Everything about Conversion Funnel

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About this article

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.

Everything about Conversion Funnel

 

Introduction

 

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.


Google Analytics funnel

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:

  • Product page, landing page, or recommendation page;
  • Cart page;
  • Shipping and billing info;
  • Confirmation screen;
  • Thank you page;

 

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.


Common goal-tracking issues

 

1. Technical errors

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.

2. Omitted page in the funnel

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.

3. Payment gateways

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:

  • If you’re using a third-party payment system or gateway (such as PayPal that take customers off the site to initiate and complete payment), add the third-party URL to the referral exclusion list.

    You can do this in Google Analytics. Go to the Admin tab and open Property Settings. There, open Tracking Info, and you’ll find the referral exclusion list. Fill in the field with the URL you need to exclude (for example, www.paypal.com).
  • Use a payment system that integrates into your cart. With this option you have everything on your own site and also preserve the integrity of the data in Google Analytics. You still retain the main advantages of your third-party payment gateway (trust and credibility), while removing the need for your customer to go to some other website to complete the payment.

 

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.


How to analyze funnel data

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:

  • Add a product to the cart, and select different options (color, size, etc.)
  • Provide their delivery address, contact information, and billing method.
  • Validate that the order is correct and initiate payment.

 

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.


Step 1: Address dropout rates from “Add to Cart” to shipping and billing info

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.

Three tips for removing dropout rates on Step 1

There are a few general principles that can help you lower your dropout rate:

  1. Provide all relevant and pertinent information about price, shipping, and other important factors on the product page. You don’t want a potential customer to get a nasty surprise later on.
  2. When a new visitor adds a product to the cart, consider offering a discount or additional benefit to strengthen their interest, such as free shipping.
  3. Offer discount codes or some other benefits in exchange for a visitor’s email address. This way, you can contact customers who abandoned the cart and re-engage them through your remarketing efforts.

Step 2. Address dropout rates from shipping and billing to confirming transaction

 

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.


Step 3: Address dropout rate at the payment confirmation step

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.


Conclusion

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.

 

Reference: https://cxl.com/blog/funnel-analysis/

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