What Is the Definition of a Sales Funnel?

What Is the Definition of a Sales Funnel?

A sales funnel depicts the stages of your sales process, demonstrating the customer’s buying journey from awareness to purchase from the beginning to the end. As leads are added to the top of the funnel, the quantity of leads declines steadily from stage to stage until just a small percentage of leads convert to customers at the bottom of the funnel, which is represented by the “funnel” form. The measurements provided by the steps of the sales funnel are valuable for sales forecasting, goal management, and performance improvement purposes.


The Different Stages of a Sales Funnel

The steps of a sales funnel differ from one company to the next, depending on the product or service offered, business procedures, and duties required to seal a deal. The funnel phases typically contain one or more steps during which customers become aware of a firm, get interested in what it has to offer, receive an offer, consider the offer, and ultimately make a purchasing decision.


Free CRM for MacOS (10.10 and above, macOS 10.13 High Sierra is recommended). Download the CRM and install it. To get notifications on new updates, install through SHOPPING CART or use QUICK DOWNLOAD.


Free CRM for Windows and Apple MacOS

Free CRM for MS Windows

Free CRM for Microsoft Windows (64-bit). Download the CRM and install it. To get notifications on new updates, install through SHOPPING CART or use QUICK DOWNLOAD.

It’s critical to understand the difference between a sales funnel and a sales pipeline in order to maximize your profits. The phases of a sales funnel refer to the present statuses of prospects, whereas the stages of a sales pipeline refer to the activities that are conducted to convert a prospect into a client. One of the most effective ways to compare and contrast the two visuals is to think of a sales pipeline as the actions required to move leads to the next level of the sales funnel.

The sales funnel has five steps, which are as follows:

  1. Increasing Public Awareness

When potential consumers or leads first become aware of your brand and the products or services you provide, they are said to be in the awareness stage and are welcomed into the funnel. Advertisement and special offers are common examples of marketing activities that are used to initiate the client journey. Sales activities such as cold phoning and email introductions are also effective ways to raise awareness of a product or service.

  1. Creating an Environment of Interest

Pipeline activities that pique the interest of leads are required to move them into the nurturing interest stage of the sales funnel, where they can be encouraged to learn more about your organization, product, service, or pricing, among other things. Cold calling and email introductions, which are similar to those used to raise awareness, can also be used to pique a lead’s interest, providing that the lead is already familiar with your brand and understands what your company does.

Lead nurturing strategies can also be used to follow up with a lead on a consistent basis, for as by phone or email. Offering a free trial or demo is another wonderful technique to pique a lead’s curiosity in a risk-free environment prior to discussing pricing with them. In addition, qualifying a lead by asking pertinent questions about their requirements might help to generate interest.

  1. Making a Case for Your Offer

At this point, your lead is interested in getting information that they may use to determine whether or not to make a purchase. Presenting the offer can take the form of a sales pitch or it can be done as part of an actual product demonstration.

The pitch, on the other hand, could take the shape of a formal business proposal in response to a request for proposal (RFP), or it could be delivered more informally by simply explaining the pricing and scope of services to the prospect over the phone or via email. After receiving an offer, a lead is not normally in this stage for very long since they either reject it or go on to the next step, depending on the situation.

  1. Factors to take into account

Following the presentation of an offer, the lead moves on to the deliberation step. According on the product or service, back-and-forth bargaining may be required during this period to reach an agreement on pricing and terms of service for everyone involved.

This is also the stage during which a lead may have more inquiries concerning the offer that has been presented. Lead nurturing, which involves following up on possible purchases on a frequent basis, may be required to make a difference. For example, if you send a prospect a proposal or contract that they must sign, you may need to make phone calls or send emails to overcome any lingering concerns and remind them that they must sign and return the form in order to complete the transaction.

  1. Making a decision

After giving it some thought, the lead decides whether or not to make a purchase from your company and become a customer, whether or not to purchase another choice, or whether or not to make no purchase at all. It is possible to try again later on in the sales process if the transaction is lost; depending on how your sales process is structured, they would be back in the cultivating interest or presenting an offer stages of the funnel.

The following stage, if the lead agrees to make a purchase from your company, is to complete the transaction, which may include include a customer onboarding procedure. Cross-selling, customer loyalty and retention, repurchasing, upselling now or selling upgrades in the future, or some other kind of recurrent purchases could be part of your business’s after-sale process after a sale has been completed.

How to Make the Most of Your Sales Funnel

The purpose of using a sales funnel is to keep track of sales information. If you’ve already built your sales funnel phases, assign each lead to the proper stage and then send them on to the next step as their customer journey progresses.

We have a sales funnel template guide that has more information on how to construct the steps of the sales funnel. This article outlines a step-by-step procedure as well as free sales funnel templates that you can use to design and configure a sales funnel for your company’s website.

With your sales funnel, you can figure out how many leads it takes for a lead to convert from one step to the next, which informs you exactly how many leads you need to have in the funnel in order to produce the appropriate number of customers and fulfill your revenue targets. Your funnel also tells a story about the effectiveness of your sales strategies at each level, which may be used to identify changes that can be made to increase sales performance.

Customer relationship management (CRM) software is a good tool for tracking the progress of your sales funnel, as CRMs organize contacts and sales prospects in an organized manner. It is possible to see and modify the records of each lead (or opportunity) to ensure that the information displayed is accurate, including contact information, deal value, and stage in the sales process, which can then be combined and converted into a funnel-style graphic.

