Few things are more critical to any sales team than building a steady stream of new customers and prospects. A healthy, robust flow of leads can help ensure that your company increases revenue and brings in more customers.
New business recruitment rarely happens by mistake. Pulling in customers requires conscious, extensive effort. It also demands that your business build a robust sales pipeline and funnel. Unfortunately, there is some confusion between these two terms, which begs the question: What exactly is meant by sales funnel vs. sales pipeline? What are the similarities, and what are the differences? How can your business create systems to build healthy sales funnels and pipelines?
A sales funnel refers to a customer’s journey from awareness of your company or brand to doing business with you. It is a customer-centric process. There are actions that your sales team can take at each phase of the journey that can help a customer move to the next.
Different organizations tend to structure sales funnels in different ways. However, generally speaking, there are five distinct phases of a sales funnel:
- Awareness: The customer becomes aware of your product or service. You can build this awareness in various ways. These techniques include marketing, referrals, or searches that their purchasing team conducts.
- Interest: Your ads have caught the attention of a purchasing team or individual enough to inspire interest in your business.
- Consideration: The prospect is now seriously considering purchasing from you and likely your competitors.
- Evaluation: The prospect has the information they need. This information includes a proposal from your team. Alternatively, they may have now read data about your product. They are reviewing the information and determining whether to go forward with your organization, another, or none at all.
- Purchase: The company completes the purchase. During this phase, your business will communicate purchase information. You will also conduct the necessary follow-up and investigate opportunities for upselling.
Different stages require different forms of advertisements and lead-building activities. Your sales team can close deals faster by deploying targeted advertising in these areas. You can also create lead campaigns and investigate insights from artificial intelligence customized to the lead. Your business will also need to identify the right people at a company, enabling you to move the customer through your sales pipeline.
A sales pipeline is a step-by-step process that shows where your leads and customers are in their sales journey. Unlike a sales funnel, which is customer-centered, a sales pipeline takes a business perspective. It creates a framework to determine where leads are in the sales process.
Like a sales funnel, different companies will have other names for the various sales pipeline phases. However, the sales pipeline is generally agreed to be:
- Lead generation: You generate leads through different advertising, marketing, or sales activities.
- Lead qualification: More than just broad-based advertising, you use data, analytics, and artificial intelligence to determine that the potential for a sale may exist with a customer.
- Contact and meeting: First, you identify the right stakeholder at the prospective company. Next, your business initiates contact, makes the first pitch, and sets up a meeting. In this phase, your company will create a customized proposal for the customer’s needs.
- Negotiation: The prospect will address any concerns and discuss ways to reduce the price.
- Closing the deal: The sale is made. From there, either the product is shipped, or the service is delivered. During this phase, your business must follow up with the customer, ensuring they are happy with the result. You may also work on building repeat business or identifying other ways to generate more business.
A sales pipeline is not static nor set in stone: Customers can skip phases or move back and forth. However, a sales pipeline allows you to determine the success of your sales efforts. With appropriate analytics and data — like those generated by Next Quarter — you can also determine how likely a lead is to move through your sales pipeline. This information can prove critical for your account planning. In addition, it can help you determine where revenue leakage occurs and what techniques you can deploy to stop such leakage in the future.
As the name implies, there is extensive overlap between a sales funnel vs. a sales pipeline. Understanding these similarities will allow your business to take the correct action to improve both processes.
- Both deal with phases of a customer’s journey. By understanding where customers leave the sales funnel and where your pipeline struggles, you can make necessary improvements to increase sales.
- Both rely on data for proper understanding. If you have breakdowns in certain phases of your sales funnel or pipeline, you need to know when and why those are occurring.
- Your company has a critical role in influencing both phases. You can create targeted advertising, develop accurate intelligence-gathering methods, and appropriately deploy artificial intelligence. Doing so will maximize your chances for sales funnel and pipeline success.
Keep in mind that the successes of a sales funnel vs. sales pipeline influence each other. If a customer moves through their sales funnel, it will positively influence your sales pipeline. Increasing the movement of customers through your sales pipeline also increases the odds that they will compete for the journey through their sales funnel.
You need the right technology to improve your sales funnel and sales pipeline. This technology includes up-to-date data, robust analytics, and platforms to break down traditional data silos within an organization. Next Quarter offers this technology: We provide your business with access to a sales platform within Salesforce, ensuring that your entire company uses the same data for decision-making.
The primary difference is perspective. A sales funnel is customer-centric, while a sales pipeline is business-centric. As a result, your sales team will concentrate on increasing the number of businesses and prospects in their pipeline while a customer travels through the sales funnel. These differences mean your company uses different data components to measure success. For example, you can measure the success of your sales pipeline in percentages and revenue. At the same time, you can analyze the success of your sales funnel by determining if a customer completes their journey.
Improving a sales funnel means concentrating on advertising campaigns and customer relationships. Improvements you need to make to a sales pipeline mean gathering revenue intelligence, offering appropriate lead magnets, and ensuring that your entire sales, revenue, and finance team have access to the same information. A sales funnel means communication with a customer, while a sales pipeline concentrates on internal improvements you need to make to your business processes.
Finally, you deploy different analytics tools to determine the success of your sales funnel vs. sales pipeline. Your sales funnel demands you understand the ROI of your marketing. You also need to know how to close deals faster and ensure that advertising gets into the right hands. Improvements to your sales pipeline often involve tweaking communications. You will also need to know how to create accurate proposals and ensure you are communicating with appropriate decision-makers.
Despite these differences, improving your sales funnel and pipeline are similar tasks. The differences between the two are minor compared to the overall goal of increasing your prospects. Acquiring account growth requires accurate forecasting, robust analytics, revenue intelligence, and the tools to develop financial clarity.
Next Quarter can provide you with these solutions through its intuitive Revenue Intelligence module. This module enables you to manage sales opportunities across your entire sales pipeline. It also allows you to monitor where a customer is in your sales pipeline, track their engagement level via a data-driven engagement score, and ensure that all of this information is connected to your sales forecasting.
Using Next Quarter’s Revenue Intelligence solution takes the guesswork out of building new businesses and creating a healthy and active sales pipeline. We can help you identify breakdowns in your customer’s sales funnel journey and improve the success of your customer pipeline.
Ready to take the next step? Contact Next Quarter today to book a demo.