What is a Sales Pipeline, and How Does it Differ From a Sales Funnel?

Gustavo Bianco Last updated on: April 17, 2025

If you’ve been using “pipeline” and “funnel” to mean the same thing, you might want to pay attention.

Sales pipeline and sales funnel both describe the flow of prospects through a sale, but there’s an important difference between the two commonly confused terms. While the definition and meaning of a sales pipeline versus that of a sales funnel may seem similar, there are some fundamental differences.

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What is a sales pipeline?

A sales pipeline is a set of stages that a prospect moves through as they progress from a new lead to a customer. Once each pipeline stage is completed, the prospect is advanced to the next stage.

Essential stages of a sales opportunity pipeline

Though the structure can differ from company to company when building a sales pipeline, here are some of the more common stages:

• Qualification: The rep asks questions to determine if the prospect has the need, budget, and authority to buy in the near future.
• Meeting: The sales rep and prospect discuss the solution that would best fit the prospect’s needs.
• Proposal: The rep sends the prospect a detailed quote laying out what will be provided, at what cost, and for how long.
• Closing: Final negotiations are made, and contracts are signed. The prospect is officially a customer.

Now, here’s where things start to get confusing.

1) A sales pipeline is similar—but not identical—to a sales process, which refers to the recurring actions that a team takes on every lead to move them across those stages (i.e., distributing leads to the proper team member, calling new leads to qualify them, or doing research in advance of a presentation). The actions in a sales process are divided into pipeline stages.

2) Many sales professionals use “pipeline” or “sales pipeline” to mean the quantity or dollar value of the deals currently in their pipeline, not the series of sales stages themselves. It’s very common to hear a sales rep lament that their “pipeline is looking rough” because they let their prospecting efforts fall by the wayside or to hear a manager call a “pipeline meeting” to discuss the specific deals that the team has in progress.

What they’re really talking about is deal pipeline value, which is measured by a pipeline report.

A pipeline report shows the value and quantity of all deals in each stage of the opportunity pipeline at the moment when the report is run.

Related: The sales pipeline prescription: how to cure the 10 most common ailments plaguing your pipeline

Pipeline reports are important for effective pipeline management, helping sellers keep track of the status of every deal and understand whether they have an appropriate distribution of deals in order to meet their sales targets.

While Nutshell uses the “series of stages” definition when referring to “sales pipelines” in our CRM, don’t be thrown off when you hear seasoned sales pros use it to mean “value of deals in progress.” As a wise band once sang, sometimes words have two meanings.

What does a sales pipeline look like? 

Perhaps you’re wondering what a sales pipeline looks like. A sales pipeline is typically depicted as a horizontal bar broken up into the different sales process stages. For example, the sales pipeline pictured above shows a horizontal series of pipeline stages from Qualify to Close.

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What is a sales funnel?

Unlike a sales pipeline, which focuses on the set of actions taken by sellers, a sales funnel represents the quantity and conversion rates of prospects through your pipeline stages. It’s called a “funnel” because of its shape: wide at the top as prospects enter, then increasingly narrow as they are disqualified or decide not to buy.

Unlike a sales lead pipeline report, which shows the value and quantity of deals at the moment when the report is run, a funnel report is based on a cohort. This means that a funnel report can tell you, for example, of the 100 leads you received last quarter, what percentage of them advanced through each stage of your pipeline.

A sales cycle funnel report is important for sales leaders because it can help them forecast sales and identify where deals are getting stuck. A sales funnel forecast report is generated based on the current lead volume. And pinpointing bottlenecks in the funnel cycle helps them improve their process and better coach their team.

What does a sales funnel look like?

We know what a sales pipeline looks like—how does the look of a sales funnel differ? A sales funnel depicts the buyer journey in a vertical format, from when the lead enters the top of the funnel to the point at which the lead becomes a customer at the bottom. 

Because the number of leads usually decreases from stage to stage, the sales funnel automatically takes on the shape of a funnel, as shown in the above picture of a sales funnel. For this reason, regardless of whether the funnel highlights the number of leads per stage or simply focuses on the types of stages in the sales process, the sales funnel is usually visualized in funnel form.

