What is a Funnel Chart?

What is a funnel chart exactly? We’ve all heard of funnel cakes, funnel clouds, and automotive funnels, but the combination of funnel and chart together is foreign to many. Read on as we cover the basics of this particularly useful, mathematical graphic.

Funnel Charts: The Basics

The use of charts and tables for representation of math and figures is an ancient practice. As far back as the ancient Babylonians, such math graphics have been found in the form of clay tablets. In fact, as time has gone on, the number and types of these graphic illustrations has grown to an almost untrackable number and variety. Funnel charts, one of the younger of the family are specifically used in order to demonstrate stages of the sales process most typically.

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At each stage of a sale, there are a number of factors that may take place. Within these stage-by-stage happenings, there exists an accompanying propensity or possibility for income or loss. This is what this particular chart is designed to show, and better than any other chart.

Reading Funnel Charts

Once you understand the basic premise and design of these charts, it’s easy to understand their individual stories at a quick glance. The funnel shape of this chart looks like a funnel with the narrow end down and the wide base up. At the top where the wide base is, you will find the representation of the very beginnings of the sale process.

Headed downward, we get to the middle area of the funnel. Here, we find ourselves mid-sale and will see all of the associated activities that occur at this point as well as their associated incomes. Below this, we find ourselves at the narrow tip of the funnel, the location representing the end, or finalization of the sale. This area is likely to show the biggest associated income numbers.

To get a better view, here are a couple of quick, hypothetical examples of these charts’ real-life uses.

Examples at Work

The West Equipment Sales Company sells all types of equipment, tools, construction materials, and other related products to construction companies in a tri-state area. Each contract signed into by a company is an agreement to only get supplies and tools from this provider as opposed to any other. In order to reach signing though, there is a courting process involving providing samples, visits to sites, small, introductory sales, and more. Each stage of this courting process, up until the contract signing, is then represented by way of traditional funnel charts created by the company finance department. In the end, staff can analyze associated costs and gains at each stage of the courting, or sales process simply by glance at one chart.

This case of an alternate use of funnel charting we’ve also seen is yours courtesy of a hypothetical staffing company – Pam’s Staffing Agency. At each level of the hiring process, this company needs to know what costs and gains are associated as well as the percentage of candidates that pass each hiring step and go on to the next. The funnel chart is the perfect illustration in order to show this exact information at a glance. This hiring company therefore uses this method of charting initially designed for sales purposes quite efficiently and beneficially

This particular kind of chart certainly isn’t ideal for all applications. For those that it is used for though, it’s a perfect match for graphic representation of this kind of data. These are the basics of today’s funnel chart and the uses found therein.