A Conversion Funnel is an e-commerce term that describes the different stages in a buyer’s journey leading up to a purchase. The funnel metaphor illustrates the gradual decline of the number of potential customers as they are guided through the conversion path.
The conversion funnel is arguably the most important part of every ecommerce website. It’s where the magic happens: visitors turn into customers.
And yet, as marketers we know all too well, that not all visitors who put a product into their cart end up purchasing.
Just moments away from buying, they end up having second thoughts, getting distracted, or going with your competition.
Queue the dreaded “abandon cart.”
Potential customers fail to buy for a number of reasons, but historically we’ve had to guess as to reason for an abandoned cart.
Fortunately, by using Google Analytics, we can locate where they quit.
Although the initial setup of your conversion funnel is certainly important, we won’t go into technical details today.
To start, you first need to create a goal in Google Analytics. When creating a goal for a funnel, it should be a “destination” goal — meaning that you’ll set a specific web page as the goal, and the goal is then achieved when a visitor lands on a specific page.
For most ecommerce businesses, the “Thank You” or “Order Confirmed” page is typically what defines the end of your funnel process.
Once you’ve setup your destination goal in Google Analytics, you’ll be able to see your Funnel Visualization report, an incredibly useful feature.
Here’s what it might look like:
Before you can get the most out of your Funnel Visualization reports, you must first identify the exact pages that serve as the starting or entry point of your funnel. For most ecommerce sites, product pages will generate most of the entries into the funnel. But there are others:
No matter how many entry points you have to your funnel, the rest of the funnel should be like a single-line railroad.
Customers should only be able to initiate the journey through the funnel when and only when, they add a product to the cart. Otherwise, your conversion ratios and Funnel Visualization data will be inaccurate and unhelpful.
One of the most common goal-tracking issues happens as the result of a technical issue, such as an invalid link to the final step of your funnel.
A misplaced link, will often lead to a larger number of people in the bottom steps of the funnel compared to the total sum of dropouts and customers who proceeded to the next step.
To solve this problem, identify and eliminate the “backdoor” entry and enable only legitimate customers to get to the goal page.
Another common issue is when you accidentally omit a page in the funnel and have a step unaccounted for.
Luckily, this mistake should be very easy to spot. Unlike with a technical issue, the sums will not add up, since you will have missed all the potential customers who dropped out on the omitted step.
To fix, simply go through the purchase process yourself and find out which step is missing from Google Analytics. Add it missing step, and like magic the issue should disappear.
One final possible error: You notice buyers drop out at the final step of the conversion funnel, but they return to the “Thank You” page under the same order number.
This often occurs because the website uses a payment gateway (e.g. PayPal), so each time a customer goes to initiate payment, they effectively navigate away from your website to the third-party site. When they complete the payment, they are referred back to your website.
The result? A mess of funnel data, and more generally all of your analytics.
The solution to this issue is simple. In fact, there are two:
Before we analyze the funnel further, there is one additional checkpoint to cover. Google Analytics has a report called “Reverse Goal Path.” Once you define your conversion goal and wait a week or two, you can check what pages people open prior to reaching the goal.
Once you set up your funnel, it generally takes a week or two depending on the size of your site before your data becomes available. Ideally, you want to have about a month of data or one well-rounded sales cycle to use as your baseline.
To analyze your funnel, open the Funnel Visualization report in Google Analytics. There you should see something like this:
The funnel visualization represents the visitor’s path from adding the product to the cart to ending with checkout.
That means your visitor needs to complete the following steps:
Focusing on these steps allow you to identify any source of friction that may be causing funnel dropouts.
Below is the process I used in my specific case.
The first step of most ecommerce checkout funnels starts with the cart. The visitor adds a product to the cart and then clicks “Proceed to checkout.”
This first step traditionally sees the largest dropout rate of all steps. According to a Baymard study, 69% of all online customers abandon the cart in their first step, just after adding the product.
When a prospect adds a product to the cart, but does not proceed further, it’s called cart abandonment — and it represents a large issue for ecommerce retailers. The same Baymard study also gives the average rate of shopping cart abandonment in ecommerce stores at about 75%.
Given this data, it’s well worth your while to use every tool you can to address cart abandonment.
The problem with this step in the funnel is that you may not know why the customer added the product to the cart. They might be testing the water, checking the shipping price, or may even have added a product by mistake.
Without knowing why they did not proceed with checkout, it’s difficult to reduce your abandoned cart percentage.
There are a few general principles that can help you lower your dropout rate:
Shipping and billing information represent the first big test of your website’s credibility and trust. Before you can deliver your product to your customer, they need to tell you where to deliver the goods and how they are going to pay.
If your potential customers don’t trust you, giving away sensitive private information, such as home address, phone number, and credit card information may be all but impossible.
While this step is usually viewed as a mere formality, this is only true if you’ve communicated all the information about the costs, shipping, and other store policies up front.
At this point, the customer should already know the final price tag, delivery time, and other potential qualifiers. If you add additional qualifications for price such as requiring a purchase of some other product to use it or get it delivered at the last second, don’t be surprised if they jet.
A full 55% responded that they did not complete a purchase because of high additional costs.
Additionally, some 21% quit because of hidden costs. While abandon carts will always happen, much of what causes abandon carts can be prevented with clear communication.
Your checkout process will never be perfect, but you can always keep working to improve it.
For most sites, Google Analytics enables you to structure your funnel by the goals and steps a customer must take to complete the purchase process.
While Google Analytics can’t tell you exactly why a user quits, the position of the step in the funnel enables you to make an educated guess. And by analyzing where visitors go after they quit, you’ll get further insight into what may have gone wrong.