Sales funnel, explained
A sales funnel describes how a large number of people who notice your business becomes a smaller number who enquire, fewer who are qualified, fewer again who get a proposal, and finally the ones who buy. It is drawn as a funnel because each stage is narrower than the one before it, and the useful question is always where it narrows most.
The funnel is a view of people, while a sales pipeline is a view of deals. The funnel usually starts earlier, with ad impressions, website visits and enquiries, and it is how marketing plans spend. The pipeline starts once a salesperson owns an opportunity, and it is how sales plans the week. Both use stages, and a lead moves from one to the other when it is qualified.
To use a funnel, count how many leads reach each stage in a period and the share that move to the next. A drop between enquiry and first contact points to slow follow-up; a drop between proposal and deal points to price, timing or competition. Fix the narrowest point first, because it limits everything below it.