In practice
A funnel is a counting device, not a theory of buying. You define the stages you can actually observe — session, engaged session, lead, qualified lead, customer — and measure the drop between each pair.
Most funnels leak in one place. Naming the stages is what lets you find it instead of optimising everything at once.
Why it matters
Without stages you only see the final number, which tells you that something is wrong but never where.
Related terms