What Is a Conversion Funnel?
The conversion funnel is a marketing and sales theory that maps out the full sales process. The funnel is a useful metaphor that illustrates the gradual erosion in prospects from the large number that find out about your business down to the number of people that convert (by buying a product or signing up to a service).
How Does a Conversion Funnel Work?
A conversion funnel is a business metaphor that illustrates the sales journey that customers take to conversion. New prospects enter the funnel from the top when they first become aware of your business. They then gradually move down the funnel towards the bottom as they build an interest in your products, before coming out the bottom of the funnel after buying something.
What Are the Stages in the Conversion Funnel?
The conversion funnel is based on Elias St Elmo Lewis in 1898. He called it the AIDA model, with the name an acronym of the key stages - awareness, interest, desire, and action. It’s been developed since then; some iterations include a final - retention - stage, while others divide his initial four stages further.
What Is the Difference Between Conversion Funnels, Marketing Funnels, and Sales Funnels?
Conversion funnel modeling underpins each of these types of funnels, and - somewhat confusingly - these terms are often used interchangeably. Marketing and sales funnels are both types of conversion funnel, and the difference between them is one of objective.
A sales funnel, for instance, refers to a process that shepherds prospective customers through to conversion, while a marketing funnel ends the process at the point when people provide their details and become leads.
What Is a Conversion Funnel in eCommerce?
A conversion funnel in eCommerce is a useful way of illustrating a specific, goal-orientated journey that internet users take through your business - from first hearing about your online store to making a purchase and beyond.
What Is the Top to Bottom Conversion Funnel Like on A SaaS Business?
SaaS companies generally do business online. For them, the top of the funnel refers to whatever outreach they’ve used to first attract specific internet users to their website. The bottom of the funnel refers to a conversion page, with the most common one existing for internet users to sign up to their service.
How to Calculate the Sales Funnel Conversion Rate
A conversion rate is the percentage of leads that performed a desired action. It can be worked out by dividing the number of conversion by the number of leads that existed at the top of the funnel, and multiplying this by 100:
Conversion Rate (%) = (Conversions / Leads) x 100
If, for instance, you had 50 people in a room and two of them bought something from you, then your conversion rate would be 4%. Online, it can be calculated by dividing the number of specific website goals that were achieved within a given time period by the total number of visitors it welcomed, and multiplying this by 100.
What Is a Good Funnel Conversion Rate?
A good conversion rate will be different depending on your type of business.
For eCommerce businesses, an effective marketing strategy can bring conversion rates up as high as 10%. However, the average online conversion rate sits between two and five percent, and anything within this range would be considered good.
For SaaS companies, it really depends on your own business model since the conversion rate for freemium plans can be much higher than for an alternative sales-led approach. These companies will also find that, while the final conversion rate is high, the proportion of visitors that turn into leads is lower.
What Is a Conversion Funnel in Web Analytics?
A conversion funnel in web analytics is a tool that is built on conversion funnel modeling. It enables you to connect various webpages together for the purpose of analyzing the chain’s effectiveness at converting website visitors into leads and then customers.
Can Conversion Funnels Show the Source of Converted Users?
Yes. When set up through a website analytics platform, conversion funnels will show the source of converted users. This is a great way to identify your top performing marketing campaigns and channels, and you can use this information to learn about your target audience and structure your marketing strategy accordingly.
How Can I Find Out the Efficacy of a Conversion Funnel On My Website?
Complete website analytics solutions like Visitor Analytics will automatically provide a site-wide conversion ratio for your website or eCommerce store, and you can also build conversion funnels from webpages that you want to analyze in more detail. You can also use specific conversion funnel software.
What Is the Best Way to Visualize a Conversion Funnel?
Ultimately, conversion funnels illustrate the erosion of internet users along the journey to purchase. As such, a bar chart is a useful way of displaying this information, though the number/ratio of them that moves through each stage of the funnel is easy enough to understand without any further illustration.
How Can I Create a Conversion Funnel?