Salesforce, for example, includes unique records for opportunities that identify where they are in the sales pipeline as well as the potential worth of the opportunity in the future. This information can be integrated with other chances in the sales funnel in order to be converted and shown in a funnel diagram.

CRMs may also be used to display conversion rates for each stage of the sales process. Not only does this aid in sales forecasting, but it also allows you to identify bottlenecks in the sales process, allowing you to make improvements and move leads down the funnel more quickly. Specifically, HubSpot does this by gathering aggregated data about each lead or opportunity stage and converting it into a % conversion rate.

The advantages of utilizing a sales funnel

Sales funnel design and management can give several benefits to your company. For example, you will have better sales forecasting capabilities, insights into how to improve overall sales performance, and a dependable means to measure your progress toward your sales goals.

The following are the most significant advantages of utilizing a sales funnel:

The Sales Process as a Visualization

When it comes to visualizing your sales process and managing prospective possibilities, a sales funnel is a powerful tool. Find out how many leads migrate from one step to the next, how long a lead remains in each stage, and how many or what kind of sales pipeline activities are most likely to advance them along the sales pipeline. This is accomplished by the use of aggregated views and analysis of current leads, prospects, and customers who are now undergoing the sales process, among other things.

Sales forecasts that are more accurate

It is possible to estimate future revenue by using a sales funnel, which works by visualizing how prospects go through the sales process and move on to the next stage. If you have information such as conversion rates from the consideration stage to the purchasing decision stage of the sales funnel, you can calculate the percentages of leads you expect to close and multiply that figure by the total estimated deal value at each stage of the funnel, resulting in a forecast of future sales.

In order to calculate a sales forecast, the formula takes into account the number of prospects who are in the consideration stage, the likelihood that each prospect would close a transaction, and the anticipated deal value of each potential opportunity. This provides you with an estimate of how much sales revenue you may expect to produce in a specific time period.

As a reminder, the formula is as follows:

Sales Forecast = (percent Likelihood of Prospect A Purchasing x Estimated $ Deal Size) + (percent Likelihood of Prospect B Purchasing x Estimated $ Deal Size) + (percent Likelihood of Prospect C Purchasing x Estimated $ Deal Size) + (percent Likelihood of Prospect D Purchasing x Estimated $ Deal Size) + (percent Likelihood of Prospect E Purchasing x Estimated $ Deal Size) +

Using the HubSpot CRM platform, you can see an example of a sales funnel that includes forecasting features. In the form of a funnel with conversion rates, users can see the state of each lead or opportunity in the pipeline, as well as the total possible deal values in the pipeline, allowing them to create an accurate sales forecast.

Sales Performance Has Improved

Sales performance may be improved at each stage of the sales funnel by visualizing leads moving down the funnel through the various stages. In the case of a sales funnel, if you notice that particular phases are taking longer to move a lead through than others, you can use this information to develop training for sales agents on specific methods for pushing a lead to the next level.

Additionally, you may use funnel statistics to deploy additional resources necessary to maximize conversion rates at each stage of the funnel process. Anything from technology that speeds up a workflow, such as sales automation software, to financial help in the form of increased financing for a project or advertising are examples of what is meant by this. Furthermore, it may entail human resources, such as the hire of additional staff to assist with sales duties such as lead research and qualification.

Managing Sales Objectives

Tracking and monitoring team and individual sales goals isn’t just about total sales income earned; it may also refer to the total number of conversions and the conversion rates of a lead as they progress through the sales funnel. Because a sales funnel is essentially a visual representation of sales stage conversions, it is an efficient tool for tracking progress in respect to the current targets in your sales strategy.

Sales funnels can also be used to assess how many leads are required at each stage in order to achieve your sales objectives. Take, for example, the scenario in which your aim is to close four sales by the end of the year and you are aware of the funnel conversion rates as follows:

  • 25% of leads who are aware of your company’s existence are interested in learning more.
  • 40 percent of your qualified leads would like to be contacted with an offer.
  • Eighty percent of the leads you have provided require additional investigation.
  • Fifty percent of your leads who are in the consideration stage are willing to buy.

This indicates that in order to achieve your objective of four concluded agreements, you’ll need to raise awareness among at least 100 leads, of which 25 will express an interest in learning more about your company. Ten of those 25 will accept an offer, while the remaining eight will require more consideration. Then, four of the eight leads who are being considered will consent to make a purchase.

The bottom line is as follows

Sales funnels are visual representations of the sales process that allow you to see each stage of the funnel in relation to the customer journey and hence manage the sales process. Sales funnels can be used by your firm to assist in projecting sales, making modifications to improve performance, defining and managing sales targets, and a variety of other tasks. Aside from that, sales CRMs make use of technology to assist you in tracking sales information and making it simpler to assemble data and create a sales funnel.

Download our CRM and work for free indefinitely


Free CRM for MacOS (10.10 and above, macOS 10.13 High Sierra is recommended). Download the CRM and install it. To get notifications on new updates, install through SHOPPING CART or use QUICK DOWNLOAD.


Free CRM for Windows and Apple MacOS

Free CRM for MS Windows

Free CRM for Microsoft Windows (64-bit). Download the CRM and install it. To get notifications on new updates, install through SHOPPING CART or use QUICK DOWNLOAD.

All data is stored on your system or on a cloud service of your choice, so no data ever goes to anyone else’s hands. Although free, there are no limits on entries, etc. Supports Collaborative Mode for working in teams.