Sales Funnel
A sales funnel describes the customer's journey from the first touchpoint to payment. At each stage, some people drop out, so the funnel always narrows.
Stages of the Sales Funnel
The classic sequence looks like this: acquisition, interest, lead qualification, presentation or demo, deal, and repeat sales. In a CRM, these steps become deal stages and are configured to match the company's actual process, from the first message in a chat to invoice payment.
How to Calculate Conversion Rate
Funnel Stage Conversion Rate = (number of people who progressed to the next stage ÷ number of people who entered the stage) × 100%.
If a meeting is scheduled with 50 out of 200 leads, the conversion rate from “lead” to “meeting” is 25%. Multiplying the conversion rates of all stages gives the overall funnel conversion rate.
Where Customers Are Lost
Funnel analysis reveals weak points. Suppose half as many people attend a demo as attend a meeting. This means lead qualification at the entry stage is too weak. If deals fall through after the quote is calculated, it is worth reviewing the offer terms or the sales team's performance.