Measuring the Marketing Funnel

Good measurement is crucial, because otherwise it’s impossible to tell which of your marketing efforts are working and which aren’t. Measuring actions on your website is really easy (using tools likeGoogle Analytics or KISS Metrics), but the important part is knowing which metrics matter for your business.

Besides knowing the amount of visitors your website sees in a month, you need to know where they come from (ie. which ad campaign, link, or search term) and what percentage of them “converted”.

There are different kinds of conversions; they don’t all necessarily mean that the visitor bought something, but they represent a step in that direction. For example, when someone uses your contact form or signs up for your email list that is a type of conversion.

Online marketers describe the set of conversions leading to a sale as a funnel. The terminology isn’t really important, but the concept is; potential customers rarely buy from a company on initial contact. Instead, you need to lead them through a series of steps. Keeping track of those steps is a huge part of using your website as an effective sales tool — you want to know the percentage of people that make it from one step to the next.

There are many strict-ish definitions of conversion funnels out there, with fancy acronyms for the different steps, but for most small and medium sized businesses with a website the system can be much simpler and just as effective.

Basically, there are four conversions that any online sales funnel needs to measure, and for many cases these are the only four that matter:

• Initial contact: the first time someone visits your site. You’re probably already measuring this to some extent.
• Subscription: when a visitor gives you permission to contact them, usually by signing up for your mailing list.
• Interaction: a member of your subscription audience takes some sort of action that represents interest in your company. It could be as simple as clicking a link in an email, but ideally involves some sort of response or sharing action (replying to a marketing email, tweeting your link to their followers, etc.)
• Contact: a person interested in your company takes action to contact you — for example, by using the contact form on your website — or you identify them as a quality lead based on their interactions, and contact them individually.
• Purchase: a person gives you money.

It’s entirely possible for visitors to skip any of the steps, but thinking of the online sales process this way is enormously beneficial. Once you’re measuring your funnel, optimising conversions is greatly simplified. We’ll get into more of the details in another post, but for now it will suffice to understand that by breaking the problem down this way it allows you to focus on a single step at a time. Improving performance at any level of the funnel will increase your overall sales.