A sales funnel helps you follow your customer journey stages from discovery and consideration all the way to purchase.
Your funnel illustrates the typical path prospects take to become customers. Understanding the sales funnel 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.
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.
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.
Digital marketers can use these metrics to obtain clear KPIs (key performance indicators) that help understand how successful investments in communication tools and customer relationship management are.
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.
1. Traffic metrics
The first stage in the sales funnel is awareness. It’s essential for you to know how many people arrive on a landing page or physical store. No matter if you're in e-commerce or purely in-person, you need people to take that first step to eventually make a purchase.
Traffic is a broad metric, but it gives an insight into how well your brand awareness campaigns are doing. Measuring traffic and comparing it over time lets you understand how your customer acquisition channels are performing.
If you use a business phone number app for sales calls or use cold email marketing to attract prospects, you can use 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 metrics from each of these acquisition channels, you can figure out which one gives the highest return on your dollar. Once you know the origin of the traffic that converts, you 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 numbers show you’ve managed to keep prospective customers engaged.
2. Conversion rate
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%.
Simply, the higher your conversion rate, the more effective your 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. Customers could fall off at any of these points. Tracking conversions helps to identify the weak links in your funnel.
3. Average order value
This is perhaps one of the most important 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.
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. 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.