Sales Pipeline vs. Sales Funnel – What’s the difference?

by | Oct 12, 2021 | Business | 0 comments

The world of customer relations and marketing is full of specialized terminology, making it easy to feel confused. For this reason, we have decided to dedicate an article to exploring the differences between the sales pipeline vs. sales funnel. Honestly, many people consider them to be the same and use the terms interchangeably. However, we hope you’ll be able to gain more understanding and use that knowledge to communicate with your colleagues accurately. If you learn the differences and carefully plan your marketing campaign, you will surely see an increase in sales.

      I.            What is a sales pipeline?

When determining what’s the difference between a sales pipeline vs. sales funnel, it’s best to start with accurate definitions. A sales pipeline constitutes all the different stages potential clients, called prospects, need to go through before becoming paying customers. It all begins with lead generation, and then sales representatives follow through until a sale is made.

Sales pipelines usually closely examine every individual stage in the process of attaining customers. This is done from the perspective of the company. The stages represented in a pipeline are there to reflect what the seller does during the entire sales process.

Quality score of a lead in a sales pipeline

You can obtain a lot of relevant sales data by examining the sales pipeline and scoring leads.

The stages of a sales pipeline

Here is where things can get a little bit complicated. Different companies sometimes use various definitions, terms, and stages to represent their pipeline. Likewise, companies will commonly develop an internal jargon. As a result, you will need to make sure you are on the same page with the other team members and that your sales pipeline is handled the right way. This is especially important for managerial positions that can call for a ‘pipeline meeting’ and leave their team confused.

Here are the typical stages of a sales pipeline:

  • Prospect or lead generation. Some companies don’t include this as the first step. They consider the pipeline stages to begin after they have already obtained leads. However, generating leads is where it all starts.
  • Qualification. Does the lead have the potential to become a paying customer? You can score leads and allow sales teams to better focus their efforts.
  • Meeting. In this stage, the sales representative discusses options with the prospect. Communication can also take the form of a call and take place over multiple interactions with a prospect. A common example of this is email communication.
  • Proposal. Send a detailed quote to the prospect, which includes costs, terms, and conditions.
  • Closing. The final negotiations that lead to the contracts being signed. Now the prospect becomes a customer.

 

    II.            What is a sales funnel?

Now it’s time to look at the other side of the equation in the sales pipeline vs. sales funnel. It’s commonly agreed that a sales funnel represents the journey prospective customers take to make it through all the stages of the pipeline. The sales funnel is centered on the customer and their progress towards making a purchase. The stages here are based on what the customer is going through.

Shopping basket for an online transaction as a result of the sales funnel.

Approach the sales funnel with your customer in mind to make the user experience rewarding.

Taking the customer’s point of view into account is an important part of design thinking. Whenever possible, you should approach the design of products, services, and processes with the goal of improving the user experience. Additionally, sales funnels also examine the number of prospects that make it through towards a paying customer. Therefore, relevant metrics are the number of prospects and the conversion rates. Consequently, this allows for reasonably accurate sales forecasts based on lead volume and previous sales data.

Stages of a sales funnel

Things are a bit more uniform this time around, and most companies have a similar distribution of stages.

The stages of a sales funnel are:

  • Awareness. The prospect is currently looking for ways to understand the problem they are having. This is when they first hear about your brand and what you offer. Customers can be informed of your existence by a Google search, or your marketing efforts.
  • Interest. Now that the prospect has learned about your product or service, they begin to do more detailed research. They can look into your products and services and realize they are the solution to their needs.
  • Intent. In this stage, the prospect is seriously considering buying from you. Now they need to make sure that what you are offering is going to meet their demands.
  • Purchase. The stage where the sale is made and contracts are signed. Unfortunately, there is no time to rest since the sales funnel isn’t over yet.
  • Loyalty. You should always aim to provide long-term value in order to ensure repeat sales and get referrals. Customer loyalty is also the best way to build credibility in your industry.

Similarities between the pipeline and funnel

We have previously looked at their individual characteristics and compared sales pipeline vs. sales funnel to determine the difference. However, there are some similarities and things that tie them together. In both the pipeline and the funnel, fewer prospects will make it through the various stages compared to the beginning. Therefore, if visually represented, both can seem wide to begin with and narrow at the end. Since they both have a funnel-like shape, it can be easy to confuse them.

Man using a phone in front of a computer to make an online sale.

Interact directly with your prospects to turn them into customers.

Additionally, they both deal with the progress of leads towards paying customers. If your business is struggling to turn leads into customers, then you should consult the experts from Convert More. They have developed a smart call algorithm that automatically connects customers to your sales team. Direct interaction between website visitors and your employees is the best way to boost sales and improve the customer experience.

Drawing the final conclusions

When looking at the differences between the sales pipeline vs. sales funnel, it’s easy to come to a few conclusions. Although they both deal with the sales process, the main difference is in perspective and approach. The sales pipeline looks from the company’s perspective and is almost a guide to which steps to take. On the other hand, the sales funnel deals with the journey of the customer. You can use both to obtain large amounts of data and help with sales. Thus, it’s not a matter of which approach to take; rather, they represent flip sides of the same coin.

About Brian Mawdsley

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Unpacking businesses and then creating elegant digital solutions is a passion. I actually can’t help myself at times, analysing people’s business and creating answers to questions they have not even asked.

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