Understanding the conversion funnel (sales funnel) in Google Analytics

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You may come across some websites where goal funnels or conversion funnels are used interchangeably. Sometimes it is also referred to as a sales funnel. Regardless of the term, they are invaluable to the success of your business. It tracks the customer journey from lead generation, sign-up to purchase and ensuring they buy again.

It is especially important when you are trying to measure non-transactional efforts. For e-commerce businesses, it is easier to measure the success of the website as it can be measured by profits and losses.

For example, on a typical e-commerce website, the potential customer looks at the products in the menu, clicks on the desired item, adds it to the shopping cart and then makes the purchase. Some websites require a registration process, which is another step in the conversion funnel.

Conversion funnels for blogs and e-commerce sites
Conversion funnels for blogs and e-commerce sites

With these metrics, you gain insight into the customer journey and can adjust your marketing efforts to increase the conversion rate. This saves you a lot of time and you get the most out of your investment.

Macro and micro funnels

There are two main ways you can set your conversion funnels in Google Analytics. One is the macro approach and the other is the micro approach.

When you say macro, you are referring to the broader and more generalised cross-channel objectives to gain an understanding of your customers, how aware they are of your brand, how receptive they are to your offer and how you can massage your message to reach them and trigger a response.

With micro strategy, you become more intentional in your goals to create specific and localised funnels on site. So you want to track how your customers use your website, which links they click, how long they stay on the landing page, how much time they spend on your website or if they go back.

Objective

First and foremost, you need to set your goals. The goal is the fundamental element in your conversion funnel strategy. If you set the wrong goals, you can go off track and get lost. If you align your analytics goals with your business goals, you can properly measure the effectiveness of your digital marketing campaign.

For example, if you have an e-commerce website, the overall goal is for a customer to make a purchase. If you are a developer of online games, you want users to download your title. If you are a news site, success can be measured by how many people you reach with your articles.

To determine your goals, you need to answer the following questions:

  • Does my marketing campaign lead to leads and sales for my business?
  • How much time do users spend on my website? What is the bounce rate?
  • Are the target steps clear to users when they are on your landing page?
  • Does the content of the website meet the set goals?
  • Does your company generate enough interest through relevant traffic?
Types of goals in Google Analytics
Types of goals in Google Analytics. Source: https://support.google.com/analytics/answer/1012040?hl=en

How do I define goals in Google Analytics?

  1. Log in to your Google Analytics account. You must have administrator rights to make changes.
  2. Go to the "Destinations" tab and click on it.
  3. Enter a name for your destination and then enter the URL for your destination.
  4. The default match type is shown as Exact match. Leave it on unless you also need to consider the different variants of your target URLs.
  5. Enter the target value even if you are not using your website for monetisation. This step allows Google to calibrate the metrics, such as the value per visit or the page value.

When you are ready and save your goals, first add the funnel by checking the box. Then you can enter the names or URLs in the field for the steps. You can have up to 20 funnel steps.

(Note: Below the target funnel and next to the funnel steps you will see a box with the words "Required step". If you check the box, it means that the percentage of visits on your funnel conversion rate includes a page view of the 1st step before the page view of the target page).

Limitations of targets

Google Analytics has template goals that you can choose from, but you can also customise your goals. Choose a simple and unique goal name to avoid confusion in the future.

However, there are some limitations when you set up destinations. Here are just a few of them:

  • You must first set up the goals in your Google Analytics account before the system can collect and report data.
  • Each report view has only 20 targets. You must overwrite the targets you no longer need. Alternatively, you can create an additional report view.
  • The target data does not work like your standard analytics data. You might be confused about the process, so you need to study the non-standard data processing, especially for the functions.
  • You cannot delete the targets. However, you can ask the system to stop collecting data for a particular destination.
  • After you have created your target sets and IDs, they remain. However, you can edit the target name and type.
  • You cannot track goals retrospectively. There are tools, such as Heap Analytics, that allow you to do this.
  • It would struggle to track multi-session actions. It is more reliable if you track user actions in a single session.

The conversion funnel allows you to identify the pages where there is friction. Using the funnel, the tool will immediately report that a user has left the target steps. In the case of an online shop, for example, you will know when the customer has added the product to the shopping cart but has stopped just before completing the purchase.

Then you can start to fix the problem.

