Sales pipeline vs sales funnel

When you’re speaking about your sales process and its steps with your sales team, which term do you use: “Sales pipeline” or “Sales funnel”?

The terms are very similar, but they have distinct meanings, and it’s important to understand the differences.

In this article, we’ll share unambiguous definitions of both terms, as well as their goals and benefits and how to use them to fuel your sales strategy.

What is the difference between a pipeline and a funnel in sales?

To better understand the differences, let’s first look at each term separately.

What is a sales funnel?

A sales funnel is a model describing the whole customer journey—from the first engagement with a brand to becoming a brand advocate—all through the prism of the number of leads dropping from stage to stage.

The simplest model of the sales funnel includes awareness, consideration, and decision, which leads customers to purchase a product or service.

Prospects might first engage with your brand via content marketing, paid ads, or search engine results mentioning your product or service, and form their first impression.

If a prospect is positive enough to continue interacting with your brand, they start looking for additional info about your business (articles, testimonials and customer reviews, etc.)

Your transparent reputation, website, and resources will help you succeed at this stage.

And it’s up to your sales reps to provide a prospect with meaningful data to foster a positive buyer decision.

Once your lead has received a sufficient amount of data, they can make a decision and either move to the next stage or leave the funnel.

Even if 5% of the initial number of prospects gets here, it still means you’ve built a successful funnel.

After your prospect has turned into your customer, think about recurring purchases and keep your customers updated on your product, service, or business.

Focus on customer satisfaction for single-purchase items; they could buy more from you later.

As a result, customers may start advocating your product or service to others with no strings attached.

When to use a sales funnel?

A sales funnel should be used throughout the sales cycle to visually track the customer journey from awareness to decision-making.

It’s important to note, however, that modern-day customers may not always follow the traditional, linear sales funnel. Customers interact with brands through many channels, including their website, social media, email, and more. Prospects also have more to consider with review sites, personal recommendations, and third-party websites.

As a result, customers may move between stages before making a decision.

Goals and benefits of a sales funnel

The sales funnel’s main goal is to manage conversions and force the marketing machine to work profitably.

This means conversion rates at all stages must be high enough to make the cost of generating and nurturing one lead into a customer affordable when compared with the revenue that customers will generate for you in the long run.

The benefits of using the funnel within your sales activities are as follows:

Lower sales costs

Once you improve your conversion rate, you get more customers from the same number of leads.

That means cutting down on costs for generating and nurturing leads.

That makes the sales funnel a powerful tool for saving on your marketing budget.

Fewer mistakes and fails

By using a sales funnel, you can avoid sales and marketing failures like missed opportunities or wasted resources.

When you notice unexpectedly low conversion rates or sudden changes, you can use diagnostic tools to fix mistakes early on and make your marketing activities run smoothly and efficiently.

Fine-tuning the sales process

A sales funnel can help you simplify how you understand and polish your lead generation, nurturing, and sales activities.

For example, when the number of initial leads flowing to the awareness stage of your funnel is insufficient, you can instantly spot it and elaborate on your traffic-generating channels and methods.

What is a sales pipeline?

The sales pipeline is the journey of a prospect on their way to becoming an existing customer, moving through certain stages planned ahead by sales reps.

Once one stage is finished, the prospect moves to the next in the sequence.

It all starts with sales reps generating leads (for example, by writing sales emails that convert) or just attracting people or businesses who may convert.

Reps determine if those potential customers have a real need for a product or service and have enough budget — and form a list of qualified leads.

Importantly, qualified prospects must be decision-makers in their respective companies.

Sales reps directly communicate with qualified leads, arranging initial meetings via Zoom, Slack, or other platforms.

If negotiations are a success, a sales rep prepares and sends a sales proposal.

They may also create advanced, customized quotes, depending on what exactly they sell.

When a prospect becomes a customer, all involved parties sign the agreement.

After that, sales reps shift their focus: to turn satisfied customers into loyal advocates.

What are the 5 stages of a sales pipeline?

The five stages of the sales funnel are lead generation, lead qualifying, sales meetings, proposal sending, deal closure, and retention.

Lead generation: This is the top of the funnel, where potential customers are identified and attracted through marketing campaigns, referrals, events, or outreach.
Lead qualifying: Not every lead is a good fit. In this phase, reps assess each lead based on criteria like budget, authority, need, and timeline (BANT). Qualified leads become sales opportunities.
Sales meeting: Reps connect with qualified leads on a discovery call or a demo to understand their needs and pain points and demonstrate how the product may be a potential solution.
Proposal sending: The sales reps send a detailed, personalized proposal that includes the price, terms, scope, and deliverables. Negotiations may happen at this stage.
Deal closure: When both sides agree on the terms, the contract is signed and the deal is closed.
Retention: Organizations must provide ongoing support and communication to help retain the client, drive renewals, and create upsell opportunities.

Why is a sales pipeline important?

