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What is a Sales Tunnel?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 09 July 2014
  • Copyright Protected:
    2003-2014
    Conjecture Corporation
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Sometimes known as a sales funnel, cone, or sales pipeline, the sales tunnel is a process of tracking the progress of a sale from obtaining basic contact information to completing a new sale. The idea behind the sales tunnel is to assist the salesperson in keeping track of the progression of each potential sales opportunity. Knowing where each contact is in the sales cycle helps the salesperson to know what should take place next in order to move that sales opportunity closer to the realization of a completed sale.

There are a number of different models for a sales tunnel. Some types are geared more toward the particular structures and strategies involved with business to business sales efforts. Others focus more on sales by a business to individual consumers. While the particulars for a sales tunnel may vary from one model to another, just about every type of tunnel or pipeline will focus around three distinct levels or stages: lead, prospect, and customer.

A sales lead is often considered the starting point of the sales tunnel. The lead is usually nothing more than basic contact information. At this juncture, there has been no interaction between the salesperson and the contact. A lead may come from business cards collected at a convention, a referral from a current customer, or even from a committed salesperson working through a telephone book in search of new customers.

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Leads progress in the sales tunnel by moving on to the status of prospect. Prospects are leads that have been qualified by the salesperson. This usually involves determining that the contact is interested in learning more about the goods and services offered, and by making sure the contact meets the credit requirements of the company offering the goods and services. As the prospect moves through the pipeline, the salesperson engages the contact in dialogue about possible applications of the products, provides demonstrations or free samples of the product and is allowed by the prospect to submit a formal bid, proposal, or quote to the prospect.

The final stage of the sales tunnel is the conversion of a prospect into a customer. This takes place when the prospect accepts the terms and conditions associated with a purchase and places an order with the salesperson. At this juncture, the new customer adds to the overall deal volume that is generated by the efforts of the salesmen in the employ of the company, and the sale is credited to the salesperson who put in the time and effort to secure the new customer.

Many models for the sales tunnel include sub-categories under these three broad headings. For example, qualified leads are sometimes seen as a bridge between the lead and prospect stages. A qualified lead may be a contact that has been determined to be credit worthy, but the first interaction between the salesperson and the contact has yet to take place. Within the prospect stage, each step forward may be measured in terms of percentages of completion, and may include time frames for completing the sales cycle based on the current percentage level assigned to the prospect.

Today, a sales tunnel is often outlined and tracked with the use of software programs. Depending on the policies of the company and the structure of the software, the completion of various tasks may be required before the system will progress the contact from one stage to the next. This is often a positive situation for the salesperson, in that the software helps to prevent skipping over something important and creating a breakdown between the potential customer and the salesperson that results in the loss of a sale.

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