What are Funnel Metrics?
Funnel metrics are measurement that helps you track your potential customer's journey. From the moment they first encounter your product or service to the part where they become a loyal customer, you can track your audience with these metrics.
While monitoring funnel metrics, you must pay attention to your conversion or sales funnel.
But what is conversion funnel exactly?
A conversion funnel, also known as AIDA Model or sales funnel, is a term for understanding the customer journey and conversion.
It displays the stages in your customers' journey that leads to a purchase, sale, or desired action.
Why Funnel Metrics Matter?
You might wonder why funnel metrics are essential.
Here are the main reasons why funnel metrics are important:
- Thanks to funnel metrics, you can better understand your conversion funnel and how well your certain marketing and sales strategies are performing.
- As they provide insight into each stage of the funnel and reveal where people abandon and where they convert, you can make strategic decisions to improve this path.
- Since funnel metrics allow you to see how your potential customers move through various touchpoints, you can understand the customer journey.
- As these metrics highlight where people tend to leave your business, you can take the necessary steps to create a smoother path in your conversion funnel.
- Knowing where people leave and seeing the funnel metrics like customer lifetime value, customer satisfaction score, and more, you can understand the customer journey to tailor their experience.
- You can gather valuable feedback, enhance customer experience, and attain more loyal customers and conversions thanks to data-driven metrics.
- Apart from these, you can improve your marketing return on investment and optimize for higher returns with funnel metrics.
13 Key Funnel Metrics You Should Focus on for Growth
We gathered 13 important funnel metrics that you should focus on in your conversion funnel.
By monitoring these and making the adjustments that should be done regularly, you can start improving your sales and marketing funnel.
1. Leads
Leads are among the most crucial metrics you need to pay attention to. You can keep track of your new leads, the average number, and how they enter your funnel to get valuable insights.
Seeing where you gather your leads from and how you turn visitors into leads can help improve your marketing and sales activities.
Gathering leads through lead magnets like popups, guides, e-books, etc., is possible, and you might be applying these strategies to your marketing efforts. By evaluating these lead magnet's effects and results, you can enhance your activities.
You can also keep track of your leads' process from the top to the bottom of the funnel and gather valuable information about your audience and potential customers.
Keeping track of leads can help you collect qualified leads over time that will eventually play a role in customer lifetime value, which will be explained in more detail in this article.
2. Conversion Rate
Conversion rate is the percentage of visitors that take a desired action, which can be a purchase or sign-up. It is a crucial funnel metric you need to pay attention to to measure your business goals' success.
A good conversion rate is higher than 10%, but this number can change according to industries for sure.
Conversion rate metric is not just about a sign-up or purchase; it can be about how many sign-ups upgraded their plan to a paid plan, how many visitors converted to qualified leads or clicked an advertisement, and so on.
You can measure the conversion of every stage of your funnel, such as ToFU, MoFU, and BoFU.
By tracking conversions during the top, middle, and bottom of the funnel, you can start improving these stages properly to achieve your conversion goals.
3. Customer Acquisition Cost
Customer acquisition cost, also known as CAC, is the cost of acquiring a new customer. It is related to the costs of your business to win new customers, including marketing and sales expenses and more.
Knowing the cost of acquiring a customer can be valuable as it can help you form your marketing and sales strategies.
You can calculate customer acquisition cost with this formula:
CAC = Costs of marketing & sales / Number of new customers
Take the total costs of your business about customer acquisition and divide it by the number of new customers to learn your customer acquisition cost.
Thanks to CAC, you can get an overview of your business expenses and plan your budget accordingly.
By seeing how much money you spend on acquiring each customer, you can set smart goals and evaluate actionable insights.
Paying attention to this metric can help you to use your resources effectively. That way, you can invest in channels that are in your niche and create campaigns that fit your budget to get new leads.
4. Sales Velocity
Sales velocity is about measuring how your visitors move in your sales pipeline and funnel. It is among the important metrics that reflect the effectiveness of sales efforts.
