3 Differences Between a Sales Pipeline Vs Sales Funnel

May 24, 2022

difference between a sales pipeline vs sales funnel

In the world of sales and marketing, there are many terms that companies use to describe what is happening in everyday business, and keeping it all straight can often leave your head spinning. Two terms that are often used are sales pipeline and sales funnel.

They describe and help breakdown both the customer journey and the sales activities into different stages to making a sale or purchase, and when used properly can have significant benefits. Understanding the difference between a sales pipeline and funnel can help measure the value of each stage, clear obstacles, forecast sales, and many other important business decisions. In this article, we have outlined what you need to know to hit the ground running, and understand what a sales pipeline and sales funnel really are.

What is a Sales Funnel?

A sales funnel is used to describe the journey the customer goes through. This journey is ultimately what leads them to purchase a particular product or service. This is why it is crucial for an organization to fully define and measure.

sales funnel stages
A sales funnel tracks a buyer’s journey from awareness through action.

A sales funnel can be used to help track and visualize a buyer’s journey. It is much as the name suggests, a funnel shaped visual that outlines each stage your customer goes through in their buying process. If you picture the opening of a funnel, the largest portion of a funnel at the top is the stage of a sales funnel that your sales leads are coming into – the stage where a customer first learns of your product. As they move along their journey in the funnel, they will eventually end up at the smallest portion of the funnel. The last stage of a sales funnel is often referred to as the “action” stage – which is ultimately when the customer decides to make a purchase.

What is a Sales Pipeline?

A sales pipeline is a tool that organizations use to take a deeper look at the steps within their sales process. This sales process is the steps a sales rep follows in their sales process to drive a lead from being an initial lead to a sale.

A sales pipeline can look different for every company, but the first stage is often referred to as “Contact” or the stage at which a sales rep prospects a lead. The sales pipeline will eventually lead to the final stage, where a sales rep closes the deal and makes a sale. Fully understanding and having a refined sales pipeline can be a critical step in both maintaining and growing your sales.

What are the Differences Between a Sales Pipeline vs Sales Funnel?

When taking a deeper look at sales pipelines and sales funnels, there are key differences that set them apart. In this article, we will take a closer look at 3 of the key differences between the two: the types of metrics sales pipelines and funnels create, the tools that can be used to obtain the metrics, and what you do with the information once you have it.

sales funnel vs sales pipeline
The sales funnel describes the buyer’s journey, while the sales pipeline details the seller’s journey.

1. The Type of Metrics They Create

The metrics that a business can create from a sales pipeline vs sales funnel can look very different. When looking at a sales pipeline in greater detail you can then really begin to analyze your sales process, and have a better understanding of your sales leads. This can in turn help both a sales team and upper management improve budgeting and forecasting. A sales pipeline can also provide more insight to what your customer conversion rates are, what steps you are taking to convert sales, and possibly how you could improve upon your conversion rates. Lastly, a sales pipeline shows the value of a specific market or territory. You are able to see just how small or large a market is and adjust your sales process accordingly.

Remember that a sales funnel is all about the customer’s journey. Their experience along that journey can be largely attributed to marketing efforts, so the metrics you can receive from a sales funnel tend to reflect that. This can include a company’s marketing reach to its customers.

Sales funnel metrics can also include the customer’s engagement and their conversion rate. A customer’s engagement could be measured in a variety of ways all the way from social media engagement to what they are doing on your website.

2. The Tools That Are Used

When you think of how you obtain information in your sales pipeline, think of what your daily sales process looks like, and what tools you might use. A CRM  is a great resource to gather information from your sales pipeline. This can help you view and gain a better understanding of your leads. In addition to a traditional CRM, a sales team can use tools such as Map My Customers’ to understand and build their pipeline. Map My Customers is a mobile-first B2B sales solution with an interactive deal dashboard that helps a sales team visualize their sales pipeline, manage where each prospect/customer is in the process, and implement actionable strategies to increase revenue.

Hubspot sales funnel software
Sales funnel software like Hubspot can help your team manage your sales funnel. Source: Hubspot

Working with your company’s internal customer service team, or collecting information from a POS or order entry system can also play a beneficial role in collecting the necessary information in a sales pipeline.

To better understand your sales funnel, there are many software tools that can produce rich data like Woopra and Hubspot. In addition to this, Google Analytics can be used to track a buyer’s journey on your website, and social media analytics can be used for aspects like customer engagement.

3. What We Do With the Information

Once you have gathered all of the information, what you do with that information can look extremely different between a sales pipeline and sales funnel. In a sales pipeline, all of the information collected can help craft sales plans, determine territory sizes and assignments – which can in turn aid in making important staffing decisions. Outside of the sales team, sales pipeline data is beneficial for supply chain management,  and can provide upper management with what they need to forecast sales, budget, and identify major roadblocks.

A sales funnel arms the sales and marketing team with the information that they need to understand the best ways to reach customers and prospects. This will give them the ability to write effective go-to-market plans and integrated marketing campaigns that bring the customer to the point of purchasing a product or service.

Sales Funnels & Pipelines Paint the Big Picture & Take Sales to the Next Level

There are many differences between a sales pipeline and sales funnel, but at the end of the day can both help a company and the buyer reach the end of their journey to making their sale or purchase. Sales pipeline management and sales funnel management are key to understanding. Once each is managed and understood properly, they can take a company’s sales to the next level.