The Funnel chart is used to visualize the progressive reduction of data as it passes from one phase to another. Data in each of these phases is represented as different portions of 100% (the whole). Like the Pie chart, the Funnel chart does not use any axes either.
Each stage of the funnel represents a part of the total. Therefore, it assumes the shape of a funnel -- with the first stage being wide and the largest, and each subsequent stage smaller than its previous stage. Typically, the first stage, the "intake" stage, is the largest.
The most common use of the Funnel chart is in visualizing sales conversion data.
Let's say you sell an analytics software, Quantisense.
Stage 1: At the top of the funnel are your Unqualified prospects, those people who you think might be interested in your software and whom you have approached through cold calls, mailers and so on.
Stage 2: Next are your Leads, people who have responded to your initial pitch and have showed an interest in your software.
Stage 3: In this stage, you have the leads with whom you have an initial round of discussion regarding your product in detail.
Stage 4: After your detailed product discussion, the customers evaluate your product against their own benchmarks.
Stage 5: A second round of discussion happens where you and your customers negotiate on things like pricing, customization of certain features and so on.
Stage 6, 7 & 8: You receive purchase orders for your confirmed orders, you deliver the software and you get your payment.
At each stage, some of your prospects are lost, till finally you are left with your closed deals (customers who actually set your cash registers ringing!). The resulting chart looks like a funnel, wide at the top and it narrows as you move down the various stages. The chart makes it easy to analyze where most dropouts are happening and helps in devising plans to improve the conversion rate.
Advantages of Funnel Chart
- Can be easily understood-- the shape of the funnel reveals the health of the process that’s being tracked
- Exposes bottlenecks in a linear process
Disadvantage of Funnel Chart
- They are not very effective as a decision aid for individual analysis
Variant of the Funnel chart
The Funnel chart can also be used to visualize parts of a whole where the constituent parts do not necessarily show a progressive reduction of value.
Let's say you want to visualize the sales contribution by each employee in your team.
The area of each segment of the Funnel is proportional to the value of that segment. The data values may or may not be ordered. Peter’s $40 K contribution occupies more area than John's $30 K but appears after John. The total of all the segments add up to the total sales (whole). This way the Funnel chart is very similar to the Stacked Column chart.
Where else can Funnel charts be used?
Analyze the success of a promotional campaign:
Evaluate recruitment process:
Analyze and manage order fulfillment cycles:
Check out more examples of the Funnel chart here.