The sales pipeline and sales funnel are two sales models that represent the buyer journey as leads turn into prospects and customers.
While both give you a clear picture of the sales process, they serve different purposes.
And understanding the pipeline funnel differences is essential to utilizing them efficiently.
In this article, I’ll make a quick comparison between the two models and delve into their unique benefits to help you understand which one best serves your business needs.
- Learn the key differences between leads and prospects.
This Article Contains:
(Click on the links to jump to specific sections)
- What Is a Sales Pipeline?
- What Is a Sales Funnel?
- Sales Pipeline Funnel: a Quick Comparison
- Key Benefits of Sales Pipelines and Sales Funnels
- Should You Use a Sales Pipeline or Sales Funnel?
Let’s dive in.
Note: To understand the differences between pipelines and funnels, it’s integral to first know what they are. That’s why I’ll briefly go over each model first.
However, feel free to skip ahead to the comparison if that’s all you’re looking for.
What Is a Sales Pipeline?
A sales pipeline is a holistic visual representation of the sales stages a prospect goes through as they move from being a new lead to a customer.
It highlights the customer’s journey from a sales viewpoint, helping you visualize the sales process and identify potential customers at each stage.
A salesperson can use the pipeline chart to direct prospects along the ideal customer journey and improve their sales strategy.
But just like how a sales cycle is unique to a business, a sales pipeline will be unique too.
Ideally, a pipeline chart should be tailored to a business’s sales process. This will help you discover opportunities for improvements, reduce the time it takes to close deals, and accurately forecast revenue.
Generally, sales pipeline management involves six key stages:
1. Lead Generation
The first stage in a typical sales pipeline is lead generation, which sets the ball rolling for the rest of your sales efforts.
Lead generation involves finding people who need your business’s products or services — your target audience.
You can generate leads through:
- Cold emails.
- Digital marketing, including content marketing, social media marketing, and ads.
- Referral programs.
- Cold calling, and so on.
Want to improve your lead generation strategy?
Check out these no-nonsense tips to generate sales leads effectively.
2. Lead Qualification
Once you’ve generated leads, you need to qualify them using relevant sales qualifiers.
Qualifying leads helps you determine if the generated leads match your:
- Ideal customer profile: essential requirements that a sales lead must meet to qualify as a potential customer.
- Buyer persona: characteristic buyer qualities like behavior, demographic and unique needs.
As a result, a sales qualified lead has a higher probability of converting into a customer.
Here are some popular methods marketers and sales teams use to qualify leads:
- Opt-in forms.
Qualifying leads will help boost your average conversion rates as it’ll save you time and effort from pursuing poor-fit leads.
3. Prospect Outreach
Once you qualify leads using your ideal customer profile and buyer persona, it’s time to reach out to them via sales calls, in-person meetings, or emails. Here, you discuss your business’s offerings and position them as solutions for the prospects’ unique needs.
Ideally, you should choose a mode of communication that is familiar and comfortable for your target audience. This will help you convey the message more effectively.
I recommend using email to reach out to prospects as it’s less intrusive, professional, and a cost-effective medium.
And with powerful email outreach and marketing automation software like GMass, you can:
- Auto-personalize your outreach emails with images, attachments, and more.
- Increase conversion rates by refining your email marketing strategies based on insights from detailed analytics reports.
- Adapt strategies based on behavior-based insights from how a prospective customer interacts with your email updates.
- Utilize automated follow-up emails from ready templates to engage with prospects and build a better relationship with customers.
Once a prospect indicates interest, you can further develop your relationship with them, send them a product demo, and move on to the next stage.
If the demo goes well, your salesperson can submit a sales proposal — outlining how your business is uniquely positioned to tackle the prospect’s goals and challenges.
A typical sales proposal should provide detailed information on:
- Scope of work.
- Associated costs.
- Terms and conditions, etc.
You should aim to provide information that will aid the conversion of leads to customers.
5. Sales Close
The sales close is the penultimate sales pipeline stage.
You conduct negotiations with decision-makers, iron out the details, and close the deal here. The prospect you’ve nurtured makes the purchase, becomes your customer, and your business increases its revenue.
But if you genuinely want to improve your sales potential, there’s one more sales stage you need to address.
