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The fundamentals of funnel analysis

The fundamentals of funnel analysis

7
min read

If you have an accurate, proper marketing funnel, your sales team will thank you later. But know this: once you create a funnel for your organization, your work is only beginning. You have to prioritize funnel analysis.

The thinking behind this is pretty simple—not every prospective client will become a customer. And, even if they want to, not all can commit right away.

Enter funnel analysis. By understanding your customers' varying journeys on your website, you can create and deploy more effective marketing strategies and boost your conversion rates down the funnel.

<a href="#what-is-a-funnel" class="anchor-link">What is a Funnel?</a>
<a href="#what-does-funnel-analysis-mean" class="anchor-link">What Does Funnel Analysis Mean?</a>
<a href="#what-are-the-benefits" class="anchor-link">What Are the Benefits of Funnel Analysis?</a>
<a href="#how-to-get-started" class="anchor-link">How to Get Started with Funnel Analysis</a>
<a href="#what-to-look-for" class="anchor-link">What to Look for in a Funnel to Get Actionable Insights</a>
<a href="#think-its-time" class="anchor-link">Think It’s Time to Start Analyzing Your Sales Funnel?</a>
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What is a funnel?

An illustration of a marketing funnel

A funnel, better known as a marketing or revenue funnel, is a visual representation of your audience’s interactions with your brand over time on their journey to (hopefully) purchase your product or services. Funnels effectively capture this idea: Every business starts with infinite potential buyers, but most of them drop off along the way. This reduces the number of people who decide to make a purchase.
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What does funnel analysis mean?

Funnel analysis is the process of understanding and mapping the stages buyers go through on their purchasing journey. When properly leveraged, funnel analysis can help businesses trace user journeys through various marketing channels.

With excellent funnel analysis, businesses can better identify barriers that prevent conversion. Basically, businesses are better able to see where they can increase conversion rates and revenue by zooming in on the data in their funnel.
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What are the benefits of funnel analysis?

Funnel analysis is one of the best marketing strategies in the digital space. As a business owner or digital marketer, you expect some churn. Figuring out what causes it and at what stage it happens is tricky though. Here are three ways funnel-focused marketing can benefit your business:

1. You can identify barriers and drop-off areas

Despite your efforts to optimize your marketing strategy and offer the best products and services at competitive prices, you'll still lose a portion of your leads. Some prospects are unmotivated, don't want to commit right away, or have other options.

When most digital marketers and business owners experience this at a large scale, they focus primarily on the acquisition stage. This leaves the most important aspect of the funneling process unchecked—the actual cause of the churn.

By analyzing your funnel regularly, you can determine where churn happens. Naturally, once you figure out where those drop-off and friction-filled stages are, you can work with your teammates to fix them and boost progression into the next funnel phase.

2. You can generate more (and better) leads

A well-orchestrated funnel analysis strategy is useful for determining the stages at which users drop off. It also helps you determine the demographics of the people who are churning. Do this, and you’ll better understand the success of your marketing efforts with customers of different ages, locations, and occupations.

Once you know which customers are more likely to perform certain tasks, such as subscribing to your services or making a purchase, you can design better lead-generation strategies that target those specific segments of prospects.

3. You can align your marketing and product teams

Without proper collaboration between departments, chaos ensues.

For instance, in most companies, marketing teams focus on generating leads and converting prospects. And most product teams focus on retaining existing customers by optimizing the product for them.

Without sharing data and insights about what’s wanted in the market and what’s working well for existing customers, these teams aren’t as effective as they could be. They’re siloed. 

By looking at the sales funnel together every so often, the product can see where folks are falling off and why they’re not progressing to the next phase, and they can adjust the product roadmap or overarching strategy if needed. 

In short, if a prospect is impressed by what they see in the awareness stage and notices the same value once they’re actually seeing the product in action, they’re more likely to make a purchase or subscription and stick around.
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How to get started with funnel analysis

Getting started with funnel analysis isn’t quite as straightforward as choosing the right tool and viewing data. That’s because there are several steps you must take to make your strategy effective. Here’s how to get started:

1. Define your strategy and goals

What goals do you want to achieve by creating a clearly defined funnel? There’s no sense in spending time on a funnel that won’t impact your business for the better. Be sure you understand who you’re creating this funnel for and how you’ll educate and enable the client-facing folks who’ll use it. 

2. Map out your funnel

Mapping out your funnel involves identifying the critical user journeys that lead to your defined goals. You need to break down these journeys into stages. You can start from the initial conversation to the final conversion, such that each stage represents a milestone in the user’s journey.

3. Set up tracking

What influences user behavior at each stage of the funnel? You need to implement a robust analytics system to track user behavior at each stage. You can use several tracking methods, including event and page view tracking, to capture user actions and interactions.

4. Analyze user behavior

The analytics system you set up during the previous stage will help you analyze data to gain useful insights into user behavior within the funnel. With this data, you can examine the conversion rate at each stage and address any problematic drop-off points. That way, you’ll understand user flows throughout the journey.

5. Iterate and test

After setting up the funnel analysis system, you have to continuously monitor and analyze your funnel's performance—or set up automation and triggers to make this process feel more seamless. So, find trends in user behavior and come up with marketing plays to test out ways to keep your most qualified leads engaged and moving quickly through the funnel. Consider A/B testing ads, emails, and web copy based on customer interviews with people in your ideal customer profile (ICP) to see what resonates most.
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What to look for in a funnel to get actionable insights

To get actionable insights from your funnel, watch for this data. This step will help optimize your sales funnel and improve its performance. The most notable elements to evaluate include:

Conversion rates

I’ve mentioned this a lot throughout this article; you need to monitor conversion rates at each stage of the funnel, identify where drop-offs occur, and focus on re-capturing people who really are a great, qualified fit for your product or service. Streak funnel reports can help you out here by generating custom reports for every stage of your sales funnel and giving you an easy way to visualize your next steps in graphs and charts.

Screenshot of a Streak funnel report with a comparison chart for conversions by lead source

Traffic sources

Where's your funnel’s traffic coming from? Determining what sources drive the most qualified leads can help you allocate your resources effectively and boost conversion.

Drop-off reasons

Identify the top reasons why users drop off at different stages. This can be anything from technical issues to unclear messaging or even a lack of trust. Once you have that figured out, you need to address the issues to stop excessive drop-off.

Segmentation opportunities

Segment your funnel traffic to understand how different groups of users behave within the funnel. This includes everything from user demographics to the devices they use to interactions they have with your platform.
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Think it’s time to start analyzing your sales funnel?

Every digital marketer and online business owner expects to interact with leads who’ll never convert. After all, not everyone is interested in what you have to offer or able to make the final decision to invest in your product or service. However, that's not always the case. Sometimes, drop-offs come from poor interactions with your brand, a foggy funnel, or other fixable issues.

Funnel analysis can help you identify these issues so you can optimize and improve your marketing campaigns. If you're ready to up your funnel analysis game, reach out today and chat with an expert at Streak. We’d love to support you in this next phase of your lead management journey.

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