Sales Pipeline Vs. Sales Funnel: What's the Difference and Why Does it Matter?

What is a sales pipeline?

How is it different from a sales process funnel? Are they any different? Let’s find out! Having a well-defined sales process is crucial to the success of an organization. Irrespective of the industry, there are chances that sales teams are facing challenges due to a lack of structure in the sales management process. For instance, 40% of salespersons feel that prospecting is the hardest part of their job. This is why sales management has gained considerable traction over the last few years. Companies with a sales process are in a better position to excel in competitive environments.

Sales terms and concepts are an integral part of the sales management process. They are much more than simple theoretical definitions and are, in fact, the guiding principles for the sales teams. Two widely used sales terms are sales funnel and sales pipeline, but you might be surprised to know that these are two distinct concepts.

Sales tracking systems help decision-makers access real-time data about the efficacy of sales processes. These systems help remove any element of doubt from the sales process. The salespersons might believe what they are doing is yielding the results, but without hard data to analyze, it is impossible to ascertain the accuracy of their claims. With sales tracking software, businesses can make data-driven decisions that are likely to impact the bottom line.


What is a Sales Funnel?

A sales funnel strategy represents every step a prospect takes during transitioning into a customer. The sales funnel strategy is completely focused on the customers. The funnel stages are determined by the awareness levels of prospects regarding the available solution and their intent to purchase.

As a result, teams can customize their strategies to the prospect's stage. After all, 96% of website visitors are not ready to purchase but are certainly interested in the solution.

For instance, let's say that a prospect reads a blog related to a problem that the company solves. This indicates that the prospect would be more receptive to messages about solutions for those problems.

68% of companies have never measured their sales funnel; consequently, 79% of their leads did not transform into sales. Hence, you can understand the importance of sales funnel management.


The Important Stages of a Sales Funnel

Sales funnel stages are important for boosting conversion rates. These stages help the marketing and sales team measure the conversion rates accurately. 3% to 5% is a good range for sales funnel conversion rates.

The different sales funnel stages are listed here: -

  • Awareness: Prospects know more about your entity, i.e., this is their first encounter with the products and services offered by the company. This stage can be triggered through different mediums like Google Ads, social media advertisements, or other forms of communication. When prospective customers are looking for a solution to their problems, your products or services can be portrayed as the best options.
  • Discovery: The prospective customers better understand your services and products. This indicates their interest in your products and services and willingness to know your company better. Here you can use different educational materials to ease the task for the prospects and gain better brand visibility.
  • Evaluation: The prospects will compare your products and services with competitors. They will make their decision based on this comparison. They shall also check out your content and reviews and discuss your company with others. An average user spends around 37 seconds on a content piece, so ensure that your content is interesting to read.
  • Intent: This is where the prospective customers will share their decision to make the purchase and would again evaluate your products and services closely. The final proposal will be created based on the available budget and desired requirements of the prospects.
  • Purchase: The prospect makes the purchase. As a brand, you must create an easy onboarding process for a better customer experience and encourage repeat purchases.
  • Loyalty: After you have turned a prospect into a customer, it is now time to make them loyal customers. It is essential to offer ongoing support and query resolution with regular follow-ups. Remember, businesses lose 65% of customers not due to errors but because of indifference.

What is a sales pipeline?

A sales pipeline can be described as the different stages that turn a prospective customer into a customer. Depending on the nature of the business, a series of stages will define your sales pipeline.

Sales pipeline management is used to visually represent multiple prospects and track their journey along the sales pipeline stages. Sales teams use pipelines to get insights into their sales strategies and understand how to transform prospects into customers. Companies with effective sales pipeline management experience 15% more growth than others.

It is a brand-centric concept that offers insights into the different stages that your sales and marketing teams must move to ensure the transition of a prospect into a customer and then into a loyal customer.


