November 24, 2023
9 min read

Sales Pipeline vs. Sales Funnel: What’s the Difference?

Sales pipelines and sales funnels are two of the most important tools a successful sales organization can have. Alas, they’re also the most easily confused. Even experienced sales reps sometimes mix up a sales pipeline and sales funnels or don’t fully understand how they relate to each other in the sales process.

So, what happens when you mix up these two concepts? Well, first of all, it can be confusing for your team and your customers. Second, it can lead to missed opportunities. If you’re not clear about which stage of the funnel a prospect is in, you may miss chances to nurture or close them. Finally, it can impact your bottom line. If your sales pipeline isn’t aligned with your funnel, you could be losing out on potential revenue.

If you want to have better control over how you guide your customers’ decision-making process, it’s important to understand the difference between these two terms—and make sure everyone on your team is on the same page. So what are they, and which one should you focus on when? Keep reading to find out!

What is a sales pipeline?

A sales pipeline is your view as a sales rep of all your leads, prospects, and deals—and the processes you use to move them from interest to (hopefully!) purchase. Sales pipeline stages along the way include contact, qualification, meeting, proposal, closing, and follow-up: all the steps you need to make a sale.

It all starts with leads, which are generated through marketing activities such as trade shows, online advertising, and cold calling. Once a lead has entered the sales pipeline, the sales team will work to qualify them, which means assessing their need for the product and their ability to pay for it. If the lead is a good fit, they’re moved to the next stage of the pipeline, where they’ll receive a meeting, demo, or presentation to learn more about the product. Next, they’ll be sent a proposal and given an opportunity to make a purchase. Finally, reps will follow up to see if customers are satisfied.

The sales pipeline is an invaluable tool for managing the sales process because it helps you know what action to take next for every potential customer—keeping them moving before they get cold but not pushing too hard. With a solid understanding of their sales pipeline, reps can assess their performance and identify areas for improvement.

What is a sales funnel?

Meanwhile, a sales pipeline funnel takes the customer’s view of their buyer’s journey. Like the pipeline, however, it’s used by the salespeople to identify and qualify prospective customers, then guide them through the steps. The stages of a sales funnel are much more distinct; there are dozens of slight variations, but they typically boil down to something like these four: awareness, interest, evaluation, and purchase phase.

Of course, the term ‘pipeline funnel’ comes from the idea that the widest part is at the top (lots of people will become aware of your product or service) and the narrowest part is at the bottom (fewer people will leave during the consumer decision making process).

In the first funnel stage, awareness, the customer realizes they have a problem (don’t we all) and discovers products or services to solve it. Next, they move on to interest, where they learn about how your product or service can fit the bill. With evaluation, they start comparing you with competitors and creating a shortlist. Finally, they reach decision time, and hopefully make a purchase.

At each stage in the funnel, organizations use different marketing tactics to attract and engage prospects. For example, they may use social media ads or blog posts to generate awareness of their product or service, or they may offer coupons or free trials to spark interest.

Sales pipeline vs. sales funnel: the main differences

1. Point of view

Both a sales pipeline and a sales funnel are tools that businesses use to track and manage opportunities. You might see the terms used interchangeably, but they actually refer to two different things.

The first important difference is in perspective. Like we mentioned, a pipeline is a sales rep’s view of deals and the actions they need to take to move to a close. A funnel, on the other hand, is the customer’s view of the entire buyer’s journey, from awareness to decision.

Now that’s out of the way, there are even more ways to look at sales pipelines vs. sales funnels, each with their own distinctions—from how they’re used in sales to the kind of information you can extract from them.

2. Linear vs. non-linear model

A sales pipeline is a linear model that tracks the progress of potential customers from initial contact through to purchase. In this model, the prospect is always being moved forward, never backward. A sales rep can never make a first impression twice; they must always move forward in the sales process to close.

In contrast, a pipeline funnel is a more flexible, non-linear model that allows for fluctuations in the level of interest and commitment from potential customers. For example, prospects can be on buyer’s journey for months or even years, jumping back and forth between awareness, interest, and evaluation until they make a purchase.

3. The insights gained from each

Insights from sales pipelines: A sales pipeline is a process-oriented tool. When businesses analyze sales data by tracking the number of leads, the conversion rate, and the revenue generated at each stage of their sales pipeline, they can identify lost opportunities and make necessary adjustments. Additionally, the pipeline can be used to set sales goals and track progress and performance over time. By understanding it, businesses can optimize their efforts (by using sales pipeline tools) and increase their chances of success.
Insights from sales pipeline funnel: A funnel is a visualization-oriented tool. As a result, it’s often used in organizations that have a more complex and involved sales processes. It can help you track your progress and see where your leads are coming from, what type of products or services they’re interested in, and where they are in their buyer’s journey. Also, the funnel can help you identify any bottlenecks in your sales process so that you can make changes to improve your conversion rate.

By understanding the journey that consumers take from awareness to purchase, businesses can better tailor their marketing efforts to each stage of the funnel. For example, at the top of the funnel, businesses should focus on generating brand awareness and educating potential customers about their product or service.

As the funnel starts to narrow, they can then start to introduce more persuasive, tailored messages and offer incentives like discounts or gifts. Finally, at the bottom of the funnel, businesses can encourage customers with a strong call to action and hyper-personalized targeting and messaging. By understanding how customers move through the pipeline funnel, organizations can improve their conversion rates and increase sales.

4. Customization

Another important difference between sales pipelines and sales funnels is that pipelines can be customized to fit the specific needs of a given sales rep, while funnels are more general in nature.

For instance, a sales rep targeting a customer base with a longer sales cycle might choose to add additional stages to their pipeline, such as “Decision-makers buy-in” for multiple contacts. The rep has the power to lengthen their pipeline stages to fit their sales process and customer.

On the other hand, pipeline funnels cannot be changed; the stages of the buyer’s journey are set and they have to be passed through no matter what. Ultimately, the choice between using a sales pipeline or a sales funnel depends on the needs of the individual team.