A conversion funnel can be a theoretical approach to sales, but for digital marketers it can be best created by using the conversion funnel tool provided by advanced website intelligence platforms like Visitor Analytics. Ultimately, these are very simple to create, and can be set up in just a few minutes.
How Do You Optimize a Conversion Funnel?
Funnel optimization is the process of calibrating the full conversion funnel so as to increase the proportion of prospects that flow all the way down to conversion. Practically, this means performing conversion funnel analysis, and making data-driven improvements to stages with high drop-out rates.
How to Analyze a Conversion Funnel
Conversion funnels are easiest to analyze through a website intelligence platform or conversion funnel solution. Once the various webpages are connected together to form a funnel, it’s simply a case of looking at the percentage of prospects that drop out at each stage, and identifying the source for your highest quality leads that go on to convert.
How to Analyze the Conversion Funnel of a B2C SaaS Company?
Conversion funnels are an effective analytical approach for B2C companies. However, it’s important to create both separate and interlinking funnels between whatever revenue model that you’re using, since conversion rates will vary greatly for paid subscription converts and freemium signups.
Should eCommerce Conversion Funnels Include the Shopping Cart?
Since conversion funnels are easy to activate, it’s a good idea to have at least one that includes the shopping cart.
However it’s important to remember that there are a number of reasons why drop-off numbers from cart to checkout can be artificially high due to shoppers using shopping carts as wish lists that they plan to pay for at a later date.
Some shoppers also use the shopping cart as a way to see the total price before making a decision, while others will be pushed away by the upselling or cross-selling that happens at this stage of the buying journey.
How Do You Measure Improvements to a Conversion Funnel Over Time?
Conversion funnels provide basic information about the effectiveness of your funnels as conversion vehicles. The conversion funnel feature from web analytics platforms and other funnel solutions enable you to track funnel performance over time, but you can also do this manually by keeping a record of conversion rates across the funnel.
How Do I Build a Social Media Marketing Conversion Funnel?
A social media marketing conversion funnel is similar to any other funnel, and can be created through your website analytics platform by starting the funnel with a specific social media website landing page.
The awareness stage represents when social media users first discover your brand or products. The interest stage refers to pages where they can find out more about your business, and to compare the different product options available. Conversion represents the page at which they make a purchase, start some kind of trial, or become a sales lead by providing some contact details.
What Are the Most Important KPIs for Conversion Funnel Optimization?
Conversion funnel optimization is ultimately based on the number of internet users that arrive at the top of the funnel, and the number that perform a conversion at the bottom. However, other important information for conversion funnel optimization includes the following KPIs:
- Marketing cost per conversion
- Unique and returning website visitors
- Points of entry and exit along funnel
- Bounce rates
- Time spent browsing on webpage
- Marketing Qualified Leads to Sales Qualified Leads ratio
What Is the Best Automated Conversion Funnel/Sales Funnel Software?
Conversion funnel software has been purpose-built to help businesses manage and develop online sales, with some of the best platforms available being Hubspot, ClickFunnels, and Katra. Advanced website intelligence platforms like Visitor Analytics also provide a conversion funnel tool.
Why Are Conversion Funnels Effective in 2023?
Conversion funnel modeling has been adapted brilliantly for the digital age. Conversions are the end goal of all businesses, and conversion funnels provide businesses with a way to dissect their marketing strategy, and to see which elements are working well from this goal-oriented perspective, and which need work.
Improve Your Conversion Funnels with Visitor Analytics!
Now that you’ve scrolled this far down, you’ve hopefully got a better understanding of what conversion funnels are, how they work, and the work required to optimize the popular routes to purchase followed by your customers.
Conversion funnels represent a great way to simplify website optimization by focusing marketing activities around the work that is most likely to get you sales, particularly since the monitoring, analysis, and reporting is done automatically by website intelligence tools like Visitor Analytics.
If you liked what you read, and feel that it would help other marketers like you to learn how to best optimize their conversion funnels, then please share this resource hub with them!