The important stages of a sales pipeline

Sales pipeline stages hold considerable importance, as only 25% of leads are actually interested in meeting a sales rep. Understanding these stages is essential for the sales teams to lead the prospects across the sales pipeline effectively. Here are the important sales pipeline stages that you must focus on.

  • Prospecting: It is one of the most important sales pipeline stages. Here, the prospects find out about your company through marketing or outreach. You can strengthen the visibility of your business through advertising, social media, and other communication channels.
  • Qualification: Here the sales rep can understand the prospects' requirements and educate them about the various solutions available. Over 50% of sales leaders believe that clients they converse with are not suitable for the products or services they are selling.
  • Need Analysis: In this stage, the sales reps get to know more about the prospects' needs. This process is also known as lead evaluation, wherein prospects can better grasp the utility of your services or products.
  • Value Proposition: It is also one of the crucial sales pipeline stages. Here, the sales rep gets the chance to explain to the prospects the benefits of your products and services. Reps use various communication tools to send a strong message to the target customers.
  • Perception Analysis: This stage helps the salespersons compare the real functioning of your products and services with the customer expectations. This comparison allows the sales reps to ascertain how much your solutions will be able to help the customers. Here you can also identify the key decision-makers from the customer side who will make the final decision.
  • Proposal: After you have determined who the decision makers are, it is time to create a proposal explaining the benefits of your products and services. Also, explain how the products or services can meet their requirements in the long run.
  • Finalize: This is the stage that describes if you managed to close the deal or lost the customer. This will help determine if the prospect has been turned into a customer and then how to move to the next stage, i.e., a loyal customer.

Sales Pipeline vs Sales Funnel

Here are some basic differences between the function of a sales pipeline against a sales funnel.

  • Purpose: Stages involved in the sales pipeline and sales funnel are somewhat similar, but there is an underlying difference in their presentation. A sales funnel indicates how the prospects perceive the company and helps the marketing teams to analyze how many prospects are moving down the funnel. Whereas a sales pipeline talks about the size and value of the potential deal and at which stage the deal is.
  • Representation: Another major difference is that a sales funnel is a representation of the purchasing journey from the viewpoint of customers. The focus is on how a prospect discovers a business and moves along to reach the purchase stage. On the other hand, sales pipeline focuses on the business's activities and its lead-generation efforts. It also helps determine if the leads are suited for the products or services being sold. The sales pipeline also represents the sales processes being used by the sales teams for selling the products and services.
  • Utility: Many businesses use sales pipelines to determine the efficiency of the sales process. This includes tracking the activities of the sales teams at various stages, like meetings held, proposal sharing, and closed-won, while the sales funnel is majorly used by the marketing team to understand how prospects are finding the business and which marketing channels they are using. This helps determine if the budget allocated for marketing is being used in a productive manner.
  • Reporting: Sales funnel reporting is used to help the sales and marketing teams understand how well a marketing channel is converting. If the performance is below expectations, they need to revisit the approach through that channel. When it comes to sales pipeline reporting, it helps the sales teams understand the various stages at which different customers are present. The decision-makers can formulate strategies to move the prospects to the next stages.

Can We Use a Sales Pipeline and Sales Funnel Together?

Yes! You can use sales funnel and sales pipelines together as a part of your sales management strategy. After all, why choose one when you can easily leverage both? When used together, the sales funnel and sales pipeline can help you gain useful insights into your sales strategies and achieve better close and conversion rates. Sales teams will be able to determine if the sales processes require any more steps or if there is any need to reduce the steps involved. This will help the sales professionals optimize the sales processes to incorporate more stages and also ensure more meetings with the prospects. You can leverage a sales CRM to help you with this integration and allow you to optimize the sales processes efficiently.



Q1. What does sales pipeline mean?

A1. A sales pipeline is a visualization that helps marketing teams track potential buyers as they move through different stages of the sales process.

Q2. What are the four stages of the sales funnel?

A2. The main stages of a sales funnel are awareness, interest, decision and action.

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