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 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:

• The difference between a sales funnel and a sales pipeline
• Sales pipeline vs sales funnel: key differences summarized
• Do I need a sales pipeline or a sales funnel report?
• Sales funnel & pipeline management: making them work together

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

The Difference Between a Sales Funnel and a Pipeline

Both sales funnels and pipelines are important for revenue teams—but they each tell a slightly different story. Mainly, the difference has to do with the perspective. Here’s why:

What is a Sales Pipeline?

A sales pipeline is built from the perspective of your reps. Your pipeline is a clear overview of how many open deals your team has on the table, and gives reps a clear path to push that deal towards a sale. It’s modeled after the different stages in your sales process but focuses on the actions reps take to cultivate and sell to new leads. 

By building stages around rep actions rather than the condition of the lead, a sales pipeline shows your team what actions they need to take to get leads through the different stages and convert them to customers.

What is a sales funnel?

A sales funnel is built from the perspective of your leads. It’s based on the stages your leads go through before they become customers, and shows you how your leads are reacting and converting through each stage.

By measuring key sales metrics, a sales funnel report gives you a visual overview of the average conversion rates of each stage in your sales process. As people travel down the funnel, the number of qualified leads will drop. In the end, you’re left with the leads who successfully converted into customers.

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:

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?

Now that we’ve discussed the difference between sales pipelines and funnels, you see that both 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.

Sales Funnel & Pipeline Management: Helping Them Work Together

These two essential pieces of revenue generation can be used by both sales and marketing teams.

When done correctly, using both a sales funnel and pipeline together can help you align sales and marketing teams to produce the smoothest path to purchase for new customers.

Remember, this isn’t necessarily a linear process. Customer journeys are growing more varied than ever, and your team needs to be prepared to offer them the communication methods they need at the right points in their journey.

That said, when you learn more about the funnel your best customers normally go through, you’ll be able to better align your sales pipeline to guide them through their purchase journey.

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. →