A funnel chart is a single series chart which uses a cone that represents the progressive reduction of a value over a process. It does not employ an axis, and data at each stage in a process is represented by segments of the cone. Funnel charts are most heavily used to represent sales data, and its function is similar to that of a stacked bar chart.
In sales, it is used to track lead results. It typically presents sales leads on top and in descending order it presents qualified leads, “hot” leads, and then finally closed deals. The shrinking segments represent the lost potential sales. This graphic allows organizations to track the performance of sales teams, and see how effective their sales and marketing professionals are in converting leads to sales. The graphic can also be employed to explain the sales process to new team members.
The funnel reveals the “leaks” in the sales process by showing the point which loses the most. This information is employed to improve marketing and sales techniques through examining these points of loss to see how and why it is happening.
Another way to use funnels would be to represent order fulfillment or the recruitment process. The segments can represent the volume of orders at different stages of the order fulfillment process, and the segments could also represent the stages of the recruitment and hiring process.
The funnel can also be used in the same way as a pie chart. An example of this usage is to label each segment in accordance with a team member and their total sales for the month.
Funnel charts suffer from limitations in the scope of the data they can represent, which includes volume and complexity. It is also a tool most useful for a small set of specific uses.