At the end of the day, there are really only two ways to get more customers for an online business. Yup, just two.
Every fancy growth hack, marketing strategy, and “Top 10 Ways to Be Awesome” blog post falls into one of the two strategies.
You’re already super familiar with the first one…
NUMERO UNO: Get more traffic.
Assuming you can get QUALITY traffic (and this is a big fat assumption), you’ll get more customers. If 2 people out of 100 visitors become customers, then 200 visitors will get you 4 customers, and so on. Pretty simple.
Buuuuuut… getting quality traffic on the interwebs is one of the hardest things you’ll ever have to do. We can spam Twitter, Facebook, Reddit, and LinkedIn all day. We’ll get a ton of traffic. But that won’t get us anywhere. We might go from 100 visits to 10,000 visits and still have only 2 customers.
Luckily, we have another option…
NUMERO DOS: Get more customers with the traffic we already have.
Say what? That’s crazy!
I assure you, it can be done. And it’s usually a more reliable strategy than trying to get more traffic.
The key to making this work is the marketing funnel.
Remember, funnels measure the number of people who move through a series of steps in order to become a customer. Let’s run through a few examples.
For an ecommerce business, you’ll have a checkout that people have to complete in order to purchase from you. And you’ll have steps like these:
- Visit product page
- Add product to cart
- Enter checkout
- Fill out shipping information
- Fill out payment information
- Confirm payment
Or if you’re in the SaaS space, you’ll have steps like these:
- Visit home page
- Sign up for a free trial and start creating an account
- Finish creating account
- Activate the product by using a core feature
- Upgrade to a paid plan
At each step of your funnel, you’ll want to know the number of people who reached that step and the percentage of people who moved to the next step.
But why go through all the effort of setting up these things? We know that we’ll lose some people at each step. Why worry about it in the first place?
Well, funnels help you find the bottleneck in your customer acquisition. Take a look at this funnel:
We’ve got three steps in this one. Between visiting the site and signing up, we have a 5.1% conversion rate. That’s not too shabby.
But we also have a 90.4% conversion rate between signup and creating a survey. So out of the people who sign up, most of them (9 out of 10) create a survey. Awesome. Even though my signup conversion rate of 5.1% is decent, that’s where the bottleneck is. If I want to acquire more users for this business, I need to get more people to sign up.
Once you know where people drop off in large batches, you’ll know which part of your business needs the most improvement. And once you fix the problem, you’ll get more customers with the same amount of traffic. That’s the beauty of tracking funnels.
5 Best Practices for Building Funnels
When working with your funnels, use these 5 best practices:
1. Fewer Steps is Better than More Steps
One of the easiest ways to increase the percentage of people who get through your funnel is to eliminate a step. Yup, just hack it out completely. Even if you have an amazing design, world-class copy, and a perfect product, you’ll still lose people at each step.
The only way to move 100% of your visitors to the next step is to get rid of the step.
I want you to be RUTHLESS with your funnels. Hack and slash every unnecessary click, field, button, and page you can. Have no mercy.
Back in the old days, Amazon used to have 7 steps in their checkout. They had individual pages to confirm your shipping address, payment information, whether or not you wanted gift wrapping, shipping speed; it went on and on. Now? It’s like 2 steps. Pick payment method, confirm order, and done. Hint: there’s a reason they have a one-click checkout option.
Shopify also got their checkout down to only 2 steps. That’s no accident.
In most cases, you can hack out a step without a second thought. But there are places where one extra step can actually help you. For example, a lot of enterprise SaaS companies don’t let you try their product directly from their site. They force you to fill out a contact form and get in touch with one of their sales reps. Since enterprise products tend to be more complicated and require more setup, they want to walk you through everything and answer your questions. If they let everyone try it without any help, most people would bail before they figured out how to use the product.
Bottom line: getting rid of steps is a pretty reliable tactic, but make sure you test everything in order to be safe.
2. Start With a Benchmark
This applies to ALL your metrics, not just your funnels.
Based on your industry, business model, target market, and the alignment of the stars, you’ll find a huge difference in metrics from one site to the next.
You might have a buddy that gets 89% conversions at every step of his funnel. But you manage only 13%.
There’s absolutely nothing wrong with that. In fact, I would expect it.
It’s really not that important where you start. The critical task is to keep improving. So approach your funnel as a benchmark. Your job is to improve it, regardless of what you start out with. The third step of your funnel has a 74% conversion rate? Fantastic, make it 80%. And the last step has a mere 3%? Get it to 6%.