The difference between sales pipelines and sales funnels

So, when you’re thinking about the difference between a pipeline and a funnel, remember this: A pipeline reflects what a seller does during the sales process and a funnel measures conversion rates through the sales process.

To sum up:

• The sales lead pipeline is a series of stages that focuses on the seller’s actions to move the lead to the next stage. The sales funnel is a series of stages that show the volume of leads that have gone through each stage in the buyer’s journey.
• The sales pipeline can be changed directly, as managers and sellers can move, change, and add pipeline stages and actions. The sales funnel, on the other hand, is merely a numerical representation of the actions taken by leads – it cannot be directly changed but only influenced.
• The sales pipeline report enhances pipeline management, enabling sales teams to keep track of the status of every deal and understand what next actions to take. The sales funnel report helps you to forecast sales and understand where leads may be getting stuck in the buyer’s journey.

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Using sales pipelines and sales funnels in your sales strategy

As you’ve probably realized, the sales pipeline and sales funnel are moving in the same direction along the buyer’s journey from discovery to close. That’s why you can – and should – use both to determine your business’s sales strategy.

The conversion rates found in the sales funnel report are a response to things that your sales team can control – sales rep actions, how they communicate, and how often they’re reaching out and working to move leads through the sales deal pipeline.

When analyzing conversion rates in your sales funnel, keeping your sales pipeline on hand can help you map seller actions directly to buyer conversions and find opportunities to improve your process.

Tips for building a sales pipeline

Building an effective sales opportunity pipeline may seem complicated at first—there are several factors to consider to ensure you get it right. With a straightforward process in hand, building a sales lead pipeline geared toward moving prospects through the stages and encouraging more deals is simplified.

Let’s take a look at the core steps to create the best sales pipeline for your team and business success:

1. Zero in on your ideal customer: Define the characteristics of customers you want in your pipeline and group them accordingly for more effective audience targeting and lead generation.
2. Identify key pipeline stages: Determine the essential stages needed in your pipeline, mapping the customer’s journey from awareness to purchase.
3. Reverse engineer pipeline tasks: Develop your pipeline based on mission-critical sales tasks and activities at each buyer journey stage, working from purchase back to awareness.
4. Select the right tools: Equip your sales team with the right tools for the job—build your pipeline using a leading CRM platform to effectively track leads, automate tasks, and maximize opportunities.
5. Evaluate and optimize: Keep assessing sales results, gathering team feedback, and testing new approaches to ensure your deal pipeline is as efficient and effective as possible.

Tips for managing a sales pipeline

You’ve followed the steps outlined above and built a great sales pipeline to empower your sales team. What next? The next step is to implement a solid pipeline management process so you, your team, and your company get the most from your sales efforts. 

We’ve already touched on continuous pipeline evaluation and optimization, but there’s more to pipeline management than just that. Here are some of the top tips for successfully managing a sales pipeline:

• Determine your milestones: Examine the key steps in your sales process tailored to your business needs to clearly define your pipeline stages so you can track deal progress and spot potential roadblocks.
• Prioritize hot leads: Set up a system allowing you and your team to score and rank leads to ensure you focus your efforts on those most likely to convert.
• Centralize your customer data: Invest in a robust CRM solution to help you generate, collect, organize, and analyze customer data, giving you the tools to gain essential insights into behavior and preferences.
• Automate repetitive tasks: Use CRM pipeline automation tools to streamline tasks and activities so you and your team can focus on strengthening prospect relationships and closing deals.
• Simplify the sales cycle: Pinpoint and remove sales process obstacles, allowing you to speed up revenue generation and improve lead retention.
• Standardize your processes: Work toward developing consistency within your workflows, ensuring they remain tailored to your needs while making them easy to replicate and learn for seamless sales rep onboarding.

Master your sales lead pipeline with Nutshell

Want to turn your sales pipeline into a conversion machine? Take a tour of Nutshell and learn how our CRM’s sales process tools and insights help sales reps add more qualified leads to their pipeline and win more deals.

And with our Multiple Pipelines feature, Nutshell Pro users can even configure multiple sets of stages for distinctly different sales efforts.

After exploring our robust suite of CRM features, why not try it out for yourself? Explore any Nutshell plan free for 14 days – no credit card required. Contact our team to learn more about how Nutshell can help your business create the ideal sales pipeline, whatever your sales model.

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