The sales funnel is a visual representation of the sales process.  The sales process is like a funnel where the top is wide and the bottom is narrow.  At the very top you have many unqualified prospects who might turn into sales leads and eventually sales.  These unqualified prospects are potential customers that may require your goods and services.  At the very bottom of the funnel are people who have gone through the entire sales process and have purchased your products.  Throughout the process many leads will drop out along the way.  Leads may drop out because they decide to go with competitors or they may realize their needs can be solved in another way.

The sales funnel helps categorize leads, quantify the sales pipeline and manage the sales process.  A weighted value can be placed on each lead within the sales funnel depending on the stage it is in.  Understanding the stages and quantifying leads in this way can help you forecast future sales in your territory.  The stages below highlight the steps in the sales funnel process that all sales staff should be familiar with.

Stages of the sales funnel:

Unqualified lead prospects – Leads at the top most part of the sales funnel that you have never engaged with but who might be interested in your goods and services.

Prospects – Leads that you have spoken to and that have shown interest in your goods and services.  You have set up next steps with them to have them continue along the sales process.

Qualified prospect – The lead has shown interest in your offering and has the budget to buy the product.  Ideally discussions have involved a specific sales time table in which the purchase will occur.  This is the most critical stage of the sales funnel.

Commitment – At this stage the lead has shown commitment to the sales process.  You have provided them with contractual agreements which they have reviewed and are okay with overall.  There is some verbal commitment but nothing is formally signed.  It is important to work out payment terms, details of the contract and a contingency plan if obstacles come up along the way.

Written Order – The customer has provided a written order for the purchase which you will execute efficiently and as per the agreed terms of payment and delivery.

Delivery – The goods are delivered to the customer under the contractual agreement and have been verified that they are the actual goods he ordered.

Payment – The customer will pay for the goods as agreed.  At this point the deal has been concluded and any sales commissions due will be paid.

Once the deal is closed and payment made the sales person should still keep in touch with the customer.  The idea is to provide post sales support which can lead to repeat purchases or word of mouth referrals to new leads.  A satisfied customer will most likely recommend others to your company allowing you to further fill your sales funnel.