In the business world, similar terms cause confusion, especially when they are used interchangeably. Two such offenders are sales pipeline and sales funnel – both deal with the flow of prospects, but differ in their scope, required actions, and resource usage.
Both the sales pipeline and funnel are crucial to understand your business’s performance and customer needs and help in maximizing opportunities. They are an integral part of sales professionals in this world.
The sales pipeline and sales funnel actually define the way of approach by your sales team towards leads, nurturing, and closing sales. However, both are intended at producing a similar result, moving the potential customers through different approaches to convert them from a qualified lead to a buyer. Trying to classify the dialect between them may help you in organizing and refining your sales to churn better results for your business.
What is Sales Pipeline?
A sales pipeline is a visual representation of upcoming sales opportunities through each stage of your sales process. It helps you identify areas of the customer engagement and where they are in the purchasing process. As a result, it lets you manage your prospects more accurately by catering to their current decision-making needs.
Stages Of Sales Pipeline
Prospects follow a process from discovering your business all the way through to purchasing your products or services and then beyond as they become recurring or permanent customers. The seven key stages of sales pipeline include:
- Stage 01: Prospecting – Allow your prospects to discover your business – through promotional ads (Google and Meta), public relations, and other outbound activities.
- Stage 02: Lead qualification –
To move leads downstreamFilter out the ideal customers first, to move leads downstream, then offer targeted touch points, such as a white paper, e-book, webinar, or other lead magnets, to guage the prospect’s interest.
- Stage 03: Initial Engagement / Demo – Start with an initial engagement or schedule a demo to introduce prospects to your products or services.
- Stage 04: Proposal – Address how your business can help the prospects with their needs. Explain the value your solution offers against the engagement cost.
- Stage 05: Negotiation / Commitment – Discuss the scope of work, possible expansion in contract, adjust pricing, and manage expectations.
- Stage 06: Opportunity Won – Once the sale is closed, move towards fulfilling the commitment.
- Stage 07: Post Purchase / Retention – Invest in providing exceptional services from onboarding to weekly reports, monitoring the progress of the account to delivering the project.
What is a Sales Funnel?
A sales funnel is a visual representation of a customer’s journey through the sales cycle. In other words, it is the visual representation of the process a prospect goes through once they find your product or service interesting until after they make the purchase.
| Pro Tip: Use a sales funnel to identify your target audience and work on converting them to customers. |
Stages of a Sales Funnel
Automation is critical for success in modern sales funnel processes. It is innovated by improvements in effective digital infrastructure, data usage, and technology. The 5 stages of a sales funnel include:
- Stage 01: Awareness – The prospect becomes aware of the products and services you offer.
- Stage 02: Interest – The prospect seeks more information about your products and services.
- Stage 03: Desire – The prospects want your products and services.
- Stage 04: Action – The prospect takes action, such as purchasing the product or service
- Stage 05: Loyalty – The prospect becomes loyal to your products and services and may refer it to others.
Sales Pipeline vs Sales Funnel: What’s the Difference?
Sales pipeline and sales funnel deal with the process and flow of potential buyers through your business. However, the key differences come from the scope and action required. Some of the key differences include:
| Sales Pipeline | Sales Funnel | |
| Visualization | Provides insight of quality and quantity of the lead and detects the stage that the lead currently is in. | Helps to know the number of qualified leads at different stages of sales funnel at a given period of time. |
| Tracking | Helps you track the stage of your lead at different stages of your Sales pipeline from prospecting to the customer won. | Tracks the stage of your lead, from awareness of the product to turning into a recurring customer. |
| Reporting | Sales pipeline report commends of all the possible future prospects. As a result, you can strategize what upcoming steps need to be taken to convert the maximum number of prospects into customers. | Sales funnel reports a visual representation of the change in the volume of customers from the initial stage till the won opportunity. As a result, you can plan and take the necessary measures to enhance each stage of the sales funnel. |
| Measurement | Tracks the buyer journey through your sales process. | Measures the conversion rate through your entire sales process. |
Metrics to Track in Your Sales Pipeline
Sales pipeline management is crucial for understanding the buyer’s journey. It helps you track the quality of the lead and refine where needed to shorten sales cycles. Some of the key metrics you must track often in your sales pipeline include:
- Number Of Deals in The Pipeline: Tracking this will help you forecast the revenue and provide an accurate idea of the sales targets assigned to your sales team.
- Average Deal Size: Tracking this will help you calculate the revenue these deals will bring in and will help you analyze if these deals are worth spending time on. This will also highlight which of your products or services are most popular.
- Sales Cycle Length: This will help you calculate the sales velocity. You can track how long a prospect sits in your pipeline from lead to customer and will identify issues with your sales that slows or hinders the buyer journey.
- Average Win Rate: This helps you analyze the quality of your sales pipeline and the performance of your sales.
Using Sales Pipelines & Sales Funnels in Your Sales Strategy
From discovery to closing the deal, sales pipeline and sales funnel move in the same direction, along the buyer’s journey. To determine you’re the sales strategy for your business, it is essential to use both.
To analyze the conversion rates in your sales funnel, it is essential to keep your sales pipeline on hand. It can help you map the actions of your sales team, buyer conversions, and find opportunities to enhance and shorten your sales process.
The sales funnel is aligned closely with the sales actions. Your sales teams will be engaging with your customers to address their pain and give them a solution that your business offers. Using sales pipelines and sales funnels in your sales strategy will help you close leads faster and assist prospects successfully though to purchase and retention.
To determine how well your sales team and your business is doing, you must monitor and evaluate both the sales pipeline and funnel. This will help you analyze what your customers are looking for from your business, and how to make the most of your opportunities.
