How to Analyse and Optimise Your Marketing and Sales Funnel
It’s both a science and art to analyse and optimise a marketing and sales funnel.
Science and art?
Let me explain:
Science: Science will help you understand where and why your marketing and sales funnel isn’t working. By analysing your funnel you need data and a structured approach.
Art: When you know where and why your funnel isn’t working, then it’s time to get creative. Now you need to find a solution to your problem. That requires creativity.
In this post we will look at how to analyse and optimise your marketing and sales funnel.
The premise of this post is that you have a business and a funnel with a certain amount of volume. That mean that you already have traffic (top funnel), leads (middle funnel), customers/revenue (bottom funnel) and that you are retaining and potentially expanding your customer/revenue base.
If you have just launched a business and your funnel is empty, then you need to start driving traffic. That lesson is a for another blog post.
What is a marketing and sales funnel?
There are many definitions of a funnel. I usually stick to my own definition:
A funnel is a sequence of events your ideal customers profile (ICP) goes through to achieve a goals.
Simple as that.
Some people call it your customer journey.
You can also divide a funnel into a subset of funnels. Most commonly you would divide your funnel into a marketing funnel and a sales funnel:
Your marketing funnel typically starts with everyone who is aware of you and narrows down to all the leads you get.
Your sales funnel starts with all the leads you have and narrow down to all your customers.
A funnel is typically divided into 3 steps, however I like to include a fourth:
- Top of the funnel (TOFU): Creating awareness and driving traffic to your business
- Middle of the funnel (MOFU): Converting that traffic into leads
- Bottom of the funnel (BOFU): Converting those leads into paying customers
- Post funnel: Retaining customers and expanding the revenue from existing customers
Where to start?
So where do you start if you want to improve your funnel?
- Top funnel: Are you driving the right traffic?
- Middle funnel: Are you converting your traffic into leads?
- Bottom funnel: Are you converting your leads to customer?
- Post-funnel: Are you retaining your customers
Funnel analysis and optimisation starts with DATA.
This is the science part of analysing and optimising your marketing and sales funnel.
Science (or data) will help you understand where and why your marketing and sales funnel isn’t working.
You need to examine where you users or leads are dropping off. This is also what we call conversion rates.
There are several conversion rates in your funnel — one per each step in your funnel.
You have a conversion rate form impression to visit, visit to lead, lead to customer and customer to successful expansion of an account.
In the image above you can see 4 conversion rates (5%, 20%, 10% and 10%). These are just random conversion rates. You should look at your own business conversion rates. Here you might be able to identify your low hanging fruits in case one conversion rate is particularly low.
(And no, there aren’t any “correct” or ideal conversion rate numbers — you should just get the conversion rates as high as possible for you to have a profitable business.)
Create a dashboard for your funnel
If you don’t already have it, then I recommend you to build a dashboard using Klipfolio, Google Data Studio, Databox or similar. It’s very simple to setup (can be done drag-and-drop-style) and usually it can be done in less than an hour. By having a dashboard you will always be able to track your funnel performance. It will help you to quickly identify problems with your marketing and sales funnel.
When you have identified an area where you conversion rates are low, then it’s time to do a deep dive on that particular step. Can you narrow in more exactly where the problem is?
- Top funnel: Is it a particular channel that isn’t performing?
- Middle funnel: Is it a particular lead magnet that doesn’t work?
- Bottom funnel: Is there a particular person from your sales team that isn’t performing?
- Post-funnel: Is it a particular group of customers that are difficult to retain over time?
Conduct a small study of where you funnel breaks
Can’t you find anything in your dashboard?
Usually you won’t be able to find all your answers in your dashboard. Not only are dashboards very often only quantitative data — not qualitative data.
Quantitative data is quantities and numbers while qualitative data is more descriptive. Most often quantitative data can be derived from analytics tools like Google Analytics, while qualitative data can be derived from a customer interview.
Example of quantitative data could be total visits = 100.
Example of qualitative data could be an opinion like “The colour and shape of the logo gives me positive associations to something I should trust”.
The framework below can be a great help to figure out what you should do to both understand what the problems with your funnel are, but also how to fix them.
What metrics should I track for my funnel?
Other than your conversion rate, you should always track your “Cost per X”-metrics.
Could be:
- Cost per click (top funnel)
- Cost per lead (middle funnel)
- Cost per acquisition (bottom funnel)
In case any of those metrics are high, then that is most likely an area you should focus on.
Now we have narrowed in on where the problem is, then we need to fix the leaky bucket.