A sales pipeline equips a company with better visibility to measure, track, and analyze performance. Teams can use this data to forecast revenue, measure performance, and improve sales training and strategies for better overall performance.

Goals and benefits of a sales pipeline

The main goal of the sales pipeline is to help you increase your revenue within the sales cycle.

By implementing the sales pipeline into your marketing processes, your business can reap substantial benefits. Here are a few examples of what we mean.

Faster deal closure

This is one of the most attractive benefits tied to using the sales pipeline.

Once you have a helicopter view of your sales activities, you can easily identify obstacles that are slowing down deal closure.

More transparency and efficiency

The pipeline helps you see the big picture and make strategic decisions to help your salespeople work efficiently.

Once the sales pipeline is ready, track the stages where your prospects are, analyze issues they might face, and unlock insights that will help prospects move to a subsequent stage.

Better resource allocation

Knowing where your prospect is in the pipeline also helps you better distribute your marketing resources.

For example, if your target prospect is currently at the consideration stage, you can prepare case studies to show them more personalized content.

Easier team tracking

The pipeline helps track the activity of each sales team member separately. Knowing the initial goals and tasks assigned, you can clarify who works with a “full steam ahead” approach — and who doesn’t.

Sales pipeline vs. sales funnel: Key differences

To quickly grasp the difference between a funnel and pipeline: think stages vs steps.

While the pipeline is focused on the stages your prospect travels through to become your customer, the sales funnel is based on the steps taken to improve conversion rates between the neighboring stages.

When you guide a lead toward a sale, a pipeline is all about the various stages your deal goes through (for example, “contact made” or “proposal sent”).

On the other hand, a funnel focuses on the steps taken to move your prospect from attention to buying (“awareness,” “consideration,” and “decision” are examples here). Both terms are broadly used in CRM systems like Salesforce, Monday.com, or Pipedrive. And they describe similar processes, offering visual representations of buyers’ journeys — but from different vantage points.

Visualizing the difference

Let’s use the table below to show what sets the sales funnel apart from the sales pipeline.

This cheat sheet will help you nail down the distinctions between these two terms.

Aspect	Sales pipeline	Sales funnel
Perspective	Shows where sales reps are in their selling journey	Shows where prospects are on their path to turn into customers
Focus	Centers on sales teams, their activities, and the sales process	Centers on understanding customer behavior
Structure	Linear: sales reps guide prospects stage by stage.	Non-linear: prospects can move forward and backward.
Insights	Sheds light on sales rep performance	Highlights prospect behavior, their pain points, and buying triggers
Customizations	Sales reps can tweak stages to speed up the process and better match customer needs.	Stages remain the same for diverse customers.
Visualization	For clear understanding, it can be presented as a linear progression	To display every step, it’s easier to use a funnel-shaped diagram
Lead nurturing	Focus on strengthening relations with potential customers at each stage	Centers on moving prospects from one funnel stage to the next

How do sales pipelines and sales funnels work together?

If you use these tools together, you can uncover new avenues for your brand:

For complicated products and services, which require long customer journeys with many different stages, a combination allows you to understand if your customer journey model has enough stages — or if it isn’t properly segmented.
Marketing teams can use sales pipeline reports and sales funnel reports based on data gathered from both models to develop new sales materials for each stage of the process, including the generation of new leads.
Product development teams can use sales feedback to understand potential customers’ questions and update their sales strategies.
Sales and RevOps teams can use both to improve forecasting and deal prioritization. The sales funnel highlights drop-off points and conversion rates, while the pipeline shows where each deal stands. When combined, teams can identify which stages tend to slow down or leak revenue, then take steps to optimize deal velocity and focus on the most promising opportunities.
Customer success teams can improve handoffs and onboarding. Combining the pipeline with the sales funnel helps teams understand the customer journey and personalize onboarding, which can increase customer retention and satisfaction.
Leadership can better align resources and strategy. Understanding how pipeline velocity and funnel conversion rates impact revenue helps teams forecast accurately, allocate resources, and adjust GTM initiatives.

Step up your sales strategy with PandaDoc

The sales pipeline and sales funnel have similar long-term objectives — happy customers buying your products/services — but they’re different at the same time.

The pipeline is aimed at controlling your customer journey based on where they are in the stages they’re traveling through.

The funnel is focused on conversion rates between the neighboring stages of the customer journey.

PandaDoc can help you optimize and streamline your sales processes from any perspective.

You can use sales automation software to simplify and streamline repetitive tasks, helping your salespeople focus more on enhancing relationships with prospects.

Moreover, you can automate proposals for better collaboration, document tracking, and faster deal closure.

Plus, PandaDoc CPQ integrates with top CRM software, including Salesforce, HubSpot, and Pipedrive, to help your teams sync customer data and create contracts and proposals directly within your CRM.

Ready to unlock the full potential of your sales strategy? Schedule a demo today to learn more.

Originally published July 23, 2024, updated June 10, 2025

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Sales pipeline vs sales funnel: What’s the difference?