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Using a Conversion Funnel


Once your site objectives are established, you can measure progress toward meeting those objectives through the use of a conversion funnel. A conversion is a term used by marketers to describe the final outcome of a site visit. This can be an online purchase or various other desired actions.

We earlier defined the four basic websites: e-commerce, content, lead-generation and self-service. On an e-commerce site, a conversion is obviously a sale. For a content site, it might be the number of newsletter subscriptions. A desirable lead-generation site conversion is a white paper download. A self-service site might be looking for decreased visitor visit length or fewer calls to a call center since these are measures of customer satisfaction.

As you can see in the conversion funnel below, each step in the sales process on the way to conversion is fraught with visitor drop off.

It is a challenge to measure your website's conversion rate because there are a number of steps leading to the final action, and sometimes visitors are thwarted in their quest to complete an intended action. Additionally, many sites measure only their final conversion rate. However, this does not give them the opportunity to improve drop-off by analyzing the sales path then finding the bottlenecks and making the site improvements that result in higher conversions.

Tip: Don't measure your end result conversion rate without tracking the path that your customers take to conversion.

Preventing Conversion Funnel Drop-Off

In a typical conversion funnel, visitors drop off along the way to the final step that completes the sale or achieves the desired action. The good news is that when your analytics program tracks the micro steps required to reach the final conversion act, it reveals actionable data that can be used to prevent drop-off. A microanalysis of the sales path reveals the problems that thwart conversion, leading to implementation of more effective calls-to-action at each step along the way.

Tip A: Eliminate all unnecessary steps to conversion to reduce conversion funnel drop-off. The fewer steps needed for conversion, the greater the likelihood of a sale or desired action.

Tip B: Create an effective call-to-action for every step in the sales path. The most effective call-to-action makes use of an imperative verb and a compelling benefit. The B2B pitch below is very motivating for an engineer seeking this type of solution.

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Website Conversion Funnel Analysis

Let's say you have an e-commerce site that gets 2,000 visitors per month, your site has a three-step sales path and your average sale is $11.

If half of your site visitors enter the sales path that means 1,000 prospects drop off at the first step. A 50 percent drop-off rate at the first step could be due to an impediment such as required site registration. If 40 percent of that remaining 1000 drop off at the second step, leaving 600 and 30 percent of that group complete the sale, you have $1980 in sales at a 9 percent conversion rate since only 180 of the original 2,000 prospects made a purchase.

Making Site Improvements

If you can improve the final step of the sales path by just 10 percent, it would bring you an additional $660 in sales, upping your conversion rate to 12 percent. However if you can make improvements at the first step of the sales path, as well as the third, reducing your 50 percent drop-off rate to 25 percent, you can increase your sales by $1320, resulting in a 18 percent conversion rate.

Furthermore, if all you do is shorten the original conversion funnel by one step, resulting in a two-step sales path, you can increase your sales by over $6600, resulting in a 30 percent conversion rate, assuming the same number of monthly visitors enter the sales path. Making improvements to the two remaining steps would increase conversions further.

However, if you do not know what to measure and why, or haven't a clue on what indicators to evaluate in your analytics reports, you would not be able to take the necessary actions to improve your site performance. So you must understand what data to analyze based on your site objectives and then follow up on actionable data revealed through the use of a robust analytics solution.

Simply picking out indicators that look good at first glance, like the increasing number of referrals from Google and Yahoo!, or the number of increased page views, might not help you make business decisions that improve site performance. Not that these numbers are worthless, they simply might not be the right metrics to improve your bottom line. Knowledge of basic analytic principles will ensure that you know what metrics to evaluate for making opportune business decisions.

So far, we've been talking about overall site objectives, but you also need to consider objectives for the individual pages within your site.

Assigning Web Page Objectives

It is desirable to assign individual objectives to each page, especially those that require action. In fact, every page should be designed to elicit visitor action, even if that action is to move to the next step down the sales path.

Every page on your website that requires action should answer the following three questions:

  1. What action is required?
  2. Who must take that action?
  3. What information does your visitor need to take the required action?

By answering these questions, you can define objectives and apply analytics solutions to test and optimize your pages for improved results. The same call-to-action principles used for site optimization also work for page optimization. Defining your objectives and optimizing pages at the granular level is one way to get a leg up on the competition.