So, you’re researching your marketing funnel, which is awesome. You’ve gone way beyond digital marketing 101; you’ve got your website ticking along, you have traffic on the website and you’re collecting sales or leads, but you want more. Someone has mentioned your funnel conversion rate and how that can grow your business.
Great – it’s time to take a look at your marketing funnel and make your website more efficient. Because your conversion rate can make or break your business.
By optimising your marketing funnel you can increase your leads and/or sales with the same marketing spend. Ie. you don’t need to increase your ad budget to increase your conversions. Instead, you can leverage your data and optimise. Your conversion rate has a direct impact on your cost per lead and in turn your profitability. And, the best way to improve it is by taking a look at your marketing (AKA sales) funnel.
So, we’re going to breakdown:
- What a Sales or Marketing funnel is
- How to work out the conversion rate for your funnel
- Industry benchmarks for funnel conversion rates
- How to improve your funnel’s conversion rate
This will help you analyse your website’s marketing funnel, assess if you’re performing at industry standard, or if you need to improve and what strategies you can implement to increase the conversion rates of your marketing funnel, should this analysis prove you’re underperforming.
What is a Sales or Marketing Funnel?
A marketing funnel, also known as a sales funnel, is a model used to visualize a customer journey. It’s the path from initial awareness of a product or service to the point of purchase and beyond – to retention, referral, and then back again to customer.
Essentially, it is a framework outlining the stages a potential customer goes through before making a buying decision.
We can use the old advertising adage AIDA – Awareness, Interest, Desire and Action. The foundation of marketing funnels has always existed, it’s the implementation of tactics within each stage that has and will continue to change.
Here’s a breakdown of a typical marketing funnel divided into these four stages:
- Awareness: Potential customer becomes aware of a product or service, through advertising, content marketing, etc
Focus: Attract a user’s attention & generate interest. - Interest: You have the user’s attention.
Focus: Provide detail about the product or service. - Decision: The potential customer is interested in the product or service and is considering making a purchase.
Focus: Provide them with the information to make an informed decision, such as pricing, customer reviews, and product specifications. - Action: The final stage of the marketing funnel – point of purchase. This may involve completing an online order form, visiting a physical store, or contacting a sales representative.
Focus: Conversion
By understanding the different stages of the marketing funnel, you can develop targeted marketing strategies that address the needs and preferences of potential customers at each stage, leading to higher conversion rates and increased sales.
Here is a great example of an e-commerce conversion funnel from Smart Insights
How to calculate your marketing funnel’s conversion rate
We have a great breakdown of what a conversion rate is here and how to calculate it, including a helpful example. But as a quick summary, here’s how to calculate your site’s overall conversion rate:
Divide the number of conversions by the number of visits to your website or landing page.
For example, a website that receives 5,000 visits and had 100 leads
100/5000 = 0.02
Convert to a percentage – 0.002 x 100% = 2%
You can use this calculation along your marketing funnel to work out conversion rates throughout. Here is an example below
Using this funnel, this example site can analyse where their users drop off. This could be for various reasons:
- Irrelevant information
- Too difficult to find what they’re looking for
- Prices too high
- Expensive postage (e-commerce)
- Item out of stock (e-commerce)
- Not servicing their area
- Etc
You can analyse your data and see if your website is performing inline with your industry. Ie. are you beating your competitors or missing the mark?
So, how can you tell if you’re conversion rate is where it should be or subpar? Let’s take a look at industry averages and see where you sit.
Industry benchmarks for marketing funnel conversion rates
All websites/apps/landing pages are different. We’re often asked by clients, “what should my conversion rate be?” The answer is – it depends.
The best option is to track the conversion rates for your industry and work from there. This does not give you a get-out if you’re already hitting your industry’s average but gives you a jumping-off point if you’re in the dark on what minimum you should aim for.
Unbounce, an A/B testing software, that we’re very familiar with and often recommend, runs an annual CR report and provides a helpful breakdown by industry.
Here’s the latest data they had available – see how your industry ranks.
Report from Unbounce
They also provide a more granular breakdown of conversion rates for those with a landing page.
So, if you’re in the travel industry and you have a landing page running for a marketing campaign and this landing page only sees a conversion rate of 2% you can assume it’s underperforming and there are plenty of optimisations available that could help.
So, how can you improve your conversion rate by utilising your marketing funnel? Here’s how…
How to improve your marketing funnel’s conversion rate
Step 1 is to analyse your conversion (marketing/sales) funnel with multiple data points.
Fill in your specifics for the last 30 days:
The CTR on your advert was ______%
How many visitors did your site have _____________%
How many visitors stayed longer than 1 minute __________%
How many visitors completed an event like an ebook download _________%
How many visitors converted ___________%
If you can spot a significant drop in one of these areas, it’s a good area to run an A/B test. If we use our example above;
Example site spots a significant drop in conversion from step 1: awareness, to step 2: interest. This could mean that the information in their headline isn’t clear or relevant. They run a test and change their headline. This small change increases their landing page’s conversion rate
They’ve grabbed another 25 leads by changing a headline.
Small changes like these, taken incrementally, will help your marketing funnel’s conversion rate increase.
You can use Google Analytics to track specific, personal goals along the marketing funnel and create data points to generate useful visuals for marketing decisions.
If you’re not sure what changes could help your marketing funnel’s conversion rate you can use the following to help:
- Visitor tracking including; heat-maps, click-maps and visitor recordings
- Conduct on and off-page traffic and customer surveys
- Be able to communicate cross-functional with the Developers, Designers, Copywriters, Management, SEO/SEM/Social team and your Legal Team
Alternatively, work with a digital marketing agency experienced in conversion rate optimisation to ensure you’re analysing, testing and optimising your website and/or landing page.
We have more tips for conversion rate optimisation here.
Key Takeaways
Your conversion rate can make or break your online business. Tracking and analysing your marketing funnel can help you spot problems and optimise areas that will increase your conversion rate, drop your cost per lead, increase your profitability and grow your business.
Improving conversion rates is a marathon, not a sprint – you win with incremental improvements.
Remember to
- Analyse
- Hypothesise
- Test
- Rinse and repeat
Use your marketing funnel conversion rates as key data points that reveal huge amounts of information that you can use to benefit your business and optimise your marketing efforts.
What is a marketing funnel?
It’s a model used to visualize a customer journey, outlining the stages a potential customer goes through before making a buying decision.
How to calculate a marketing funnel conversion rate
Divide the number of conversions by the number of visits to your website or landing page. You can do this calculation at each stage along the marketing funnel for multiple data points.
How can I improve my marketing funnel conversion rate?
Analyse your conversion funnel with multiple data points. If you can spot a significant drop in one of these areas it indicates a good area to run an A/B test. Multiple, small changes over time will create positive, incremental growth of your conversion rate.
