Sales Funnel: key terms, formulas and examples
A sales funnel moves leads from awareness to purchase. Qualify leads, nurture them, follow up and track conversion at every stage to find leaks.
Example
1,000 leads and 50 buyers is a 5% conversion rate.
Takeaway
Fix the stage where prospects drop out before buying more leads.
Key terms
- Sales funnel
- The steps a lead passes through, from first contact to purchase.
- Lead
- A person or company that might become a customer.
- Conversion rate
- Share of visitors or leads who take the wanted action.
- Customer retention
- Keeping existing customers buying from you.
- Sales pipeline
- All potential deals a team is working on, organized by stage.
- Landing page
- A web page built to turn visitors into leads or buyers.
- Lead generation
- Finding and attracting potential customers.
- Qualified lead
- A prospect who is likely to buy and able to pay.
- Follow-up
- Contacting a prospect again after the first meeting.
- Sales quota
- A target a salesperson must reach in a period.
- Commission
- Pay based on a share of the sales made.
- Cross-selling
- Offering related products to an existing customer.
- Elevator pitch
- A short, persuasive summary of what you offer.
- Sales cycle
- The time from first contact to closing a deal.
- Buying signal
- A hint that a prospect is ready to buy.
- Prospecting
- Searching for new potential customers.
- Customer objection
- A reason a buyer hesitates.
- Lead nurturing
- Building relationships with leads over time.
Formulas
Conversion rateC ÷ V × 100
Average order valueRevenue ÷ Orders
Churn rateLost ÷ Start × 100
Win rateW ÷ N × 100
Pipeline coverageP ÷ Q
Quota attainmentA ÷ Q × 100
Sales commissionR × c
Average order valueRevenue ÷ Orders
Conversion rateC ÷ V × 100
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