It can be a valuable metric to forecast the usefulness of sales activities.
To calculate the sales velocity, you can use the following formula:
Sales Velocity = Number of Opportunities x Deal Value x Win Rate / Length of Sales Cycle
To get the most out of this metric and improve your funnel, you can increase the number of opportunities and track your win and conversion rate.
With product and service add-ons and after-sales services, you can increase your deal value as well.
Apart from these, shortening your sales cycle can also lead to the growth of your operations. You can speed up and automate repetitive tasks and focus on high-performing campaigns and channels to shorten your sales cycle.
5. Average Deal Size
Average deal size is the money amount that your customers spend on your product.
You can calculate the average deal size using this formula:
Average Deal Size = Total money gained from orders / Number of deals
This sales funnel metric is crucial for sales teams, as it provides an overview of the effectiveness of deals.
To increase your average deal size, you can upsell and cross-sell your products, offer incentives, extend your deal duration, and more.
Using advertisements to improve your average deal size can be another solution if you want to grow your income and reach a wider audience.
6. Average Order Value
Average Order Value (AOV) is the average amount customers spend when they make a purchase.
AOV plays a crucial role in your marketing funnel. It's not just about getting more customers; it's about getting them to spend more and achieving loyal customers.
A higher AOV means more revenue and an enhanced customer experience.
You can calculate AOV with this formula:
Average Order Value = Total Revenue / Number of Orders
You can increase your average order value by upselling and cross-selling and boosting your conversions accordingly. High average order value leads to increased sales and revenue, so paying attention to it if you own an e-commerce business is vital.
Explore: How to Improve Average Order Value? 10 Simple and Effective Tips for tips to improve your AOV.
7. Customer Engagement Score
Customer Engagement Score is an important metric to see how your user engagement is doing and how active your customers are.
The higher the customer score is, the happier and more satisfied your customers are. It plays a big role in evaluating the funnel of your business.
You can identify elements that influence your customer engagement score and increase user engagement accordingly.
It can be calculated with this simple formula:
Customer Engagement Score = [Event A x Value] + [Event B x Value]
To boost customer engagement and increase your customer engagement score, you can create webinars, offer guides, organize giveaways, and many other strategies that serve your audience's needs and interests.
8. Customer Satisfaction Score
The Customer Satisfaction Score plays a huge role in your marketing funnel. It's not just about drawing in customers, but it's about keeping them satisfied.
To calculate the percentage of your customer satisfaction score, use this formula:
CSAT (%) = (Number of positive responses / Number of total responses) X 100
A high Customer Satisfaction Score reflects satisfied, loyal customers who are likely to become advocates for your brand. You should aim for a high score and make necessary adjustments to keep your customers happy and satisfied.
In order to get feedback from customers about their satisfaction, you can create popup surveys, ask customers to give feedback, and collect form submissions for data-driven insights.
Include an engaging headline, explain your survey clearly, and add a catchy call to action button to get the most out of your survey popups.
9. Repeat Purchase Rate
Repeat purchase rate, RPR, is the percentage of customers who make more than one purchase.
This term can be used in various industries, including digital products, retail, service, and more.
You can calculate the RPR of your business using this formula:
Repeat Purchase Rate = Customers who purchased more than once / Total purchases
As it goes hand in hand with your customer retention, tracking this metric and improving for a higher repeat purchase rate should be among your goals.
You can build customer loyalty programs, collect feedback about your audience's interests and pain points, increase engagement, and upsell products to increase your repeat purchase rate.
10. Abandonment Rate
The abandonment rate metric reveals the percentage of visitors who start but don't complete an action, like abandoning a filled shopping cart. It's like visitors changing their minds midway through a ride.
For e-commerce businesses, it is also known as cart abandonment rate, which is among the most important factors that influence churn rates.
According to cart abandonment rate statistics, the average cart abandonment rate is around 71.82%.
