Sales Pipelines and Sales Funnels: What’s the Difference?

Sales pipelines and sales funnels, together with sales and marketing, is probably in the “Top 5 Most Interchangeable Terms Because They Kind of Mean the Same Thing”. It’s easy to see where the confusion stems from, as both describe the flow of a prospect in a sale. But what makes them different from each other?

What is a Sales Pipeline?

A sales pipeline is an established set of stages in your sales process that a prospect moves through in order to become a customer.

The Anatomy of a Sales Pipeline

Though it may vary from company to company, every sales pipeline should have these stages:

  1. Qualification Stage: this is the stage where sales people determine their prospects needs, capacity and intent to be a future customer;
  2. Meeting Stage: as it suggests, reps and prospects meet to discuss if a possible business relation can be beneficial to both parties;
  3. Proposal Stage:  a formal and detailed quote (product or service, cost and duration) is sent to the prospect;
  4. Closing Stage: at this point, prospect and rep make final negotiations, if any, and signatures are put on the dotted line. Congratulations on signing a customer!

What is a Sales Funnel?

As the name suggests, the sales funnel looks like – a funnel. Wide at the top and tapering as you go further through the stages, a sales funnel tracks the number and conversion rates of prospects going through the sales pipeline. It is shaped like a funnel because, as the prospects go through the stages, not all will decide to buy or become a customer in the end.

What’s the Difference?

The main difference between pipelines and funnels is in what they monitor. Pipelines mainly monitor the number of deals in each stage, at any given time. This is useful to sales people as they can see if they can hit their predetermined quotas. Funnels on the other hand track the conversion rates for each stage in the pipeline. As an analytic tool, it becomes useful as you determine weak points in the pipeline – as in, where your deals usually fall through – and make corresponding adjustments in the future.

Still confused? A trick to avoid confusing one over the other is to picture pipes and funnels –  pipes can be straight tubes that carry water from one point to another while funnels are wide at their mouths and get smaller towards the end. So with this in mind, sales pipelines carry the prospect from the beginning and towards the end become customers, while funnels start with a lot of prospects but gets “filtered” towards the end as they become customers.

Whether you are using pipelines, funnels or both in your CRM, keeping your data accurate is key to creating meaningful reports and accurate analysis. Hey DAN combines technology and AI into a Voice-to-CRM solution that greatly reduces data input errors which results in accurate databases, all the time. Experience the difference by firing up your funnels and pipelines today.