A sales funnel is a count of how many people reach each stage on the way to paying you. For a service business it has five steps: aware, contacted, replied, booked and paid. Count the people at each step over a month, and the step where you lose the most people you could have kept is the one to fix first. That's all it is. The word sounds like marketing, but the arithmetic is a notebook page.
This page explains the five steps in plain terms, shows a 200-contact month for a fictional company with the drop at every step, and then works out which step is worth fixing first, which is not the one most people pick. The company is Larkspur Window Cleaning, a Portland, Oregon firm run by Hana Oyelaran that sells monthly cleaning contracts to small shops and offices.
What a funnel is, without jargon
Picture a month. Two hundred businesses could use your service. Some you never reach. Some of those you reach never answer. Some who answer never meet you. Some who meet you never pay. Draw it as a shape that narrows, and you have a funnel. It's different from a pipeline. A funnel counts people by stage over a period of time, so you can compare steps. A pipeline lists the open deals you're working right now, each with a value and a next step. You need both, but they answer different questions, and a pipeline that is really a list is what happens when you only have a list of names.
The five steps, and Larkspur's 200 contacts
| Step | People | Lost here | Share kept |
|---|---|---|---|
| 1. Aware (on the list) | 200 | - | - |
| 2. Contacted | 164 | 36 | 82% |
| 3. Replied | 20 | 144 | 12% |
| 4. Booked a meeting | 11 | 9 | 55% |
| 5. Paid | 4 | 7 | 36% |
Four customers out of 200 is 2 percent from top to bottom. At $480 a month each, that's $1,920 a month in new contracts. These numbers are invented to show the arithmetic.
Step 1: someone knows you exist
In this table the pool is a list of 200 shops and offices within Hana's service area that match the kind of customer she wants. For an inbound business the pool is whoever finds you: searches, referrals, signs. Either way, step 1 is the number of real potential buyers who could hear from you. If the pool is small, nothing else matters. If it's full of wrong fits, every later step looks worse than it is.
Step 2: you reach them
Of the 200, Hana actually contacted 164. Thirty-six slipped through: 14 emails bounced, 10 had no working phone number, and 12 never got a message because she ran out of Tuesday. That's an 18 percent loss, entirely in her hands. Missing or bad contact details are the usual cause, and a clean list is cheap to fix. How many leads do you need to get a customer has more on the chain of ratios.
Step 3: they reply
Twenty of the 164 replied, 12 percent. This is the biggest drop in the table, 144 people, and it's also the one people stare at. Most of those losses are normal. Cold outreach to people who've never heard of you will always lose the majority. Better targeting and a better first message move this number a few points, not 40.
Step 4: the meeting happens
Eleven of the 20 who replied booked a visit. Nine didn't. These nine are the ones to look at, because each one wrote back, which means they were interested enough to answer. Hana pulls up the threads. Five of the nine waited two days or more for her answer, because her inbox was full of quotes. The other four said "let me check with my landlord," and Hana never asked when she could check back. A reply that waits, or a yes-ish answer with no date attached, loses people who already raised their hand. The lead you never followed up is the same leak.
Step 5: they pay
Four of 11 meetings became customers. Seven didn't. Some are fair: the price was wrong, they already had a vendor. Others fade because Hana's quote went out three days after the meeting and nobody followed up. Closing without a process covers what a simple version looks like.
The step to fix first, worked out
Ask what each fix would add, using the other steps' current rates. The rates are 82 percent contacted, 12 percent replied, 55 percent booked, 36 percent paid.
- Reach the missing 36 (step 2 to 100 percent): 200 reached × 12% replies × 55% × 36% is about 4.8 customers, 0.8 more than today.
- Lift replies from 12% to 15% with a better message (step 3): 164 × 15% = 24.6 replies × 55% × 36% is about 4.9, about 0.9 more.
- Lift replies-to-meetings from 55% to 75% (step 4): 20 replies × 75% = 15 meetings × 36% is about 5.5, which is 1.5 more.
- Lift meetings-to-customers from 36% to 50% (step 5): 11 × 50% = 5.5, which is 1.5 more.
Steps 4 and 5 beat steps 2 and 3, and step 4 is cheaper to improve: answer within the hour and always offer two times. That's why the rule isn't "fix the biggest drop." It's "fix the step after someone has shown interest, where a person who already said yes-ish is leaking." The same logic, applied to inbound leads for a landscaping company, is in a 40-lead month, traced stage by stage, and a weekly routine that keeps each step moving is in a weekly sales plan template.
If your leads come to you
The same five steps work when people find you instead of the other way around, with two changes. Step 2, "contacted," becomes "you answered," and the count is how many inquiries got a real reply from you, not how many you sent. And the drop at that step is usually much bigger than a service owner expects, because slow replies lose people before any conversation starts. Steps 3 to 5 then mean the same thing: the person talks back, a visit or call is booked, and they pay. A business that mixes both sources should keep two sheets, because inbound and outbound leads rarely convert at the same rate.
Counting your own month
Write five numbers from last month: people on the list, people contacted, replies, meetings, customers. Divide each by the one before it. Check the last two ratios first. If you don't have the numbers, start a one-row-per-lead sheet today, and fill it in as things happen.
A funnel only moves when someone works it every week. Rocketship finds the buyers, emails them from your own Gmail, follows up, and books the meeting on its own. Plans that get you customers start at $24.99 a month (Launch), and every monthly plan starts with a 7-day free trial, card required. See how the AI workers work steps 2 through 4 for you.