Wednesday, April 14, 2010

Funnel Analysis for Online business

What is happening to all my traffic acquired through email marketing and PPC campaigns? Why are they not bringing in the moolah after I spent so much $$ to bring them into my online store?

Are these some of the questions bothering you? Then start by asking your web analyst (or anyone designated to crunch numbers for your site) to do a FUNNEL ANALYSIS.

How is that going to help me??

Well the concept behind funnel analysis is very simple. The Funnel analysis looks at what is coming in (traffic) and what is coming out (what % of traffic is actually doing a checkout).

So What?

Now that you know what the conversion rate for your site is, start looking at the layers of the funnel, basically the various steps/groups of pages in your site involved in taking the guest from the landing page to the checkout page.
Typically you would have at minimum a homepage, a product list page (if you are selling any product), a product detail page and finally shopping the cart application. These are very broad classifications (think of them as “buckets” of pages) and there may be many pages within each of these page categories (except of course the Home Page).
You are now ready to start analyzing what % of visitors or sessions are moving from one layer to the next in your site funnel (more appropriately called the “Conversion Funnel”). More often than not you will find a layer that is performing below par. That is where you start looking next.
Let’s say your product detail bucket is not working well to channel more traffic and creating a bottle neck for the rest of the funnel. In most of the cases that would mean that there is something wrong with your product detail pages.

So what do I do?

That is topic of discussion for another post, but you can start by asking your guests through a survey or look at a competitor’s product detail page.

How do I do Funnel Analysis?

You don’t need to have a fancy high web analytics tool to do a visually appealing funnel analysis. You can do that with some as basic and free as Google analytics.
Just create the buckets and look at the traffic in each of these buckets. That should give you a fairly good idea how your buckets are performing.

Next is what??

Samsung… I am kidding.

Well you can start doing some basic path analysis around the underperforming bucket to understand how your guests are navigating the site. That will give you insight into what pages are confusing them or not giving them enough information.
But the most keyword here is “Experimentation”. Start doing A/B testing to prove your hypothesis/argument. Again you don’t need a fancy tool. You can just put up two alternate pages (in the funnel and make guests use either of the two pages) with slightly different URLS and use Google’s Web Site Optimizer to answer your question: which version is better A or B.

Will I get my ROI?

Well all I can say is you will definitely know your core user group much better and that will definitely show as ROI on a long term.


  1. In most of the cases that would mean that there is something wrong with your product detail pages.
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  6. This post was written five years ago but I must say that all the information written here remains relevant today. At present, having an optimized conversion funnel is very important if you want your online marketing to be a success.

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  7. When you have an online business, it is best to create your very own funnel analysis. Doing this will help you measure your success quantitatively and determine what approach is better to achieve your desired outcomes. Jason, kelowna search engine optimization

  8. If you're not that familiar with web analytics, it is recommended to talk with your web analyst. Talk to him or her to learn more about your sales funner conversion rate.


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