  • It could be a technical error that throws the user out and prevents them from buying the item.
  • It could be a question of design, where the many pop-ups and log-ins put off the potential customer.
  • The steps might be confusing, forcing them to abandon the process in frustration.

As the reporting tool allows you to see at which stage of the funnel the process was stopped, you can then develop potential solutions to avoid similar problems in the future.

You can also identify which target steps are the biggest bottleneck for many users. If you see an unusual number of visitors who have abandoned at a particular step, you can narrow down the possible disruption.

Setting up the conversion funnel for the e-commerce website

There are three paths you can take when creating the Google Analytics funnel report. You can click on the selection from Conversions>Ecommerce. First, you need to enable the advanced ecommerce conversion and ensure that all the required elements are tracked.

Shopping Behavior

This allows you to check the number of sessions and steps in each stage of the purchase funnel. You can also see how many stopped in the middle of the goal funnel and abandoned the process completely, and how many completed the steps. Where in the step do you see a significant increase in the bounce rate? The report also has a visualisation feature that gives you a quick look at the funnel.

Reverse Goal Path

Not many people use this tool because they don't fully understand what it does. In Shopping Behaviour and Funnel Visualisation you can clearly understand the steps the customer goes through in the goal funnel. However, there are cases where the paths are disjointed. For lead generation pages, for example, they have contact forms that appear on multiple pages. Reverse Goal Paths help fill in the gaps and allow you to continue to track the movement of customers whether or not they appear on the landing page, customer directory list or registration page. The only limitation is that it accounts for abandoned processes. The goal must be completed before it can be tracked.

Funnel Visualization

The funnel visualisation measures how often users visit that particular step. It should not be confused with page views. The funnel visualisation shows each section representing the percentage of visitors who continue to the next step until they reach the final destination URL. It should not be confused with Goal Conversion Rate, which counts all visits to your website. The tool helps you gain insight into whether the pages you set up are contributing to your conversion rate. For example, if you publish blogs regularly, you will know how many visitors are directed to the conversion page from your articles.

Source: Wikimedia Commons
Source: Wikimedia Commons

The funnel visualisation and buying behaviour give you an insight into where you went wrong in your target funnel. You don't bask in your successes, because that is not an effective way to learn. You learn lessons from your failures.

Setting up a conversion funnel for a non-e-commerce site

It is more difficult to set up this type of conversion funnel for your non-transactional website. There is no option within Google Analytics to do this. Some companies resort to third-party apps, while others have the necessary know-how to "hack" Google Analytics.

For example, you can use Google Data Studio, which allows you to filter the segments, such as users coming from the landing page or a specific channel. You can also segment custom profiles of users who have abandoned the funnel steps so that you can try to target them again.

You can also change some values and variables in the Enhanced Commerce funnel steps to get results that are relevant to your needs. It's doable, but quite complicated.

Funnel conversion rate

The Funnel Conversion Rate tracks the rate at which the lead passes through the marketing funnel. With this tool, you can measure the effectiveness of your marketing efforts in achieving goals as you approach the end of the sales funnel. With the help of the funnel conversion rate, you can also adjust your website to match your goals.

You can use the following formula to calculate the funnel conversion rate:

(Number of leads moving to the next stage รท leads in the funnel stage x 100).

You can also set the frequency of reporting, depending on your needs.

Even if you have a seemingly good conversion rate, you still need to check each funnel to identify bottlenecks. Check the numbers for each section of the funnel from top to bottom. Identify which channel is not performing well, and then you can find ways to optimise it so that the channel performs better. If you find other bottlenecks, address those too.

However, make sure you complete the optimisation of one channel first before moving on to the next to avoid overlapping strategies.

The 2019 US Consumer Electronics Report found that the average conversion rate from visit to purchase is around 3 % across industries.

The funnel conversion rate depends on your industry. As quoted in the report, the conversion rate in the electronics industry was only 1.4 %, which is pretty miserable. If your conversion rate is between 3 % and 5 %, you can rely on your marketing strategy. As long as you don't fall below 2 %, you're good.

Conclusion

Conversion Funnels in Google Analytics are a useful tool to help your business calibrate your marketing campaigns, create a better experience for your customers and address the bottlenecks on your website. By identifying the problem as early as possible, you can immediately optimise the channel and improve its performance. Make sure you identify the funnels and targets at the earliest stages of your implementation process.

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