Prospects move through stages before becoming customers. The sales funnel is the model of that progression from initial contact to closed deal. Stages typically include awareness or lead, qualified opportunity, proposal, negotiation, and closed-won or closed-lost. Each stage has a lower conversion rate than the one before it, producing the funnel shape.

Sales teams use the funnel to forecast revenue, to identify bottlenecks, and to manage activity. Metrics such as conversion rates between stages, average deal size, and time spent in each stage reveal where the process is healthy and where it needs attention. Marketing and sales alignment is often discussed in terms of how leads are handed from the top of the funnel to the sales stages.

Modern CRM systems make the funnel visible in real time. The model is an approximation—deals do not always move linearly—but it remains a practical tool for managing a pipeline of opportunities and for focusing effort where it will have the greatest effect on results.