The sales funnel is a term often used in sales but what does it really mean? This article explains why the sales funnel is an important aspect of sales management.

Imagine a funnel used to pour liquid into a bottle. It has a wide top tapering down to a narrow ending which fits into a bottle. You pour the liquid into the funnel top and then the liquid flows down through the funnel and into the bottle.

Each business will have a typical time it takes for a sales lead to convert into a sale. This could be minutes, days, weeks, months, or even years. Just like pouring water into a funnel and watching it flow through to the bottle, so sales opportunities go into the top of the sales funnel leading to sales flowing into the business. The only difference is that not all sales opportunities will convert into sales.

It’s very rare to see a sales person win every sales opportunity. Some will drop away for a variety of reasons as they work their way through the sales process. For example, the prospect may lose interest or the sales person decides that proceeding would be a waste of time.

It normally works out that there are a lot more sales leads compared with final sales. In fact if you were to do a diagram of the value of all outstanding sales opportunities at each stage of the sales process you should see the shape of a funnel – Wide at one end and narrow at the other.

Sales professionals often talk about ‘filling the sales funnel’. As sales opportunities flow through the sales funnel or fall away they need to be replaced. Its the only way to develop a healthy and predictable stream of sales.

A well run business, from a sales perspective, measure and track the value of opportunities in their sales funnel and manage the flow of opportunities in the funnel.