How to Leverage Marketing Funnel Analytics to Fuel Your Growth

Today, almost all businesses have embraced digital marketing. It has the potential to reach a wider audience and provide ample data, helping businesses analyze and improve their marketing campaigns. Companies can utilize several techniques to make sense of the data gathered through their business websites, social media, or mobile apps.

This article discusses one such important technique, known as marketing funnel analytics. This tool allows businesses to understand the different stages their visitors go through before making a purchase. 

A marketing funnel describes your buyer’s journey from the time they learn about your business to the time they finalize their purchase. It pays to evaluate the marketing funnel as it can show businesses how to influence customers at each stage of the funnel and boost their conversion rates.

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What is marketing funnel analytics?

Digital marketing funnel analytics is an excellent technique for marketers to understand the customer journey and make data-driven decisions. It uses different metrics to understand how your website visitors engage with your business at each stage of the marketing funnel. 

With marketing funnel analytics, you can identify the pain points where visitors leave your website before making a purchase. Thus, you can promptly address the roadblocks acting as conversion barriers for potential customers.

It’s called a funnel because the number of users from the first stage of visiting the brand’s website to the final stage of buying the product can be visualized in the form of a funnel. 

Naturally, not everyone visiting your website or app will add products to their shopping carts. Similarly, not everyone adding products will check out and make a payment. As such, the number of users keeps on decreasing as we move through the marketing funnel.

Proper analysis of marketing funnels can help meet objectives such as improving website traffic, boosting conversion rates, and maximizing the impact of marketing campaigns.

Let’s understand marketing funnel analytics with the help of an example. 

Suppose 1000 people visit your website. Of these, 500 add products to their carts, 300 people check out, and ultimately, only 200 make a purchase. 

In that case, the marketing funnel will look something like this:

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By evaluating the funnel, you will find that the biggest drop in users occurs at the top. Only 50% of visitors add products to their carts. This demonstrates that the first stage has the maximum scope for improvement. You can direct your efforts toward figuring out the reason for this high dropout rate.

To this end, let’s categorize visitors into two groups: first-time visitors and returning visitors. The funnels for the two sets of visitors will look something like this:

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It is clear from the funnel that, for first-time visitors, the largest drop is in the first stage itself. Only 40% of the visitors went on to execute a search. 

However, in the case of returning visitors, a huge drop is observed before clicking on a search result, even though a search inquiry was made. 

This observation will give you a great starting point to see which part of the buyer’s experience needs improvement and what can be done to prevent them from dropping off.

Benefits of marketing funnel analytics

Marketing funnel analytics is a valuable tool that provides useful insights into a buyer’s journey and uncovers friction points to narrow down areas that impact growth. The primary benefits of performing funnel analysis are listed below:

• It helps in finding pages with high dropout rates.

As seen in the above examples, funnel analysis can demonstrate the stage where the maximum number of users drop out. By knowing the number of users, you can calculate the dropout rates for each page and the final conversion rate as well.

By understanding where visitors discontinue their buyer journey with you, you can plan your marketing campaign and goals accordingly.

• It determines the source of high-quality visitors.

Marketing funnel analytics not only shows you the visitors that left your website but also makes you aware of the source of high-quality traffic to your site. Advanced marketing funnel tools such as Google Analytics make it possible by providing deeper insights.

The information regarding the source of high-quality visitors is very useful in implementing targeted and personalized marketing actions to further drive the volume of traffic from these sources.

• It helps in easy communication and coordination with your team.

Since marketing funnel analytics is a logical and objective technique that uses certain metrics to prove its point, it can be used to make the team members understand how their marketing efforts are performing. 

The results are easy to communicate since there is no vagueness or subjectivity. It helps the whole marketing team be on the same page and instills cooperation and coordination among all members, helping them make data-driven decisions.

How to perform funnel analysis?

In order to perform marketing funnel analytics, three basic steps need to be followed:

• Define key metrics.

Any kind of analysis requires you to define the metrics which will be tracked. Data collection is also done according to those metrics. Define these metrics very carefully, as your entire analysis will be based on them.

E-commerce websites can use metrics such as number of signups, transaction data, number of products sold, etc. Similarly, social media platforms can use the number of daily active users, the number of followers, etc., as key metrics.

• Identify touchpoints that lead to conversion.

The ultimate goal behind conducting funnel analysis is to understand the buyer’s journey and use it to improve the conversion rate by working on factors affecting it. For this, you need to identify the touchpoints leading to conversion by understanding the user’s mindset and needs when he visits your website. Make sure to include all touchpoints possible since customers can take any path before making a purchase.

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• Perform in-depth analysis via user segmentation.

It will be easier and more effective to perform funnel analysis by segmenting users based on various factors, such as gender, location, age, etc. Instead of applying funnel analysis techniques to a large user base, you can use them on these groups to gain deeper insights. These insights can enable you to plan targeted actions for a certain group and improve the conversion rate for that group.

For example, suppose it is observed that conversion rates among users from China are more than that among users from India due to certain reasons. Through marketing funnel analytics, you can determine that reason by considering users of the two countries separately. This analysis can help you maintain the conversion rate in China and improve it in India.

Common assumptions regarding funnel analysis

Some common assumptions made during funnel analysis that might lead to wrong conclusions and poor decisions are listed below:

• Funnels end at the point of conversion.

Many marketers make the mistake of thinking that the marketing funnel ends where the customer makes a purchase. However, businesses need to realize that a high customer retention rate is equally important for growth. They should direct their marketing efforts to retain customers and make them repeat customers who can, ultimately, become advocates for your products.

• A high dropout rate means there’s something wrong with the user experience.

High dropout rates for a particular page can be due to poor user experience, but it is not the only possibility. Even with the best user experience, you could observe a high dropout rate if the traffic coming to your website was not really interested in your products or service. 

So, you should first ensure that your website visitors are relevant to your business. Direct your marketing efforts to the right audience to generate high-quality traffic that is likely to convert.

• The same conversion path is followed by all users.

Different users can follow different paths before actually making a purchase. Each path has to be analyzed separately to optimize it well and drive relevant traffic from that particular path.

• Focus mainly on high dropout points.

You should definitely focus on addressing the causes of high dropouts, but they are often the most difficult to improve. 

Therefore, pay attention to smaller issues, too. Make small changes that can have a huge impact on conversion and retention rates. It is much easier to address these smaller friction points than go for huge drops straight away.

In closing

Marketing funnel analytics can play a very important role in the success of your digital marketing strategies. It allows you to understand how users interact with your app or website. It gives you a fair idea of the user journey to see where users drop off and how many of them convert.

You can compare funnel analysis with the speedometer in your car. It tells you how fast you are going and whether you need to slow down or speed up. It also tells you when to press the brakes or accelerator or take the necessary action.