How to improve the broken part of your sales funnel
Now we come to the art of optimising your sales funnel.
It’s time to fix your funnel. This requires a certain amount of creativity.
Find a solution to why your funnel isn’t performing well can be difficult and the solution isn’t always straight forward. Most blogposts around the web will recommend you to test out a new headline or make your buttons bigger — simple, yet generic advice. Below I’ll try to provide you with more of a framework that you can use to find out what the right solution to your problem is.
5 ways to optimise your funnel
Here is a few mutually exclusive ways you can optimise your funnel — try to work with your:
- Messaging
- Audiences
- Design
- Offering (product or lead magnets)
- Reliability (fixing errors)
These are mutually exclusive, but most likely not collectively exhaustive.
You can also unpack each of them even further. Design can for instance be improving usability, changing your colours — even making your buttons bigger ;-)
Ask yourself these questions
When you have identified in what funnel stage your problems are, then you should ask yourself:
- If it’s your top funnel, then you should ask yourself if you are driving the right traffic?
- If it’s your middle funnel, then you should ask yourself if you are having the right lead magnets or if you for some reasons aren’t converting you traffic into leads?
- If it’s your bottom funnel then ask yourself why you aren’t converting your leads to customer? Problems with your sales team? Or are you maybe getting the wrong leads?
- Post-funnel: Are you retaining your customers
Examples of potential solutions for fixing your funnel
There are also potential stage specific solutions you can explore. Some examples are:
- Top funnel: Test out new ads
- Middle funnel: Test out new lead magnets
- Bottom funnel: Improve your sales productivity
- Post funnel: Improve your account expansion strategies and tactics
This is really where you need to get creative. The examples above are very general and depending on your business the solutions might be very different.
How to implement your change?
Coming back to the science part of optimising your marketing and sales funnel.
When you have identified where in your funnel the issue is and have found the right solution, then it’s time to implement your changes.
No matter the size of the change I always recommend people to implement this change as an A/B test.
An A/B test is basically an experiment where you are dividing your visitors or users into two groups which is called an A group and a B group. These two groups are then shown your original version (the control version) and your new version (the challenger version), respectively. Then you can see how well the new version performs compared to the original version.
My favorite tools for this is Google Optimize (which is free!), but Optimizely or Visual Website Optimizer are also great tools.
There are many tools to do this for your website and if you are testing out your email communication then most email marketing tools have an A/B testing feature.
General principles for how to work with funnels
Before rounding off this post, I want to share my top 4 general tips and tricks for how to work with funnels.
- Always work bottom up with funnels: You shouldn’t drive traffic to your funnel before you have fixed your middle and bottom funnel. Otherwise you will be wasting money on marketing.
- Remove friction from your (sub)funnels: What should you look for in a broken funnel? Always look for ways to remove friction and increase motivation.
- Focus on low hanging fruits: It doesn’t have to be big things that are hurting your conversion rate. Simple things as copy or adding a picture can sometimes have a high impact.
- Shorten the length of your funnel: Humans are impatient creatures. So do what you can to shorten the length of your funnel — both in time and steps.
Do you want to become an expert on funnels?
All the content in this article comes from my Udemy course on “How to build a high converting sales funnel for your subscription business”.
In less than three hours I’ll teach everything you need to know to build and optimise your sales funnel through 10 sections. Step by step.
After taking this course you will learn:
- What funnels are and how to work with them
- How to find your ideal customer profile and why it’s critical to get this step right before sending traffic into your funnel
Next, I’ll cover the four stages of a funnel:
- Top of the funnel (TOFU) — this is about driving traffic to your funnel
- Middle of the funnel (MOFU) — converting that traffic into leads
- Bottom of the funnel (BOFU) — and finally closing the deal and get paying customers
- Post funnel — this covers everything that happens after a sale has been made
- Then I’ll teach you how to continuously work with your funnel
- I’ll even help you put together the right tech stack which supports the needs of your funnel
- Lastly, I’ll provide you with a few cases that will inspire you to build your own funnel
It will cover so much more than what you have read in this post and of course I have saved all the best tips and tricks for those attending the course.
The course is for you who consider starting or already owns a subscription business, like a software-as-a-service (SAAS). However, the course covers a lot of fundamentals about sales funnels, which you can apply to non-subscription businesses.
If you want to succeed with your business, you need to understand funnels and this course will provide you with the right structure to build and work with your funnel.
Remember that you are covered by a 100% money back guarantee. So what are you waiting for? Click here and enroll today on either Udemy or Skillshare.
