A business marketing funnel—representing the customer conversion process—consists of four key phases: awareness, consideration, conversion, and loyalty. Each phase corresponds to a step in the customer journey. Embedded within each phase is a mini-funnel: a smaller sequence of stages prospective customers navigate as they advance through the overarching funnel.
The conversion stage of the funnel is critical. At this point, prospects are close to making a purchase but haven’t yet confirmed it. They might be reconsidering the value or confused about a specific feature. Addressing these concerns through conversion funnel optimization can significantly impact your bottom line. Here’s what you need to know.
What is a conversion funnel?
In marketing, a funnel metaphorically represents the customer journey through distinct phases. As stated earlier on, this marketing funnel includes the four key stages of awareness, consideration, conversion, and loyalty. Each mirrors a step in the customer’s journey, from initial awareness to becoming a loyal advocate. The funnel has become a popular illustration for this framework, because the number of people decreases at each stage as some drop off.
Within this broader framework, there is a specific focus on the conversion funnel, which delves into the critical phases of turning a potential customer into a paying one, highlighting key touchpoints and decision-making moments.
For an ecommerce website, the conversion funnel typically starts on the homepage, or a landing page. It then progresses to a product page, then the checkout flow, and ultimately on to the purchase confirmation. The benchmark for a standard ecommerce website is to achieve a 2% conversion rate across this entire funnel, from initiation to the final purchase.
What is conversion funnel analysis?
Conversion funnel analysis is the practice of tracking and reviewing how potential customers progress through your conversion funnel. It focuses on drop-off analysis, which is the practice of reviewing what percentage of visitors drop off at each step of the funnel—landing page, product page, checkout, and so on—and identifying why they might be leaving at each stage, as well as ways to reduce drop-off rates.
Why is conversion funnel analysis important?
A conversion funnel analysis produces data to help you prioritize website or marketing changes, like redesigning your product page to increase conversions.
Without data, marketing decisions are based on guesswork and intuition, leading to inefficient workflows, wasted resources, and missed opportunities for reaching your target audience and achieving desired outcomes.
Effective conversion funnel analysis often starts with a specific data-driven question. For example, a business could ask, “How can we improve our add-to-cart rate from product pages?” This often leads to more productive decisions and stronger website performance.
How to analyze your conversion funnel
There are a few ways you can approach conducting an effective conversion funnel analysis. We’ll look at these four steps in more detail:
Ensure proper tracking is in place.
Identify your largest holes.
Consider on- and off-page levers.
Prioritize, test, and learn.
1. Ensure proper tracking is in place
To analyze your conversion funnel properly, you must be able to track each step’s success and drop-off rates. In ecommerce, core final conversion actions like adding a product to a cart or making a purchase occur on your website. You can track these using analytics tools like Google Analytics.
To do this for a Shopify store, set up your Shopify/Google Analytics integration. Shopify automatically sends key ecommerce conversion funnel events—such as product page views, add to carts, checkouts, and purchases—to your Google Analytics account. Analytics then creates automated funnel reports showing the drop-off rate (called abandonment rate in GA4, the latest version of Google Analytics):
2. Identify your largest holes
Use the funnel report to identify which parts of your funnel need improvement. This isn’t necessarily the step with the largest drop-off rate. Most websites have the most significant drop-off rate between starting a session and viewing a product, but it doesn’t necessarily mean this stage presents the best opportunity for improvement. As the initial phase in the funnel, many websites inherently encounter a high drop-off rate at this point.
To pinpoint which enhancements to make, assess your website’s funnel performance against relevant drop-off benchmarks. Littledata provides good high-level funnel benchmarks for Shopify stores, but you can also compare data to your site’s historical performance, especially after significant changes like a website redesign. The most suitable starting point is the step that deviates the most from these benchmarks.
Another way to understand where your opportunities lie is to track user behavior on your FAQ page and chat logs. If potential customers frequently ask or click the same question, that signals you should change your product page directly.
