How Marketing Funnels Work

If you’ve spent any time learning about marketing analytics, you’ve probably come across the term “funnels.” If you’re curious about what they are and how they can help, this post is for you.

What Are Funnels?

You undoubtedly want visitors on your website to take certain actions. Maybe you want them to make a purchase, sign up, or fill out a form. When someone does something you want them to do, it’s known as a conversion. The visitor converts from browsing to taking the action you want them to take.

A funnel is the set of steps a visitor needs to go through before they can reach the conversion.

There are additional steps/actions that can be taken in between each of these steps, but they do not matter in the purchase funnel. For example, a visitor may view Amazon’s About page, Contact page, and Careers page, but we don’t need to count these in the funnel because they aren’t necessary steps.

Why Funnels Are Beneficial

With a funnel report, you can see where you are losing customers.

Let’s take your average SaaS business as an example. Here’s how a funnel may look for them:

• Visited site
• Signed up for a trial
• Used product
• Upgraded to paying

Do people have to use the product before paying? They don’t, but it’s a good idea to track it so you can see if it’s a roadblock for them.

Here’s how that funnel would look in the Kissmetrics Funnel Report:

In this example, the business manages to get 165 people to use the product, but only 13 people convert to Billed. There are opportunities for improvement at every step of the funnel, but it’s important to first work on the areas that need the most attention. The more people they can convert to Billed, the more revenue they’ll have. This should be the first area of the funnel to optimize.