How many stages should a funnel have?

Five to seven. Fewer will not show you where deals stick, more and the reps stop filling them in.

Where do «thinking» and «maybe later» go?

Into a separate status field, or into a pause reason. They have no place among stages, because nobody controls them.

Sales funnel stages: how many you need

Funnel stages: how many you need, and the rule for them

in short

A working funnel has five to seven stages. A stage exists on two conditions: the move to the next one depends on a specific action by the rep, and that move can be counted. Everything else is a status, and it belongs in a separate field. The commonest mistake is stages named after the customer's state: «thinking», «maybe later». Nobody controls those, so a funnel built on them shows you that deals exist rather than that they move.

The rule for a stage

the move depends on your rep's action, not on the customer's mood
the move can be counted: there is an event visible in the system
the stage cannot be skipped without breaking the process

A working frame of five stages

New enquiry: recorded, with an owner assigned.
Contact happened: a live conversation, or a reply in the thread.
Need established and price quoted.
Invoice or proposal sent.
Payment.

A long cycle adds a stage for approval by whoever decides, plus a contract stage. High-volume flow needs fewer stages, not more.

What has no place among stages

«thinking», «maybe later», «call back later»: those are statuses
«hot», «warm»: that is a judgement, not an event
stages where more than half the deals get stuck: they glue several different states together

We have seen a funnel where 49% of all deals sat on one stage. That means the stage separates nothing: everything that stopped moving ended up in it.

What to measure on a funnel

conversion of the move between every pair of stages
average time spent on each stage
the share of deals sitting longer than the norm

How to check yours

Count how many deals sit on each stage.
If more than a third sit on one, split it.
If almost 100% of deals pass through some stage with no delay, remove it: it shows nothing.
For every stage, name the action that moves a deal onward. If you cannot name one, it is not a stage.