The term sales funnel refers to a visual representation of all stages a customer is going through during a sales process - from awareness to action (or purchase). The shape of funnel shows that at the beginning there are a lot of prospects, but the number of your potential customers decreases at each stage of a sales process.
Sales funnel is used to track and analyze the number of prospects at each sales funnel stage. You will see the bottlenecks of your sales process and be able to make improvements if necessary. The most common stages/phases are as follows: awareness, interest, evaluation, decision, action/purchase. However, in most advanced CRM software, like Bitrix24, you can customize each stage of your sales funnel according to your needs and have multiple sales funnels, which is especially important when you sell more than one product or service and want to have a clear picture of each sales process.