Sales pipeline vs sales funnel: Which is best for your business?

When you work in sales, it can sometimes feel like you’ve learned a secret language.

Gatekeeper, churn, MQL, AE, customer acquisition cost, B2B, unique selling proposition, net promoter score…

This is just some of the sales jargon thrown around the office on a daily basis, and while any outsider wouldn’t know an SME from an SMB, we’ve all learned the code and use these terms as if we learned them as infants.

Among this secret sales language are the terms sales pipeline and sales funnel. And while these terms may be used interchangeably at times, they refer to different things (looks like some of us need to brush up on our sales dictionary terms).

While both are closely related to your sales process, they each have a unique (and important) perspective and role.

That’s why in this chapter, we’re going to discuss these topics:

• What is a sales pipeline?
• What is a sales funnel?
• Sales pipeline vs sales funnel: key differences
• Do I need a sales pipeline or a sales funnel report?

Let’s define both sales pipelines and sales funnels, and find out which one your business needs.

What is a sales pipeline?

What is a sales funnel?

Sales pipeline vs sales funnel: key differences

Now that we know what each term means, what are the key differences between sales pipelines and sales funnels?

Let’s discuss five aspects where these two terms differ:

	Sales Pipeline	Sales Funnel
Track and report	To track the right metrics for your sales pipeline, you can use information from your CRM and other sales analytics tools. Most CRMs like Close include pipeline reports that you and your team can analyze and interact with.	You’ll need multiple tools to track the metrics for a sales funnel, but most of the data will come from your website analytics and customer data.
Benefits	A pipeline helps reps have clear guidelines to gently push leads through the different stages and close more deals.	A funnel helps the sales team to see the sales process from the perspective of the customer. It creates a framework to focus on the customer’s needs.
Stages	The stages of a sales pipeline are built around the actions reps take during the sales process.	The stages of a sales funnel are bui lt around the stages that a lead passes through before converting.
Roles who use	Everyone on the sales team helps create, interact with, and analyze the sales pipeline. When using a sales pipeline CRM, your reps’ actions are recorded automatically and the pipeline is used by all to keep track of deals and move them forward.	Sales leaders use the sales funnel to understand where conversions are happening (or where they aren’t). Sales reps use the funnel to see the sales process from the customer’s perspective.
Where to create	The best place to create your sales pipeline is within your CRM, where your data lives. You can also export the data to a spreadsheet, if you prefer.	The data you need can be exported to a spreadsheet but should be constantly updated to reflect current conditions.

Obviously, sales pipelines and sales funnels are two very different things. So, which one does your business need?

Do I need a sales pipeline or a sales funnel report?

Both sales pipelines and sales funnels can be extremely useful: depending on your situation.

Let’s discuss situations when you would need a sales pipeline vs times when you need a sales funnel.

You need a sales pipeline if:

• Your reps are unclear how to convert leads to customers: Maybe they’re bringing in the demo too early, or they’re pushing trials when they should be pushing sales. A pipeline shows reps exactly what steps to take (and the correct order) to close a sale.
• You don’t have a clear view of where current deals stand: You may know what deals are going on, but what stage is each in? How long have they been in those stages? A pipeline will show you this data, and help you move deals forward.
• You want to see what actions have the most impact on conversion: Which is better: a meeting or a demo? Should reps be cold calling or cold emailing? A pipeline that’s customized to your business and customers will tell you this and uses inside sales metrics to show you what’s working and what isn’t.
• You want to create more accurate forecasts: To forecast accurately, you need to know how much each lead is worth to you, where each deal stands, and how likely they are to close. You can gather and analyze this information in your pipeline.
• Your reps are having trouble reaching their quota: With a sales pipeline, reps can more accurately view current deals, the value of those deals, and where they need to place more priority to close deals and reach their sales quota.

You need sales funnel reporting if:

• Your team has a hard time getting into the shoes of their customers: Since a sales funnel shows the sales process from the perspective of the customer, this will help reps understand where their leads are and how best to approach them.
• You want to see how effective your reps are at qualifying: How many leads are getting through qualification stages but not converting? Your funnel will tell you that and will help you see where there’s room for improvement.
• You want to see where conversions are happening (or where they aren’t): At each stage, how likely is a lead to move to the next stage in the process? Knowing this conversion rate and measuring against sales benchmarks can help sales leaders improve their processes to better fit the customers’ needs.
• You need to understand which sales actions are most effective at which stages in the customer journey: At each stage of the sales funnel, what actions help a lead convert, and which actions make them run in the opposite direction?

In summary, if you want to help your reps have a smooth selling process, reach their quota, and forecast better, you need a sales pipeline.

If you want to help your reps be more customer-focused and see how leads convert through the different stages of the buyer journey, you need a sales funnel report.

Never underestimate the power of sales pipelines and sales funnels

Congratulations: you’ve just become a bit more fluent in the secret sales language.

After comparing sales pipelines and sales funnels, you may have realized your business is under-utilizing one or both of these important tools.

Want to create a sales pipeline that can accelerate your sales and improve your business?

Keep reading.

Next up, we’re going to discuss essential pipeline stages and how to implement them in your sales process.