What is Funnel Analysis?
Funnel analysis is the study of converting potential leads into customers. But with funnel analysis producing so much information, how do you know what to focus on? And how can you convert those insights into sales?
We’ll go over what funnel analysis is, how to do funnel analysis in Google Analytics, and how you can use funnel analysis to improve your conversion funnel metrics.
What is funnel analysis?
Analyzing sales funnels is the best way to find opportunities for conversion rate optimization (CRO).
It’s how you figure out the most valuable piece of information about your site: how it actually converts curious browsers into loyal customers. It shows you exactly where and when browsers are dropping out of your site’s marketing funnel, making sure you’re investing your limited effort in the right places.
Funnel analysis makes a distinction between macro-conversions and micro-conversions. Macro conversions are your big goals, like a visitor making a purchase. Your micro-conversions could be any number of things, from clicking on a specific page, opening your chatbot pop-up, or downloading a free trial of your workflow process software.
Funnel analysis helps you determine where your most valuable customers are coming from. They could be coming from one advertising partner or a social media site like LinkedIn. Finding out where your most high-quality visitors come from enables you to double down on what’s already working and run a targeted outreach campaign that drives sales.
And funnel analysis software gives you a handy visual representation of what’s happening on your site. Often, the data speaks for itself. Take your funnel charts into an online meeting with the sales team, and they can clearly see which marketing messages are working and what’s not.
How to do funnel analysis in Google Analytics
Google Analytics is the industry standard for web analytics, and it’s easy to create a funnel. To set up a funnel in Google Analytics, first, you need to set up a goal destination. This means choosing the single page on your site where browsers have become customers. An order confirmation page would be an obvious choice for this.
Once you’ve done that, you can identify the “wide-funnel” and “mid-funnel” pages you expect visitors to pass on their way to the order confirmation page. Your homepage would be at the top of the funnel, then your pages for product ranges and individual items might form your intended path down the funnel.
Your funnel can have multiple entry points – maybe the visitor lands on a product page linked from social media – but the funnel must get narrower as they get closer to the goal.
Once you’ve defined that goal, your funnel visualization will be taking in data from visitors to your site. Depending on how much traffic you get, you might have to wait for a few weeks before clear patterns emerge.
Along with the funnel you defined, Google Analytics will show you your site’s Reverse Goal Path. This is a map of all the pages users visited before getting to your goal page, regardless of your intended path. This is your site’s “real” marketing funnel. So you’re going to want to make sure that it matches your intentions exactly. This is a key part of building a better conversion funnel.
If you find some of the data confusing, you may have run into one of a few common issues.
Payment gateways, like PayPal, make the checkout process easier for your customers. But they can cause problems for your funnel analytics. If the user clicks the button to pay with, say, PayPal, they’re taken away to PayPal’s site to complete the transaction. They’re returned to your goal page, the end of the funnel, but Google Analytics sees this as the first step of a new visit.
You can avoid this in one of two ways. By adding sites like PayPal to your referral exclusion list, you remove them from your Google Analytics and your funnel visualization entirely.
If the numbers between two steps don’t add up, the issue might be as simple as a missing page. If you’ve not included a page of the site in your funnel visualization, the visitors who go there will be “forgotten” by Google Analytics.
How to enhance conversion rates with funnel analysis
Once you have a good set of data running through a complete funnel, patterns will start to emerge. To start enhancing conversion rates, look at steps down the funnel and notice where “drop-offs” are occurring. If you notice a page with an above-average exit rate, take a closer look at it and try to put yourself in the user’s shoes. What’s stopping you from clicking onto the next layer of the funnel?
When you’re just starting with funnel analysis, focus on the website’s functionality long before you start A/B testing different colors on the checkout button. That’s even more important if it’s a new site.
Drop-off rates on a page could be down to any number of technical hitches across devices or browsers. Even an extra second of load time might reduce your conversion rate by 4.42%.
Once you’ve nailed the fundamentals, enhance conversion rates by embracing any number of digital customer experience trends like augmented reality previews or buy now, pay later apps like Klarna.
And once you feel like you understand the audience in your funnel, it’s time to start segmenting. Google Analytics doesn’t actually let you segment the audience in its Funnel Visualization report, but there’s a workaround you can exploit to get the insights you need.
Instead, use Google Analytics’ Goal Flow report. This looks a little more complicated than the funnel, but it’s showing you pretty much the same information in a different way. Here, you’re able to segment your audience based on anything from the referral source, to region, to browser and mobile device.
If drop-off rates vary by device, that’s a telltale sign your page could be redesigned or optimized for mobile. If your shopping cart abandonment rate varies by country, it could be that you’re not offering one of the region’s payment providers of choice like Mada Pay in the MENA region.
Not every optimization you could make to your funnel will be made on your site. Bottom-of-the-funnel (BOFU) visitors are some of your most valuable targets for conversion rate optimization. They’re high-intent visitors who almost became customers, so you’ll have an easier time converting them.
Prioritize learning what converts these customers, and you’ll enjoy the benefits later when you’re worrying about optimizing the top of the funnel. What’s the point of worrying about the top of the funnel first if potential customers are just going to fall at the final hurdle?
If you find that visitors are abandoning their shopping carts, SaleCycle found that 80% of visitors do this, there are plenty of tactics you can employ to try and get them over the line.
Exit-intent pop-up menus can display when the user clicks off the page, giving you a chance to catch them with an offer if they complete the purchase. You could display retargeting adverts across the web, reminding them of your product and hopefully nudging them to come back and buy it.
If you have the customer’s email already, a cart abandonment email from your custom domain email is a proven tactic for getting customers to commit to a purchase. Use tracking links in these emails and your funnel will pick up the number of people coming in from these emails and successfully making the purchase.
In funnel analysis, it’s important to listen to the data and not make hasty assumptions about what’s going wrong.
For example, if your homepage has a particularly high drop-off rate, should that worry you? Segment your homepage traffic down and look at which segments are valuable to you and which are irrelevant. You might find that the users dropping off would have had no use for your product anyway or that your numbers are being affected by bots.
Your funnel analysis shouldn’t end at your website. Acquiring new customers is great, but you want to ensure that you’re retaining loyal customers too. Make sure your web funnel and segmenting pay attention to visitors coming in from your email marketing and any SMS campaigns.
The benefits of funnel analysis
Funnel analysis is an essential skill needed to scale a business with an ecommerce website. For people running their first website, it can look like a lot to take in. But it’s a great way to learn about your audience and will help you build a better product and service in the long run.