Simply put, a sales funnel is a marketing term that describes each of the steps or stages a potential customer takes on their journey to making a purchase. A sales funnel is (obviously) funnel-shaped. It has a very wide top, which represents every potential store visitor. It tapers through the middle, which represents customers at various stages within your store, and has just a very narrow opening at the bottom, representing your sales.
Basically, and for optimal business success, you need to push as many customers through the funnel as possible.