3. Consider on- and off-page levers
Once you identify the stage that needs improvement, brainstorm and explore strategies to enhance it. Consider all possible improvement avenues, including on- and off-page levers. On-page levers refers to changes you can make to your website experience, while off-page levers refers to changes outside the site, such as on social media or through email.
If you want to improve your add-to-cart-to-checkout rate, your instinct might be to hone in on your checkout page design. But you may have as much success optimizing other on-page elements (like how clearly you communicate your shopping or return policy) or off-page elements (such as incorporating a new discount into your abandoned cart emails and improving support team response times).
4. Prioritize, test, and learn
The simplest way to prioritize performance improvements is to use a simplified version of the PIE framework.
To start, score your ideas out of five based on your subjective assessment as a marketer of the impact (how much you anticipate the measure would improve your metrics) and ease (how easy it would be for your team to implement). Then, apply the following formula to determine priority:
Priority = Impact + Ease
Execute ideas with the highest overall score first. For example, say you’re changing your homepage’s header copy or taking new product photos. You might score them as follows:
Header copy: 3/5 impact, 4/5 ease, total score of (3 + 4) 7
New product photos: 5/5 impact, 3/5 ease, total score of (5 + 3) 8
In this case, you’d prioritize doing the new product photos first.
Then, test your improvement measures. This can mean rolling out your changes as an A/B test (randomly serving two different page versions to different users and comparing the outcomes).
Testing also means tracking your performance over time. If your metric improves by more than 10% in the two weeks after implementation, it has likely approached a statistically significant level of change, and you can be confident your idea worked.
How to optimize your conversion funnel
Once you’ve analyzed your conversion funnel, you’ll be ready to optimize it for peak performance. Here are the steps you can take to get started:
Fill information gaps.
Address selection friction.
Be urgent.
Implement win-back tactics.
Improve technical performance.
There are infinite ways to improve your conversion funnel. The best one for your website ultimately depends on your business, site design, marketing mix, and performance. Still, optimizing your conversion funnel typically involves these tactics:
Fill information gaps
Ensure customers can easily find all essential details about your brand and products on the relevant pages. Visitors often don’t convert because they feel unsure about some part of the purchase or they aren’t getting vital information from the pages within the funnel. For instance, they might feel uncertain about the shipping time for their region, your return policy, or the quality of the material.
Address selection friction
Users can struggle to understand which product is right for them early in the conversion funnel. This is most common in stores with large catalogs or similar product variants. You can address this with quizzes, filtering systems, labels, and categories.
Learn more: Ecommerce Personalization: Benefits, Examples, and 7 Tactics
Be urgent
In the user journey, a potential customer frequently wants to make a purchase but hesitates and ends up leaving. They may intend to return later, but that doesn’t always happen. You can help get these prospects over the line by introducing a timeliness factor to the purchase—you can let them know that a product is running out and in the carts of other users or that there are time-limited sales or limited-quantity product drops.
Implement win-back tactics
When visitors leave your website, it doesn’t signal the end of your conversion opportunities. You can still bring them back with automated emails, SMSes, or remarketing (ads targeting prior visitors to your site). Win-back campaigns allow you to monetize lapsed customers and plug holes in your conversion funnel.
Improve technical performance
If you’re struggling with the early conversion funnel stages, it may be because your website is taking too long to load, turning potential customers off before they can explore further. Improve your site speed by optimizing your site’s apps, images, fonts, and more.
Learn more: What Is a Good Shopify Speed Score—and Does It Matter?
Conversion funnel analysis FAQ
What is a good conversion rate for a funnel?
For ecommerce businesses, achieving solid funnel conversion rates of 2% or higher is generally the goal. However, this benchmark varies widely depending on your business’s marketing mix, average order value, and industry.
What are the stages of a conversion funnel?
The different stages of a conversion funnel align with how a user navigates toward a purchase on a website. Typically, this would go:
Homepage
Collection or shop-all page
Product page
Cart page
Checkout
Confirmation page
How often should I analyze my conversion funnels?
Enhancing the conversion funnel is an ongoing process, and having ample data is crucial to effectively analyze it. Review your conversion funnel every two weeks to two months, adjusting based on site traffic volume.
