November 16, 2020

What’s the Difference Between A Sales Pipeline and A Sales Funnel?

By sh4dyy

Building a sales pipeline can help you understand how your customers interact with your brand and products or services.
A sales pipeline describes the process a prospect goes through and how your sales and marketing team engages with them at each stage.
Sales pipelines are different than sales funnels, which describe a customer’s journey from first encountering your brand to making a purchasing decision.
Both processes are important because they help you understand how customers identify your products and services, and decide whether to buy from you.
This article is for businesses that want to increase sales by optimizing their sales process and analyzing their customers’ behavior.
A sales pipeline is a concept that articulates how your customers first come into contact with your brand and the steps your sales team takes to nurture that lead to ultimately purchase your goods or services. Constructing a sales pipeline for your company based on analysis of customer data and sales trends can help you develop better strategies to drive more sales and grow your business. Here’s how to build and refine a sales pipeline.

A sales pipeline, which describes how your marketing and sales teams court a lead and convert them into a customer, is distinct from a sales funnel. A sales funnel is a representation of where your prospects are in their journey toward making a buying decision.

A sales funnel includes three major stages, though the specifics can be altered to suit a business’s unique circumstances. A typical sales funnel includes:

High: High-funnel prospects are those who might be interested in your product or service but aren’t actively looking to make a purchase.

Middle: Mid-funnel prospects know they could probably benefit from your product or service, but they are still investigating the market and aren’t ready to buy just yet.

Low: Low-funnel prospects are ready to make a buying decision immediately or in the very near future.
Understanding where prospects enter your sales funnel, and from which marketing channels, can help refine your sales pipeline to prevent prospects from dropping out of the process and increase conversions.

Like sales pipelines, sales funnels can be adapted as needed to suit the needs of the businesses that create them. Creating subsections of the three-part funnel described above can be a useful way to focus on the more granular aspects of your sales funnel.

Key takeaway: Sales funnels explore the prospect’s journey, while sales pipelines examine your sales process.

Why establishing a sales pipeline is important
By not implementing a sales pipeline, you run the risk of a sales rep acting in a way that could potentially conflict with their co-workers, company policy, or result in dissatisfied customers. With a systemized approach, you can refine your process to increase conversion rates and revenue. Establishing a sales pipeline also makes it easier to train new staff on how they can succeed in their position.

What to do before building a sales pipeline
The first step before building a sales pipeline is to get crystal clear on whom you want in that pipeline. This will have a significant impact on every stage of the pipeline, but most dramatically on your lead generation phase.

Consider the following:

Whom are you trying to sell to?
Who has been buying?
What problems do you solve for your customers?
Why do they buy from you instead of your competitors?
Where do you reach them (online, TV, radio, etc.)?
Use the answers to these questions to create buyer personas that represent your customers. Start with just one buyer persona focused on your No. 1 customer. What motivates that person to buy from you?