What is a sales funnel?
A sales funnel is a model of how the number of prospects narrows at each step, from first awareness through to becoming paying customers.
Why it matters for sales teams
The funnel shape is a reminder that only some prospects at each stage move to the next. Measuring the conversion between stages shows where prospects drop off and how many need to enter at the top to produce a given number of customers. That turns a revenue target into an activity plan.
A simple B2B funnel might look like this:
- Leads
- Marketing-qualified leads
- Sales-qualified leads
- Opportunities
- Customers
Example
A team wants 10 new customers next quarter. Its own history shows it takes about four opportunities to win one deal, and about two qualified meetings to create one opportunity. So it needs around 80 qualified meetings, and the SDR team plans its outreach from there. If the team improves one step, for example by qualifying better before demos, it needs fewer meetings at the top.
Sales funnel vs sales pipeline
The funnel focuses on volumes and conversion across the whole buying journey. The sales pipeline focuses on individual open deals and their stages. The terms are also used loosely to mean the same thing.