All you need to know about Funnel Chart

https://images.app.goo.gl/bjGeE8NJeyqYRLk66

This article provides you complete understanding of when to use funnel chart, benefits of funnel chart and an attempt was made to explain with simple example with well known e-commence giant.

Funnel charts plays a very important role in the field of Sales and Marketing.

Funnel charts are used to represent stages in business and when there is hierarchy level analysis is required.

Lets understand a scenario, taking a simple example of flow -

Example -

(please note example taken only for understanding purpose)

Amazon is coming up with big billion week offer, for which they need to convey this information to all their customers. Now the question is how do they communicate to their customer’s?

Lets assume they try to come up with a plan of sending an email to all customer's.

Taking a simple example in tabular format-

Stages involved in promoting big billion day promotional offer

1. Number of Customers : 125K
2. Email sent to Customers : 112K (Considering active users)
3. Email viewed by Customers : 86K
4. Among 85K Customers, 75K have clicked email and directed to website
5. 45K Customers adding product to cart to purchase
6. With 26K Customers purchasing the product which on was sale (Big Billion Week)

What is your observation here?? How can we tell if emailing was a good option to communicate on big billion week offer?

Now comes the solution, we need to find out Rate of Conversion.

In the example which we considered, I would say, 26K customers making a sale out of 125K customers.

Rate of Conversion = (26K/125K) * 100 = 20.5%

Power BI Funnel Chart Visualization

In the above example, company would expect to have wider funnel size, which internally signifies to have more percentage of Conversion Rate. More the Purchase, more the Sale.

Now here are the benefits of Funnel Charts -

1. Shape of the funnel reveals the health of process / campaign
2. Exposes bottlenecks
3. Intermediate process step can be targeted and improved

Now lets see other way around,

What? If it was this example -

Stages involved at delivering product division

Considering the process at delivering product division -

1. Product Purchased : 26K
2. Product Shipped : 25K
3. Among 25K shipped products, 24K product were delivered
4. 1.2K products was reported faulted and 965 products were returned

Power BI Funnel Chart Visualization

In this example, company would expect to have thin funnel size towards the end, which internally signifies to have less percentage of product returned, to keep up the their brand and reputation.

Conclusion -

A simple attempt was made to understand funnel chart with example. We have seen both sides of funnel chart (Head & Tail). Funnel chart remains as one of great visual in bringing out insights on business process steps or stages. Literally letting us know the bottle necks of stages.