6. Post-sales Management and Retaining Customers
It’s not enough to simply close a deal — customers must also receive post-sales management. That’s why this stage of the pipeline is about retaining customers.
A great sales process will ensure that customers have a great onboarding experience and receive care and benefits that garner loyalty to the business.
Just like lead nurturing, it’s essential to reinforce relationships with customers, even if you’ve already won their approval.
For more information on sales pipelines, read my in-depth guide.
Now that we’ve explored the sales pipeline, let’s move on to the sales funnel.
What Is a Sales Funnel?
The sales funnel (sometimes also called the sales and marketing funnel) visualizes the customer’s journey or the buying process.
It’s the sales process from the prospect’s viewpoint and consists of stages that they go through — from becoming aware of a business to buying its product or service.
As a result, the funnel doesn’t look at the actions taken by a business or seller.
Instead, it focuses on the number of leads and prospects at every sales stage. This helps you track conversion rates and identify areas of improvement quickly.
As a representation, it’s like a funnel chart or inverted pyramid, with the volume of leads decreasing as you go further down the funnel.
Here are the six common stages you can expect to see in a basic sales funnel:
This funnel stage is where leads first hear about your business.
They could become naturally aware of a business through targeted marketing efforts or when they search for solutions to their pain points.
Some ways businesses can gain a lead’s attention at the awareness stage are through:
- Social media and blog posts.
- Product videos.
- Limited offers.
After entering the awareness stage, the impression you make will influence whether a potential customer will continue down the subsequent sales funnel stages.
The discovery stage of the funnel has a greater potential for conversion.
It’s where a lead starts learning more about your business through an internet search, social media, or reading up on your website landing page. They begin to show more interest in your products/services if it’s relevant to their goals and challenges.
Publishing a white paper, utilizing SEO and SEM, curating educational content, or even creating a LinkedIn page can positively influence the discovery phase.
Note: The awareness and discovery stages are considered to be the top of the funnel.
At this funnel stage, a sales qualified lead views your services as a viable solution to their problems. They evaluate whether your product is a good fit by comparing your offerings with competitors.
In terms of the sales pipeline, this stage would come after you’ve qualified leads — when you start with outreach.
During the evaluation phase, you can engage with a prospective customer via a sales call, email, or sales meeting to help them understand how your business is uniquely positioned to solve their issues.
Here’s what can improve your standings during customer evaluation:
- Word of mouth.
- A detailed landing page.
- Product reviews.
- Influencer marketing.
- Case studies.
- Competitor comparisons.
At the intent stage, buyers are in a decision-making phase and intend to purchase your service or product.
It’s when your sales person submits a proposal, initiates negotiations, and finalizes costs and inclusions.
And if all goes successfully, you’ll have new customers. If not, you’ll have the opportunity to see what didn’t work and nurture those prospects to win them over in the future.
Note: The evaluation and intent stages usually form the middle of the funnel.
This stage is when you acquire a new customer — a potential buyer decides to go through with the purchasing decision and closes the deal.
It indicates that your B2C or B2B sales strategy is working.
But it doesn’t necessarily mean that your strategy is perfect.
An overview of how many prospects moved from the intent to the purchase stage, which you will find in a funnel report, will clearly show which stages in the marketing funnel need improvement.
Parallel to the retain stage in the sales pipeline, the loyalty stage is where you’ll see the effectiveness of your onboarding process.
Beyond securing new customers, it’s vital to ensure that they continue to receive value and benefits from your business. Features like loyalty programs, discount codes, and exclusive offers go a long way in fostering a deeper relationship and enabling customer retention.
Note: The purchase and loyalty phases are considered to be the bottom of the funnel.
By now, you may have a basic understanding of how sales pipelines and sales funnels are two different things.
But if you’re still confused about their differences, here’s a handy sales pipeline vs sales funnel chart to help you out.
Sales Pipeline Funnel: a Quick Comparison
Here are the key differences between a sales pipeline and a sales funnel:
|Sales Pipeline||Sales Funnel|
But wait, do you really need a sales pipeline or a sales funnel?
Let’s find out.
Key Benefits of Sales Pipelines and Sales Funnels
Here’s a quick look at the benefits of the two models:
1. Sales Pipeline Benefits
According to a Harvard Business Review study, businesses with effective sales pipeline management display an increase in their average growth rate by 15%.
