Growth Hackers, Digital Marketers, Product Managers have made funnel reports an integral part of their repertoire for understanding conversions and drop offs.
For businesses it is necessary to understand how many people:
- Viewed-Product then Add-to-Cart but didn’t Purchase or
- Visited-Site then SignedUp-for-an-Account but didn’t Verify-their-Email-Address, or
- Selected-Restaurant then Made-a-Dinner-Reservation but didn’t Check-In-to-Restaurant, or
- Searched-for-Airline-Tickets multiple times but didn’t Purchase, or
- Opened-an-Email but didn’t Click-on-the-Call-to-Action in there
Funnels do a great job of showing us these percentages.
Our funnel reports though fall short in being actionable — they don’t help us take any action on the numbers they report back. This post discusses what is required in order to make your funnel reports actionable to drive growth.
A Speedometer and the Accelerator Pedal
To use an analogy I compare a funnel report to the speedometer in your car — an extremely useful tool that tells you the current speed of your car.
What we need in order to take action in a car is the accelerator and/or the brakes. Once the speedometer reports the speed reducing, it is the accelerator we use to get us back on track towards our destination.
A powerful user segmentation tool is the accelerator we need to use with our funnel reports in order to speed up our business.
Funnels as starting point for Behavior Segmentation
Every funnel report (almost in disguise!) exposes multiple segments of people that are directly actionable:
- people who successfully convert all the way through the funnel, and
- people who drop off at each step of the funnel
A sample 3-step funnel below shows these user segments.
If only we could get to these precise set of our users, our creative minds will find ways to nudge them ahead. We should capture and save these smaller segments of users; compare and contrast them with each other to analyze; trend these segment metrics over time and more —we almost definitely will improve growth and retention for our services.
With these user segments, we need to answer questions like:
- are the 124 users who converted mostly first time purchasers, or prior purchasers before?
- are the 565 users who drop-off at Step 3 mostly coming from one source of acquisition (say a specific Facebook AD campaign)?
- how do the behavior traits of the 3,286 users who drop off at Step 2 compare with the 124 users who converted? do they search for products a lot? do they rate or review products? how long have they been using the service?
and many more — only possible if I can get to these precise segments.
If you love your funnel reports, I can bet you will love analyzing and engaging with the user segments your funnel reports expose.
Behavior Segmentation Requirements
In terms of a practical toolset, the simplest option would be if our funnel reports directly allow us to save these different segments of people for further analysis.
The next best option would be if our segmentation tools expose capabilities where we can precisely mimic our funnel reports.
The following segmentation capabilities are required in your toolset:
1. Specify a list of actions and/or in-actions to define a user segment
For example I should be able to create a user segment consisting of people who Viewed-Product and Added-to-Cart but didn’t Purchase — this will get me the 565 people who dropped off at Step 3 in the funnel image above. Similarly, I should be able to create a segment of people who Viewed-Product and Added-to-Cart and Purchased — and this will get me the 124 people who converted all the way through my funnel above.
2. Specify a sequence of actions or in-actions to define a user segment
This makes the above capability a little more precise. If I can create a user segment consisting of people who Viewed-Product and then Added-to-Cart and then Purchased — I now more accurately get to the list of people who not only converted all the way through my funnel above, but did so in the sequence of actions I expected them to go through for conversion.
3. Specify a relative time between actions or an action/in-actions to define a segment
For example, I should be able to create a segment consisting of people who Added-to-Cart but didn’t Purchase within 15 minutes of that previous action.
4. Specify a count of certain user actions to define a segment
For example, I should be able to create a segment consisting of people who Launched-App more than 20 times AND Searched-for-Airline-Tickets 5 times but didn’t Purchase.
5. Specify any combination of the above along with the basic segmentation capabilities on demographics and geography to define a segment
There are numerous benefits for good user segmentation. I contend that our ability to understand and grow our business is directly related to how powerful our user segmentation capability is.
I strongly recommend using the concepts behind your dependable funnel report as a starting point.