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A Quick Guide to Funnel Analysis: What is it?

If you run an eCommerce site or sell services online, there are big chance hundreds or potentially thousands of people visit your website every day. It might also be true that only a fraction of that traffic ends up converting into sales signups.

If that’s the case, funnel analysis could be what you need. It could help you figure out where and why users are leaving your site, so you can improve problem areas and enhance conversions.

In this piece, we shall take a brief look at what funnel analysis is and how it can benefit your business or website.

What Is Funnel Analysis, and How Does It Work?

Funnel analysis is a method of determining the steps required to obtain a specific conclusion on a website, as well as the number of users who complete each stage.

A ‘website funnel’ gets its name because, like a physical funnel, it narrows toward the end, resulting in a higher number of users at the top than at the bottom.

Consider a hypothetical e-commerce startup whose ultimate goal – also known as conversion or macro conversion – is to attract visitors to make a purchase. The typical funnel for such a site would include steps like:

  • Visiting the site
  • Adding a product to the shopping cart
  • Clicking to check out
  • Completing the purchase

These stages are sometimes referred to as goals or micro-conversions, with a higher number of users at the visiting stage on top and a lower number of completed purchases at the bottom.

The Advantages of Funnel Analysis on Your Website

It’s all too easy (and tempting) to focus on too many aspects of your site at once, but funnel analysis may help you figure out what needs to be done first and prioritize your efforts accordingly. Below are some ways conducting funnel analysis can help.

1. Determine Which Pages Have a Lot of Traffic and Exit

A funnel visualization tool displays the drop-off and conversion rates of your main pages, allowing you to see when and where visitors and potential buyers leave your site.

Knowing where consumers leave the journey can help you concentrate your optimization efforts on the most promising prospects. Using the funnel metaphor again, determining where users exit will assist you in plugging holes in your funnel and sending more traffic downward.

2. Determine the Source of High-Quality Visits

Funnels aren’t just for identifying problems. Using funnel analysis may also help you identify accomplishments that you can build on, such as disclosing the source of your high-converting traffic. More often than not, all you need to do is set up some goals on what you need to track.

For instance, this could be newsletter sign-ups, cart completion, etc. You can then use a feature like Goal Flow or an advanced funnel visualization tool like Google Analytics to filter by source and see where most of the converting traffic came from.

From there, you will know where to focus more efforts. It becomes easy to boost the number of likely conversions if you understand how people who convert arrive at your website.

3. Decision Making For Teams and Stakeholders

Conversion funnels are a simple approach to show where your online business is succeeding alongside areas that need development.

Along with crucial metrics and KPIs, funnel reports serve as a simple visual aid to utilize in presentations to stakeholders and team members, helping you achieve buy-in for future optimization work and showcasing your successful initiatives. Nothing is more effective than seeing a large red ‘drop-off’ alert to motivate people to take action.

In a nutshell, funnel analysis tools can help businesses in many ways. They provide web admins and online business owners with insights and metrics they can use to enhance user experience, increase conversions, and maximize ROI.


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