Pretty huge, right? Focusing on this metric and finding ways to reduce it can result in wonders and help you grow your business.
To reduce the cart abandonment rate of your business, you can perform certain actions and encourage visitors to complete the desired actions.
Using exit-intent popups, offering discounts, and free shipping are among the most useful ways to reduce a cart abandonment rate. You can apply these strategies to your business and evaluate the abandonment rate regularly.
You can include a coupon code on your popup campaign and add a catchy headline and CTA button to reduce your cart abandonment rate.
11. Customer Lifetime Value
Customer Lifetime Value calculates the total value a customer brings to your business over their entire engagement with your brand.
If you want to get more loyal customers and increase customer retention, focusing on customer lifetime value should not be overlooked.
You can calculate this metric with this formula:
Customer Lifetime Value = (Customer Value x Average Customer Lifespan)
Also, you can calculate customer value like this:
Customer Value = Average Purchase Value x Average Number of Purchases
Having a high customer lifetime value means you are on the right track and your customers are valuable. If you have a low score, it might mean that customers are not that valuable.
By evaluating this metric, you can invest in relevant areas and increase your customer lifetime value with loyal customers over time.
12. Return on Investment
Return on investment is a funnel metric that allows you to measure the performance and efficiency of an investment you make. It helps you to understand whether your efforts and investments are effective and allows you to decide whether you should keep investing or not.
It's the metric that can truly revolutionize your marketing strategy, taking your business toward a future of increased profitability and strategic growth.
You can calculate return on investment with this formula:
ROI = Net income / Cost of investment x 100
Pay attention to the parts that cost more and give you more value. You wouldn't want to spend too much on a project or invest too much in a strategy that doesn't perform well.
Evaluate the results, and keep in mind the return on investment for better results.
13. Churn Rate
The churn rate reveals the percentage of customers who stop engaging with your brand over a specific period.
This metric can show you the number of customers who leave your product or service and how often they leave.
You can quickly calculate the churn rate of your business with this formula:
Churn Rate: (Lost Customers / Total Customers at the Start of Time Period) x 100
The ideal customer churn rate would be zero. But this rate wouldn't be so realistic. You need to learn about the average churn rate of your industry and compare your rates.
If your churn rate is low, it indicates that your company is doing great in keeping and satisfying customers.
To reduce the churn rate, you can apply specific marketing and sales strategies and start increasing your conversion rate.
Wrap Up
That is all for the key funnel metrics! We gathered 13 key funnel metrics you should keep in mind in this article.
We also mentioned how you can improve your strategies while monitoring these metrics as well. By exploring these key funnel metrics and enhancing your operations regularly, you can keep your customers engaged and improve your sales funnel.
Don't forget that you need to regularly focus on these metrics and adjust accordingly to get the most out of them.
That way, your conversion funnel can be optimized for good, and you can keep getting more loyal customers.
Frequently Asked Questions
What's The Difference Between Traffic Metrics and Conversion Metrics in A Funnel?
Traffic metrics, such as page views and sessions, measure how many people enter your marketing funnel, while conversion metrics, like conversion rate and churn rate, measure how many visitors take desired actions, such as making a purchase.
Traffic metrics show the entry points, while conversion metrics show the effectiveness of your conversion funnel.
How Do I Measure Funnel Metrics?
Using web analytics tools like Google Analytics, Adobe Analytics, or specialized marketing automation platforms, you can measure funnel metrics.
These tools allow you to set up conversion tracking, create funnels, and generate reports that show the performance of your efforts.
You can also gather feedback from your audience for metrics like customer satisfaction scores.
How Often Should I Monitor and Analyze Funnel Metrics?
Regularly monitoring and analyzing funnel metrics is crucial for success and growth. Depending on your business, you may want to review these metrics weekly, monthly, or quarterly.
This frequency lets you decide on trends, make data-driven decisions, and continuously optimize your marketing efforts.
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