What is a Sales Funnel?

A sales funnel, also known as a sales pipeline or a marketing funnel, illustrates a specific sales process. While it is normally depicted as an illustration, such is only intended as a visual tool to help people who work in sales understand the overall approach that must be taken to successfully complete a particular sales objective. The sales tips and wording of each sales funnel illustrated may vary according to the type of company or organization it is applied to, but the basic sales process of every marketing funnel is essentially the same.

Commonly used to train new sales representatives, seasoned salespeople are also known to refer back to sales funnel illustrations from time to time as a reminder of how the sales process works. While precise illustrations vary, all begin with a drawing of a funnel that is divided into different horizontal levels. Each level represents an important element of the overall sales process.

Most often, a sales funnel features a minimum of five different levels, but some may have more. The five essential levels are: identifying a target market; contacting or attracting prospects within that market; qualifying interested candidates; quoting a price for the product or service being sold; and closing the sale. At each level in the funnel, the number of prospects dwindles. This is to remind sales representatives that while a large number may be able to fit into the top of the funnel, many will naturally be eliminated at subsequent levels. Accepting this visualization helps representatives focus more on prospects at the bottom of the funnel, which are actual customers, as opposed to bemoaning prospects lost closer to the top of the funnel.

The basic theory of a sales funnel can be applied to any sales industry and can be detailed in such a way as to fit the precise business or industry where it is being used. Popular in personal selling, real estate and other marketing programs, most salespeople become familiar with the sales funnel early in their sales marketing careers. As a training and motivational tool, it serves to help sales recruits better understand a company’s overall marketing approach. Seasoned salespeople may or may not rely on an actual illustration of the sales funnel, but most keep a visual idea of the funnel in mind throughout their careers as a reminder of how the sales process works, in general.