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If you notice a smaller amount of user conversions, funnel analysis could be just what the doctor ordered.
Funnel analysis is a way to use metrics to understand how your customers flow through a series of set conversion touchpoints. It is very close to customer journey analytics in that the insights produced, allow you to map and forecast key marketing channels that are working while learning about those that aren’t.
Let’s take a look at marketing funnel forecasting a bit closer and see why it is important and how it can have a huge impact on your future marketing budgeting allocation.
Pinpointing Barriers
It is a common practice for marketing professionals to want to rethink their entire website to try and improve their funnel conversion rates, but that isn’t always necessary. Funnel analysis helps zero in on those pages that are not helping the conversion so you can work on a few pages rather than your entire site.
Also, goal flow reports and trending funnel reports are both great ways to gauge the effectiveness of marketing campaigns, but complementing those strategies with a method like a funnel analysis allows you to gain valuable insights that help you find barriers to growth hidden right in plain sight.
Pinpointing Growth
Funnel analysis also helps pinpoint where a web strategy is doing well. The use of a funnel visualization tool makes it easier to see the most high-performing web pages that are already succeeding, so you are better able to focus your efforts on the channels that will more than likely lead to a positive result.
Budgeting
Funnel analytics provide actionable insights that are ready to share with stakeholders, making it easier to share the success of marketing efforts. Since most companies are going through their financial plans at the beginning of the year, funnel analysis can help show where marketing resources are needed, so they can be allocated during the budget process.
Using the funnel analytics insights, companies are also better able to determine where to invest externally. If it is determined that a sales process is falling behind because of outdated technology, it is easier to make a case for allocating funds to newer software.
Now that we can see the importance of the marketing funnel pipeline and the impact it has on forecasting, let’s see how it works in practice.
have understood what the B2B sales pipeline is and why it is so important to forecast, let us look at how we can forecast it.
There are three distinct parts of the funnel where analysis can happen, the top of the funnel, the middle of the funnel, and the bottom of the funnel. Let’s look at each individually and see how they guide insights throughout the customer journey.
Top-of-Funnel Metrics (Stages 1 & 2 of Funnel: Awareness & Discovery)
Analysis at this stage has the most limited impact on decision making, as it is the broadest category and it is the stage where prospective customers are learning about you and discovering your product or service. Metrics used in this part of the funnel include traffic, opt-in rates, and other landing page metrics.
TRAFFIC: This may be the most commonly known metric, showing how many people have arrived at your website or landing pages. This is an important baseline metric that helps determine other metrics and also helps with acquisition insights.
An acquisition can be attributed to:
Each of these is considered its own acquisition channel and metrics will differ for each. For example, when it comes to paid advertising, which is a highly-targeted channel from the start, you should find higher conversion rates than from other less-targeted channels like outreach social media traffic.
OPT-IN RATES: This metric is arguably the most important for landing pages, and it measures your conversion rate. It is a basic calculation of simple division:
# of people subscribed to download a lead magnet
total # of visitors to the page
A/B testing is a great way to test which landing pages are the best performers and you should test for each of these parameters to get the best insights: titles, descriptions, colors and CTA. However, a more important parameter to test for is the content within your lead magnet. If a customer really wants what is in your lead magnet, chances are they’re not too concerned about the look are feel of the page at all.
You’re looking to determine if your content is helping or hindering their journey down the marketing funnel. Using insights from your testing, you can tweak your content to provide maximum value and boost your conversion rates simultaneously. A good parameter for landing page conversion is about 2.5% of all visitors.
OTHER LANDING PAGE METRICS: some other metrics worth mentioning at the top of the funnel are outlined briefly below:
· Bounce Rate: helps you determine the percentage of prospects that leave once they see the landing page
· Dwell Time: helps you determine how long a prospect stays on your page before they either buy or leave
· Click Hotspots: useful for more complex pages or website’s home page, shows where visitors are interacting with your page the most
These are not as critical as the other metrics, but they do help provide insight into the performance of key pages in your overall funnel. Using insights gathered in this process, you should be able to find and tweak to optimize conversions.
