Funnel Analysis: What Is It, Uses, Examples, and Tools

Funnel Analysis What Is It, Uses, Examples, and Tools

What is Funnel Analysis?

Funnel analysis is a technique used for analyzing the sequence of events that lead to a point in a conversion. Events in the funnel can be found within products mobile apps, websites, emails or other digital touchpoints. Product and marketing managers can use funnel analysis to understand customer behavior and overcome obstacles along the customer journey.

Users will likely encounter obstacles along the digital journey that hinder them from reaching their desired destination. Zooming in on each step can help you reduce friction and encourage users to go further down the funnel.

TechCrunch says, “From leads all through to engagement conversion and retention are key factors. Understanding each stage and optimizing at every stage will help you to make the most of your time.

Let’s take, for example, the conversion of free trial prospects to paid subscribers. This is how your funnel might look:

Step 1: Prospects open an email to receive a free trial offer.
Step 2: To redeem the trial, they click on the CTA button.
Step 3: Prospects create an account and get your product absolutely free.
Step 4: Prospects turn into paid customers after the free trial ends.

There are many distractions and barriers that can occur between these steps. You can also observe patterns in behavior that will help you identify what is working and what isn’t. Maybe prospects are losing interest in step 3 due to the multi-device activation needed to create an account.

You might discover that you have a better chance of converting prospects if you can get them past step 3. These opportunities to delight customers will not be available if you don’t do a funnel analysis.

The Key Takeaways

  • Funnel analysis can be used to measure and visualize key user behavior throughout the customer journey.
  • You’ll need to be able to monitor customer patterns and habits as they change. Funnel analysis can alert you when something isn’t right so that you can keep customers on the path to conversion.
  • When it comes to product development, personalization, and creating seamless customer journeys, funnel analysis is almost indispensable.

Also read: Top 10 Funnel Mapping Tools For 2022

Importance and Benefits of Funnel Analysis for Your Product

Funnel analysis is fundamental because it allows users to track their actions and behavior. This is important because it reveals the motivation and intent of your customers.

Not only are funnelling useful in marketing and sales to generate prospects, but they also are important for client retention. Knowing what customers want will allow you to add value at every step of the customer journey.

Even though every company has its own goals, funnel analysis can help you to:

  • Increase conversion. A conversion funnel analysis can help you achieve specific goals or many outcomes. A user may click a button to “Sign up” or download a PDF. You can analyze the funnel to determine what is preventing users from reaching their destination. There are opportunities to make the journey to the end of each stage of the funnel smoother and more personal.
  • Streamline your funnel. Your company supports many points of digital interaction such as websites and mobile apps or email or dashboards. Each funnel has its own unique funnel, but they all contribute to a single customer journey funnel. Funnel analysis provides a macro view of how each funnel links together.
  • Combine marketing and product teams. Marketing teams often focus on converting prospects to customers while product teams are more focused on maintaining those customers. Both teams have the opportunity to cross-pollinate insights and data through funnel analysis. Prospects who respond positively to certain aspects of the marketing funnel may stay with you if they see the same value in your product funnel.

Four Ways to Use Funnel Analytics

There are many ways that funnel analytics can help you extract insight from the data you have collected. It is up to you and your industry to understand how to interpret funnel data to reach goals.

  1. Conversion: The default mode for analyzing your funnel. This measures how many users have converted at each stage of your funnel. This data can be visualized in a chart, or bar graph depending on which platform it is. If there is a problem, you will be notified immediately of the results. You’ll be able to identify the best place to focus your efforts if there is a significant drop in users at any one stage of the funnel.
  2. Conversion over Time: Conversion Over Time lets you view conversion rates for users who entered the funnel at a specific date. Your analysis doesn’t require that users complete the funnel. This information is helpful when you want to understand how your funnel works during holidays and other special events.
  3. Time it takes to convert: Time is an important factor when analyzing a funnel. What is the average time it takes for users to complete each step? These user tendencies will confirm that your funnel sequence works as intended. A person shopping on an app for quick-service restaurants should convert more quickly than someone who is shopping on a tax service app. You can modify the flow of your funnel by breaking down conversion into hours, days, and weeks. This will allow you to make your business more profitable.
  4. Frequency: How often do users perform an action/behavior before they move on to the next step of the funnel? You can track the frequency of what users do throughout the funnel. You can make adjustments to certain funnel steps in order to increase conversion by understanding the frequency of events.

Problems in your funnel often need to be approached from an entirely different perspective. Funnel analytics can be used as a starting point to ask the right questions. You can solve problems by learning basic analysis techniques. you can find innovative ways to overcome challenges.

Also read: Top 10 Marketing Analytics Tools

Tools for Conducting Funnel Analysis

Analytics platforms are almost indispensable for businesses that offer digital products or services. Without the right tech stack, It can be very difficult to measure and improve conversion.

There are many choices when it comes to choosing a funnel analysis tool. Your product, industry, and current technology stack will determine the best tool for your needs.

Top funnel analysis tools

  1. Adobe’s funnel analysis product
  2. Google Analytics
  3. Heap
  4. Mixpanel
  5. Amplitude

Real-World Examples for Funnel Analytics

Many companies use funnel analysis because understanding customer journeys is crucial for building successful products. Its utility is what makes funnel analysis so powerful. Although it’s just one tool, you can use it to solve many different problems. Here are two examples of funnel analysis to give you an idea of the possibilities.

Patreon Increases Subscriber Conversions with Funnel Analysis

Patreon gives creators, artists, and entrepreneurs the chance to make a living by donating. Patreon allows users to pledge donations to creators. When creators win, Patreon is the winner. Patreon had to overcome a conversion problem: they needed new ways to encourage monthly subscriptions for creator content.

Through Amplitude’s funnel analysis charts, Patreon found a way to improve the pledge funnel. Patreon tried a new feature called “blurred post” to get more people to go through the pledge flow. These blurred posts conceal a portion of creator content, which encourages users to dig deeper into the pledge funnel and eventually subscribe. What did the result look like? Patreon was able to double pledge conversions through creator pages.

Mindbody uses Funnel Analysis to Drive Conversions with New Features

Mindbody connects customers and fitness professionals through a digital app. You can book classes, track your fitness progress and find deals in your area. Mindbody used Amplitude’s funnel analysis tool to test a new app feature called “Activity Dashboard” to determine how it would affect the conversion rate for booked classes.

Mindbody created behavioral cohorts, which are groups of users that were categorized according to their behavior. These cohorts allowed Mindbody to conduct their analysis. The Activity Dashboard was used to segment the cohorts into two types: those who used it and those who didn’t.

They noticed a significant increase in conversions after comparing the two groups using the funnel analysis chart. Activity Dashboard users booked 24% more classes per week. Mindbody based this success on the feature being more visible in the navigation bar.

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