A sales funnel helps you follow your customer journey stages from discovery and consideration all the way to purchase. But what sales funnel metrics should you pay attention to as you refine your sales process?
Your funnel illustrates the typical path prospects take to become customers.
Understanding sales funnel metrics and their impact on your marketing strategy is critical to success. And to understand what’s happening inside the funnel, you need to identify metrics that gauge the effectiveness of each channel or campaign.
The role of marketing sales funnel metrics in business growth
Conversion funnel metrics must be tracked to pinpoint trends and opportunities in the market. If you can’t measure the performance of your sales funnel, you can’t optimize it.
Funnel metrics locate the point in the funnel where you lose qualified leads. They help you identify if your sales and marketing strategies are working or not.
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You can use sales funnel metrics as a guide to improve the weaker points in your funnel and to find and reinforce your strengths. Touchpoint-level data from funnel metrics can help with forecasting as well.
You can use funnel metrics in sales and marketing efforts to obtain clear KPIs (key performance indicators) that help understand how successful investments in communication tools and customer relationship management are.
Tracking the entire sales cycle, from marketing qualified lead to sales qualified lead (and everything in between) is a great way to create meaningful KPI measurement. Furthermore, understanding and utilizing detailed sales funnel metrics helps them identify where they lose potential customers and adjust their sales and marketing strategies accordingly.
The top funnel conversion metrics you should be tracking
Whether you use a free e-commerce platform or a paid one, there are lots of software options that can help you measure the efficacy of your sales funnels. The following metrics are the ones you need to pay the most attention to.
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1. Website traffic metrics
The first stage in the marketing funnel is awareness.
It’s essential to know how many website visitors arrive on a landing page or physical store. No matter if you're in e-commerce, have sales teams or are purely in-person, you need people to move forward in the conversion process—starting with taking action on the initial web page.
Traffic is a broad marketing funnel metric, but it gives an insight into how well your brand awareness campaigns are doing—helpful when putting marketing budget against general awareness as opposed to directly impacting your conversion rate.
Measuring traffic is a great way to measure the effectiveness of your customer acquisition channels. By tracking website visitor numbers, you can track your progress and identify trends in customer behavior.
Comparing the number of visitors over time can reveal which marketing activities have high conversion rates and which need to change to increase customer lifetime value.
What should I consider when segmenting traffic from my marketing strategy?
If you use a business phone number app for sales calls or use cold email marketing efforts to attract prospects, you can use sales funnel metrics to determine each marketing channel's impact. With Voice Intelligence technology, you'll be able to draw out useful metrics such as average call length, calls made per hour, and call outcomes without additional effort.
Other sources of traffic could be:
Organic search engine traffic
Paid search engine traffic
Organic social media traffic
Paid social media traffic
Paid print media advertising
Paid TV advertisements
Traffic from backlinks on other websites
Traffic from partner websites
When you have the marketing funnel metrics from each of these acquisition channels, you can make marketing decisions based on which one gives the highest return on your dollar. The most important funnel metrics for your marketing teams might change over time, depending on how much revenue you're hoping to get from each channel and audience segment. Or if your cost per lead shifts for a certain campaign dramatically but you still need to generate revenue, you may adjust your attention to new metrics.
Once you know the origin of the traffic that converts, your marketing and sales teams know which channel is likely to bring in the most traffic and potential customers. You can easily segment metrics according to the acquisition channel.
You can also measure returning vs new visitors to understand if you’re doing a good job during the awareness stage. Measuring return traffic lets you know if your marketing efforts are strong enough to get a prospect who left your store to come back.
High return traffic numbers show you’ve managed to keep prospective customers engaged.
2. Conversion rates
The conversion rate tells you how many of the people who visit your store convert into customers. If 100 people enter your sales funnel and 25 make a purchase, your conversion rate is 25%. Though it may seem like a very simple metric, your conversion rate will impact everything from customer acquisition cost or cost per lead to average purchase value and beyond.
And while some marketing and sales efforts have less of a direct connection to your ultimate conversion rate (turning people into paying customers) keeping an eye on conversion rates throughout the funnel can increase sales in a really direct way.
For example, monitoring the rate at which marketing qualified leads turn into sales qualified leads ultimately impacts the number of leads generated and increases potential customer value.
Simply, the higher your conversion rate, the more effective your funnel.
Note: There are occasions where an extremely effective sales funnel leads to bad leads, customers who abandon carts at a higher rate or low average deal value.
If you're using clickbait ads or any sort of misleading marketing channel efforts, you could end up wasting sales team time to end up with decreased total sales despite a higher conversion rate earlier in the sales funnel.
A conversion does not always have to be a sale; it could be an email subscription, download, event signup or any other desired action. You could have a product or service with a longer sales timeline, and a funnel with smaller conversions at every step, especially for a high-value custom product.
Say you’re a software development company that makes custom enterprise software for communication or team building. You might have multiple conversions along the sales funnel, from submitting contact information to requesting a quote. People could fall off at any of these customer journey points.
Tracking conversions helps to identify which parts of your marketing funnel are underperforming and need improvement. This can be especially helpful for longer sales cycles or higher-value custom products, where customers may fall off at different stages.
By looking at the data, you can determine why certain prospects don’t convert and adjust your marketing and sales messaging and positioning throughout the conversion funnel.
3. Average order value
This is perhaps one of the most important sales funnel metrics. Average order value (AOV) refers to the average amount spent by customers on an individual sale. It’s your total revenue in a given period divided by the number of orders received.
Average order value is a necessary metric to help you see how valuable each customer is. If your AOV is small, consider expanding your target audience to find customers who are willing to spend more.
Promotions, product bundles, cross-sells and upsells can be used to increase AOV. While AOV helps you understand the value of each customer for a single purchase, you should also look at the entire lifetime value of customers.
The takeaway
Optimizing a sales funnel might take time, but it’s your best bet in a competitive marketplace.
You can use funnel metrics to cultivate a sales funnel that’s flawless and represents what your audience wants. Adjust your approach to improve what the metrics show and work to find out why your efforts are in vain.
Always consider the entire breadth of the funnel. This means having KPIs for customer service and other touchpoints, will help you keep the entire ecosystem running at a high level.
Your goal is to help the customer move seamlessly along the funnel; if they’re not doing so, funnel metrics will tell you why.
Recording and analyzing funnel metrics is the easiest way to know if you’re losing ground or making progress. It’s exactly the kind of information you need to feel in control of your business, instead of being overwhelmed or unsure of how to improve.