The Difference Between A Sales Funnel & Sales Pipeline

The Difference Between A Sales Funnel & Sales Pipeline There is often a lot of confusion centered around the terms, “sales pipeline” and “sales funnel”. Do you know the difference between the two? If not, it’s perfectly fine. Let’s define and dissect each term, to hopefully eradicate future misunderstandings.

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What is a Sales Funnel?

A sales funnel (also known as a sales process or revenue funnel) refers to the process of converting a prospect into a customer, with the objective of persuading them to purchase a product or service by guiding them through a multi-layered model. There are several phases in a sales funnel, and they include: 

Awareness – This is where a prospect becomes aware of a brand either by accident (social media, friend, google search, ad) or through an alluring offer, and decides to take the first step and reach out via a website form, content download, survey, etcetera. Regardless of how they arrive, the objective now is to continue their journey through the funnel.

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Interest – After a prospect has become aware of a brand, they then commence to conducting their own research on your product/service and your competitor’s product/service to determine which brand is best for them.

Decision – After conducting extensive research, the prospect is now sure that they want to buy said product/service, but now have to decide between multiple options. This is typically when a brand presents it’s best offer to a prospect to close the deal.

Action – At the bottom of the sales funnel, a lead is ready to make the decision. They’ll either purchase your product/service or go with a competitor. If a customer decides to purchase from your business, then the sales process extends to another step, “retention.” This is the act of persuading a customer to continue to buy from your company after their first purchase.

What is a Sales Pipeline?

A sales pipeline refers to a specific list of actions taken by a sales representative, with the objective of converting a prospect into a customer.

This process allows sales reps to monitor the status of every deal with every prospect, for the purpose of ensuring that sales goals are met. Similar to a sales funnel model, a sales pipeline model consists of stages that help the flow of prospects transition from point A to point B. These stages include: 

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Qualification – In order to transition a prospect down a sales process, a sales representative will need to ask a lead questions like, what their needs are, what their budget is, and so on. Then use that information to determine if they are likely to make a purchase.

Meeting – Whether in person, over the phone, or through email, after a prospect has been qualified, it is now time to have a discussion with said lead to figure out their needs and find an ideal solution.

Proposal – After the meeting, a sales representative will take the information discussed, and provide a lead with a comprehensive quote disclosing information such as the services/products that will be provided and cost of said services/products.

Closing – After a quote has been provided to a prospect and negotiations are conducted to work out the best deal for both parties, contracts are then signed and the lead is then officially converted into a customer.

Although a “sales funnel” differs from a “sales pipeline,” there is one similarity that binds both terms. That is the funnel-like structure of the process that works to push through prospects who are truly interested or

open to being persuaded to purchase a product or service. For small businesses owners looking to learn more about incorporating a sales pipeline or sales funnel into their business operations to increase the efficiency of their sales and marketing efforts.

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