However, there are many more benefits to building a sales pipeline for your business, such as:
A. Comprehensive Lead and Deal Tracking
A pipeline helps businesses track every sales lead and deal in real-time.
It provides vital information on the value of leads at each sales pipeline stage and helps identify reliable sources for qualified leads.
B. Accurate Sales and Revenue Forecasting
Sales pipeline metrics offer information on how much business each sales rep generates.
Additionally, the data on closed deals allow sales leaders to determine the pipeline velocity (aka the speed at which leads pass through the pipeline) and accurately forecast the business’s monthly, quarterly, and yearly revenue.
C. Detailed Analysis of Sales Performance
Sales pipeline reports provide insights into the strengths and weaknesses of the sales process.
You can identify hold-ups in the pipeline, which help determine if your pipeline management needs to be improved or if a sales person needs additional help and sales resources.
Training a sales manager in pipeline management can help businesses achieve greater revenue growth and meet annual sales goals.
Let’s now move on to the benefits of sales funnels.
2. Sales Funnel Benefits
Both a B2C and B2B sales funnel will help you generate more leads.
Here’s an in-depth look at the key benefits of utilizing a sales funnel:
A. Gain Insights from a Customer’s Perspective
Sales funnels provide insights into the sales process from the customers’ point of view. This will help your sales manager identify obstructions or drop-off points in a buyer’s journey.
B. Accurate Tracking of Conversion Rates
Data from your sales funnel provides information on each stage’s conversion rate and KPIs (Key Performance Indicators).
These sales funnel metrics give sales managers valuable insights into what can help with the conversion of leads into customers and where changes need to be made.
C. Analysis of Low Performing Stages
A sales funnel report offers details on which sales process stages give a low return on investment. It helps sales leaders identify weak zones and determine if they need to review the effort a sales rep puts into that stage.
Now, you might be wondering: if both the sales pipeline and sales funnel are useful, which one should I use? Let’s find out.
Should You Use a Sales Pipeline or a Sales Funnel?
Generally, if you have an intricate sales process that needs to be optimized, a sales pipeline could be useful.
On the other hand, if you want your sales team or marketing team to increase conversion rates and be more customer-driven, you could use a sales funnel.
However, there’s more to it than just that.
Here are a few more things to consider when deciding which model is best for you:
A. You Need a Sales Pipeline if:
- You want to see what parts of your sales process work and what doesn’t.
- You want to streamline your sales process and identify hold-ups in conversion.
- You want more detailed insights on the current deals.
- You want to accurately forecast your sales revenue and meet your sales quota or sales goals.
- You want to improve the performance of each sales representative.
B. You Need a Sales Funnel if:
- Your business needs to be more customer-focused.
- Your leading platforms for sales include e-commerce and social media.
- You need to increase lead conversion.
- You want to see which individual stages effectively convert prospects into customers.
- You want to know when specific sales techniques are most effective.
C. You Need a Sales Funnel and a Sales Pipeline If:
If you want aspects from both models, such as a smooth sales process and an ideal customer experience, then you could use both.
Moreover, these sales concepts offer value that applies to more than just the sales team. The marketing team, product development team, and the whole business stand to benefit from it too.
Now, there’s no such thing as a pipeline funnel.
But it’s still possible to integrate both.
You’ll need to connect the pipeline and funnel to your sales process with the help of a sales CRM (Customer Relationship Management) software.
It will simplify the process of tracking active leads, sales performance, and conversion rates across different stages of your sales cycle. Moreover, it will make all your customer data accessible in one place.
You may also need additional sales reps to manage both a sales pipeline and funnel.
However, regardless of which model you choose, you need to optimize them to your company’s unique sales process. Only then can you reduce the churn rate (the rate at which you lose customers) and boost business revenue.
Whether your business focuses on B2B or B2C sales, optimizing your sales process is never a bad idea. That’s why it’s crucial to understand the pipeline funnel differences to determine what works best for you.
You’ll also need an actionable tool, like GMass or a sales CRM tool, to integrate and optimize your sales processes with ease.
For instance, GMass makes email marketing, sales email automation, and client outreach so much easier.
Why not try GMass today and see how it helps streamline your sales and marketing efforts?
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