3. Look for Bottlenecks
I already alluded to the best way to prioritize your funnel improvements.
When you’re looking at your entire funnel and trying to decide which step gets your attention first, start with the bottlenecks. In most funnels, there are one or two steps that aren’t really steps. They’re brick walls. People are going through your funnel happy as clams until… SLAM. Then they all bail at once.
Your mission? Find your bottlenecks and patch them asap. Run A/B tests on them, talk to people who don’t make it, and talk to people who do. Use every trick you’ve got to figure out WHY people bail all at once. Once you’ve found a few reasons, start testing fixes to see what really makes a difference.
4. When A/B Testing, Track the Impact on the Entire Funnel
Once you find your bottlenecks, you’ll want to start launching improvements to see if you can fix them. The best way to do this is with an A/B test (also called a split test). Here, you show two versions of a page to your visitors so you can find out which one gets more people to the next step. Check out Visual Website Optimizer or Optimizely to get these up and running.
But there’s one teeny weeny little problem…
A/B tests typically track only the next step. So if you’re trying to get more people to create a free trial account, the test won’t track which group of customers upgrades more frequently to a paid plan.
Well, that’s no good. What REALLY matters to our business is the end result of our funnels. We want the funnel that gives us great customers even if one of the steps has a slightly lower conversion rate.
As soon as you start testing improvements in your funnel, test your changes on the ENTIRE funnel instead of just the next step. This way, you won’t slow your customer growth by accident. And yes, I’ve seen this happen.
We’ve built integrations with Visual Website Optimizer and Optimizely for KISSmetrics to do this for you. We’ll keep track of who moves through each test and tie everything back to revenue. You’ll know which version converts more people into customers and drives more revenue for your business.
5. Track People
There’s a myth that most marketers automatically believe. As soon as you start to track your funnel, you’ll assume that customers move orderly through it. Sure, many of them drop out, but everyone else goes through the funnel step by step just like you intended. This is false.
People bounce around in funnels. They’ll go forward a few steps over 3 weeks, back a couple of steps in week 4, then speed up and complete the whole thing in a single day. It’s messy.
If you use only web analytics, all this data get blended together. Trying to see how many people actually made it through a certain step gets much more difficult.
So how do we get around this? Use customer analytics so you can track people. Then you’ll know how many people moved through each step, even if they’re bouncing around beforehand. You won’t have to worry about the difference between your traffic reports and what people are actually doing.
The Flaws of Google Analytics Funnels
Google Analytics also has funnels; they look like this:
Looks great, right? Well, they’re really not that flexible.
Google Analytics allows us to build funnels only with URLs. So if you want to track events that don’t correspond to a unique URL on your site, you’re out of luck.
But that leads us into a second problem…
You can track only a series of consecutive steps that people are forced to go through all at once. So if you want to track your ecommerce checkout, great! Google Analytics will handle it without a problem. But if you also want to track the number of people who add an item to their cart in your funnel, no dice. Google Analytics can’t handle that. And SaaS funnels are even worse.
So the Google Analytics funnels break down if:
- You don’t have unique URLs to work with and can’t use virtual page views
- People leave your site between steps
- Users bounce around your site between steps
Because Google Analytics doesn’t connect data back to people, it’s really hard to tell when a customer moves through different steps of your business. You’ll have to force your site to conform to the Google Analytics funnels if you want to use them.
Where do we get better funnels?
With KISSmetrics, you can track any funnel you want. As long as you’re sending us data on that step, you can put it in your funnel. It’s as simple as that.
If you’d like your funnels to match your business instead of trying to force your site to work with the Google Analytics funnels, we’d love to show you what KISSmetrics can do.
Getting more traffic isn’t the only way to acquire more customers. Start tracking your funnels so you can acquire more customers with the traffic you already have.
First, benchmark your funnels to find your current metrics. Then look for the bottlenecks that are turning people away. Once you have a few ideas for how to fix them, start running tests to see which one works the best.
But be careful; most tests track only the next step of your funnel.
To make sure you’re not optimizing a conversion rate while slowing down the rest of the funnel, use customer analytics to track people as they move through the entire funnel.
How have you improved YOUR funnel? Tell us in the comments!
About the Author: Lars Lofgren is the KISSmetrics Marketing Analyst and has his Google Analytics Individual Qualification (he’s certified). Learn how to grow your business at his marketing blog or follow him on Twitter @larslofgren.