Let’s take a look at the next phase, the middle of the funnel.
This part of the funnel is about engagement and the metrics measure how well you are doing at engaging the leads that have joined your funnel.
Here is where content is key. A customer will be gauging how well they think your product/service will work for them and whether or not they think your business understands their particular pain points. Here is where intent is developed.
In this phase, we’ll consider the following metrics:
EMAIL OPEN RATE: A huge factor in a successful marketing funnel deals with how well your emails are doing to aid conversion. You want them to be read, but if they aren’t even opened, you’re already losing the battle.
Fortunately, most email services will already provide these metrics for you. If you find your emails underperforming at this stage, your best bet is to work on your subject line. This is where you need to tweak for your biggest impact.
CLICK-THROUGH RATE: another metric to keep an eye on is the click-through rate, which shows what customers do after they’re in your email. If they are clicking on what you are promoting with your email, congratulations, your content is converting. If not, you need to tweak your content.
If click-through rates are low, it could be that you are producing content that is of little or no use to your prospect, so it’s best to look into creating other lead magnet content that is.
Next, let’s look at a further useful metric that most email database services provide.
LEAD SCORES: In today’s marketing arena, most software will actually score your leads for you, but the metrics could vary between different providers. The important thing to note is that it is a clear indication of the quality of your funnel. This is determined by analyzing the email open rate and click-through rate over time and the number of emails sent to determine any negative trends.
Keep in mind that a lead score is not a measure of a quality customer, rather, it’s more of a measure of how well you did marketing the product or service thus far. As you tweak and adjust the leaks or omissions in your sales funnel, this metric should improve. The most effective way would be to average your lead scores over time to better determine any upward or downward trends.
Here at the bottom of the funnel, you guessed it, we are looking at the overall job the funnel did in converting a customer. This is where leads can make a purchase and develop true brand loyalty.
OVERALL CONVERSION RATE: This metric is a simple division problem:
# of people that become paying customers / # of leads that have entered the funnel in a given time period.
Just like your cost per acquisition rate, or CPA, you can track, tweak and improve this over time. This metric is better than CPA for non-paid traffic since there is no cost associated with getting new leads.
If you aren’t happy with your conversion rates, you have the chance to improve on these metrics along the way or look for alternate sources of traffic.
CONVERSION RATE BY ACQUISITION CHANNEL: As we touched on earlier, if you are able to segment leads in your email software by acquisition channel, this will help determine which metrics will be more useful by channel. By learning this, you can drive more traffic to the most cost-effective and better-performing acquisition channels.
LENGTH OF MARKETING CYCLE: This is a simple measure of how long it took for your lead to become a paying customer, and it is an overall measure of the success of your funnel.
If you encounter higher conversion times, where customers are spending too long in the funnel, it could be that you need to shorten your funnel. It means your prospects may be losing interest along the way. It is the job of the funnel to keep things moving, so if there is a downtick in activity at the 4-6 weeks mark, you may need to tweak some elements of your funnel to increase engagement.
Easy ways to accomplish this include sending emails sooner, with fewer days in between, or adding time-sensitive urgencies to CTAs. Time-sensitive discounts, for example, can help get the ball rolling.
It’s also important not to shorten the funnel too much. Between one and three weeks seems to be the gauge in this metric.
There are many methods to tweak and improve your marketing funnel, with resource allocation being one of the more efficient methods. This type of analysis enables you to make more informed decisions, no matter where a customer is in the cycle.
A proper and regular funnel analytics process can
· help you improve your pipeline over time
· help you determine underperforming areas that need tweaking
· help you plan for future expenditures
This type of forecasting has not only become standard practice, but it is now an integral part of most businesses' growth strategies. The more advanced technology becomes, the more insights we can learn and the more accurate we can become with our forecasting. While learning to draw the right conclusions may take some time, a regular analysis of your funnel metrics can help your business scale up to the next level.
Forecast your campaign funnels
and prove the ROI of your marketing investment.
