, Notion, or ClickUp to make handling the SOP creation process easy.

Source: Process Street

Your team can then follow these SOPs at each stage of the pipeline and will know not to move leads forwards in the pipeline until the SOPs have been completed.

3. Consider your lead qualifiers at each stage

At the start of your pipeline, you’ll generally have more leads. This will include people who may not be an ideal fit for your product or service.

You need to have qualification criteria at each stage that you and your team can use to assess whether a lead should move through to the next stage.

This could be in the form of lead scoring. Depending on your leads’ actions, you’ll assign them a score. Any lead with a score lower than your threshold will be disqualified. This could mean:

  • Giving a positive score if a lead matches specific firmographic criteria.
  • Scoring positively or negatively after asking specific qualifying questions in your sales calls
  • Scoring positively once you confirm that leads have enough budget for your solution.

You can also automatically take actions based on your lead scoring in Encharge. For example, a lead could be moved onto a specific lead nurturing campaign if they reach a specific score.

An example automation flow based on lead scoring in Encharge

While it can feel harsh to actively disqualify your sales leads, this process will save your sales team time talking to people who aren’t a fit for your product. It’s also going to save your leads time and money they’d spend on a solution they wouldn’t get the full value from, so you’re doing them a favor, too.

If you rigorously disqualify leads, you’ll ensure that only the best-fit customers are signing up for your product or service, which will make life easy for your sales team, and your customer support department once someone is a paying customer.

4. Perform regular sales pipeline audits

Over time, your pipeline will become full of leads – some qualified and some not. But, regardless of their level of qualification, they’ll be taking up time from your sales team.

You must run regular pipeline audits.

This could be in the form of a weekly 30-minute meeting with your team. In the meeting, you can run through each pipeline stage and verify that the leads in that stage are qualified to buy.

You can ask the team members who are dealing with each lead:

  • When the last contact was.
  • Whether the lead is still considered qualified.
  • What the next action they’re going to take is.

If you’ve done a good job of recording this information in your CRM, you should already have that data available firsthand in your pipeline.

This process will help you keep your pipeline clean and ensure your team’s attention is always focused on the leads who will most likely convert into customers.

Sales pipeline metrics to track performance

There are multiple metrics you need to be tracking in your sales pipeline. Knowing these numbers will help you understand how well your sales team are performing and whether you need to make any changes to your processes.

1. Response rate

This metric relates to your response rate to your sales outreach. For example, tracking how many replies to cold emails you get, how many replies to LinkedIn prospecting messages you get, or how many prospects pick up the phone when you cold call them.

To calculate it, use the formula:

(Number of replies / Number of outreach messages sent) * 100

Most good cold email platforms and sales outreach tools will track your response rate for you automatically. 

For example, in QuickMail’s campaign dashboard, you can see every key metric relating to your campaign, including reply rate.

In terms of targets, you should be looking for a reply rate to your cold emails of 10-20%. If you can hit that, you’ll be above average. Of those replies, you should aim for 50% or above to be positive replies.

If you can start conversations with prospects consistently, it’s a positive sign, and it won’t be long before you’re booking meetings and closing new deals.

2. Meeting booking rate

Your meeting booking rate is another key metric to measure in your pipeline. 

To find out your meeting booking rate, use the following formula:

(Number of meetings booked / Number of prospects contacted) * 100

It reflects how your leads perceive your product or service and whether they think it’s likely to help solve a pain point they’re facing. 

If you can keep your meeting booking rate high, you’ll have more conversations with prospects interested in your service, and you’ll have a good shot at turning those sales leads into customers.

You could swap your meeting booking rate for another similar metric if you don’t need to book meetings before closing new deals. The key is that it’s a metric that typically shows a prospect is demonstrating high commitment and is likely to go on to purchase from you.

3. Close rate

Your close rate is one of the most critical pipeline metrics.

To calculate it, use the formula:

(Number of closed deals / Total number of leads in pipeline) * 100

You can compare it against several different metrics, for example:

  • The total number of prospects you reached out to in a campaign.
  • The number of meetings booked.
  • The number of proposals sent.

Seeing how your close rate compares to the total number of people you engage with at each stage will give you a good indicator of the health of your pipeline and the relevance of your prospects.

If you see that some pipeline stages have a lower average close rate than others, it’s a sign that some unqualified prospects could be getting into those stages. It’s worth considering how you can improve that.

4. Sales velocity

Sales velocity tells you how quickly leads move through your pipeline stages and become customers.

To calculate sales velocity, use the formula:

(Number of Leads * Estimated Deal Value * Close Rate) / Average Sales Cycle Length 

Knowing your sales velocity means you can accurately predict how long it takes leads to convert into customers. You can use this to create targets for your cold outreach or make fairly accurate revenue forecasts.

In most CRMs, you can add an estimated deal size to each record. 

You can then use those deal sizes and your average sales velocity to predict the revenue you’ll bring in the next few months.

5. Average contract value

Your average contract value (ACV) tells you how much the average customer spends on your product or service.

You’ll only find out your ACV after you’re closing new deals regularly, but you can then use that data point to look back and estimate the amount of future revenue in your pipeline.

It’s a key pipeline metric to track because if your ACV is too low, you know your pipeline has the wrong type of customers, as they’re not ready to commit to higher pricing. On the other hand, if your ACV is consistently high, you know you can expect your pipeline to be full of qualified leads because your sales tactics attract the right type of customers.


Your sales pipeline helps you and your team understand the status of every lead you’re talking to.

It lets you quickly see the next steps and actions your team needs to take, ensuring no sales lead ever gets forgotten or lost.

To help you manage your pipeline, you can implement best practices like having SOPs for each stage, regularly auditing it, and setting rules for what you classify as a qualified lead.

Over time you can track your pipeline metrics and see how effectively you’re moving leads through and turning them into happy, paying customers.

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