When to use funnels
We all seem to be obsessed with funnels talking about them and using them to make big decisions within our business. But when should we use a funnel? They have a role to understand where a business is trending; however they are useless at understanding what needs to be fixed.
At Crank we create funnels to build out a profile of business health, but we don’t just rely on the funnel to provide the answers.
As a for instance let’s take time, we like to look at ‘like for like’ time periods.
Why use like for like?
We need to be able to iron out peaks in traffic due to seasonality or promotions.
For example, looking at February against January would potentially be misleading. In retail given January sales we might think February is a slow month when in fact it might be the best February ever but compared to January it might always be a bad month.
The example above shows a March comparison year by year. We can easily see where the focus needs to be. There has been an increase of about 52,000 visitors yet the number that arrive on the website is only around 2,000 more. Once these visitors are into the purchase process we can see they are more likely to convert and spend more.
The use of a funnel here is perfect to understand the health of the business yet it does not really tell us what we need to do to fix the bouncing visitor problem.
Last Action Hero
Not really a Hero but this new years resolution was to use a film reference in a blog, tick! * SOURCE: Tim Shaw 2013
Let’s try and understand how we would work on what the “action” is we need to take to improve the performance of our website. In the example above we identified bounce rate as being the major problem. However this is based on the assumption that everyone who is visiting your website, is there to purchase something from you. This may not be the case.
By breaking down the behaviour of the visitor we have a more realistic approach.
The big four questions I want to understand are:
- How do I attract more of the right visitor?
- How do I get them to come back or engage with me?
- How do I get visitors to buy from me?
- How do I get visitors to spend more with me?
To help understand where the problem lies, we look at breaking down the purchase process into three key chunks.
- Visitors – people who come to the website and do not take action
- Conversion – people who do not purchase
- Spend – people who could have purchased more
With these three classifications it is a lot easier to understand visitor behaviour and more importantly what we want to get them to do. Below we highlight how to measure these and what we need to do with each audience:
|Visitors||Add to cart||Drive an increase in visits OR improve visitor add to cart rate|
|Conversion||Completed carts||Improve customer overall conversion rate by reducing abandoned carts|
|Value||Average order value||Increase the overall spend for each customer by adding more items per basket or|
Why have we split audiences out?
We purposely do not look at this as a funnel as not everyone who comes to the website is there to make a purchase. They may be browsing and researching, and our task should be to get them to add to cart, which might bring them back to a purchase over the next 2 to 3 months.
By breaking specific behaviours like this we can focus our media activity, email activity and onsite page design and content to drive visitors in the right direction.
The Crank View
Don’t do stupid things by making key business decisions on the back of a funnel or what you think the contrasting numbers are saying. Try to understand where the problem lies before making a change. This doesn’t have to take a long time, it just needs to be an informed decision, which is the purpose of analytics.
So, just to recap, our three recommended steps are:
- Use funnels to help with forecasting and to understand overall business health
- Profile the audience based on the behaviour you want them to perform but do not assume everyone is coming to purchase right away
- Focus your underperforming activities and initiatives to drive the right behaviour
What’s your view on funnels?