Good times always feel like they will last forever. However, there will come a time when customers are harder to find. The global financial crisis and its consequences showed that when an economy sours, businesses without robust processes tend to founder. Falling sales is a typical sign.
Businesses can reduce the effect of external conditions by working out where future sales will come from and how to win them. This process is called building a sales pipeline because it lets you track a potential customer from the first point of contact through to a completed sale and beyond.
A properly developed sales pipeline will define how many sales you aim to close in a month, quarter or year. Looking back at your track record you can then make forecasts about the number of sales and the following revenue and profit you will generate. In other words, it helps you measure business performance.
A sales pipeline will reveal interesting facts about the skills of your sales team. A salesperson might be great at finding new customers but terrible at closing the sale; another might take twice as long to close as his or her colleagues. Sales staff can undergo training to help them improve problem areas or you could hire someone with complementary skills to your existing team.
A pipeline can also enforce discipline in the sales process and find more sales from existing customers, which is often easier than acquiring new ones. Analysing the reasons for losing a sale can help you understand which questions will lead to a win.
Studying sales as they progress through a pipeline will show that not all sales are equal. Larger deals usually take more effort to win than smaller ones, and knowing the cost of making a sale is important in finding out how much profit you made in each sale.
The more information your sales pipeline delivers, the more tightly you can focus on chasing the most profitable sales. Then you can hand your sales team a detailed picture of your ideal customer, where to find them and how to convince them to say yes.