Funnel analysis - A Guide to Increase Funnel Conversions

Funnel analysis comes in to play in the most important areas of a business, thus, enabling the company to make informed decisions.

It answers important questions in a business such as

  • Where are we losing our customers?
  • What are the customers expecting from us?
  • How are we viewed in the perspective of customers?
  • What is our strength?
  • What can we do to retain our customers and achieve our goal?
  • What are the areas of improvement in our operations?

These questions are necessary to gain insights on business performance.

  1. What is Funnel Analysis?
  2. Why Funnel Analysis?
  3. Funnel analysis - Scenario
  4. Perks of using funnel analysis
  5. How you can use funnel analysis
  6. Tools for funnel analysis

What is Funnel Analysis?

Analysis is a checkpoint in every field which depicts the current performance or the status of the work performed.

Here, let us discuss an interesting type of analysis called funnel analysis.

Funnel Analysis is a technique to recognize the steps required to attain the desired outcome in a website with regards to user behavior.

It denotes the actions of customers while using a website which represents the shape of a funnel.

A funnel is like a tube or pipe that is wide from the top and narrowed down at the bottom. It is used for guiding substances like liquid or powder into its small opening.

This analysis visualizes the flow of users, thereby picturizing their website activity.

To understand this concept better, let us assume a scenario of a company whose goal is to make customers purchase from their e-commerce website.

This requires the customers to visit the website, wishlist products they like, add them to the bag/cart and then finally making a purchase by confirming it with a payment.

Funnel analysis visualizes the user activity wherein it oversees how many people have visited the website to how many have narrowed down to complete the purchase activity.

This gives a result of actual users getting through each stage in the funnel which ultimately shows the stage where there is a biggest drop.

Why Funnel Analysis?

Funnel analysis shows the key areas that the company needs to focus on to make their customers purchase from their website.

It describes each step that a user takes in utilizing the website.

Moreover, this analysis is vital in finding the gaps that the business needs to fill in order to boost up their sales and revenue.

This is critical because it supervises the intention and motivation of the customers. Due to its nature, funnel analysis is more important in sales, marketing and customer retention.

Let us consider a scenario where the major drop in funnel analysis occurs from visiting the website to adding products to cart.

We'll assume that 500 people visited the website, out of which 250 made it to the act of adding to cart which could be the biggest drop in overall activity.

Here, the analysis clearly shows where the company needs to make improvements in order to make customers move forward to making an actual purchase.

The business could offer more discounts and coupons in order to attract customers so that they purchase the products.

There with it can be clearly seen how well the analysis could be used in terms of making developments in the business activity based on user flow in the website.

Funnel analysis - Scenario

Let us take an example to understand this analysis better.

Alpha Ltd. is an online shopping site for clothing and accessories.

It is highly dependent on customers’ activity on their website since it is an e-commerce based business.

To know their performance, it is vital to understand the customer’s behavior on their website.

Customer behavior and interactions show their take or response to their operations.

Henceforth, funnel analysis comes into play in depicting the user flow which would ultimately show the areas of concentration or improvements that the company needs to focus on.

Alpha Ltd. has the following user flow with respect to the steps that customers undertake on their website:-

User flow / Steps

  • No. Of customers visiting the website - 2000
  • No. Of customers wishlisting products - 1700
  • No. Of customers adding to cart/bag - 1000
  • No. Of customers checkout - 700
  • No. Of customers complete purchase - 500
Conversion Funnel Analysis

Here, the company's goal is to make the customers purchase which could be referred to as macro conversion.

These steps required in reaching the goal such as visiting a website to complete a purchase are called as micro conversions.

Funnel analysis helps in identifying the conversion where a major drop occurs.

The biggest drop in conversion is a cause of concern and that is the focal area that the business needs to work on.

Alpha Ltd’s biggest drop occurred from wishlisting products to adding to cart.

This could mean that the customers like the products from the website which has motivated them to wishlist it, but the other factors such as pricing or delivery could have stopped them from adding it to cart.

This cause of concern could be solved by focusing on pricing and offers which could attract customers.

Marketing strategies such as discounts, coupons, free delivery could be used to attract customers.

Henceforth, this would enable them to make a complete purchase from the website.

Perks of using funnel analysis

Funnel analysis can be a worthy tool in showing the company its priorities. Let us look at some of the important benefits of using a funnel analysis:-

1. Determines conversion rate

This analysis clearly shows the page or step at which the customers are leaving the website.

This could be referred to as drop off rate or conversion rate.

It is called a conversion rate because it shows the customers who have left the conversion process without completing it.

This rate proves to be vital in determining the focal point of the company where it needs to improve.

2. Determines achievements

Additionally, this analysis ascertains and recognizes the point or page where the company is meeting its efficiency.

For example, out of 100 people visiting the website, 800 people are registering on the page, hence this reveals that the company has attracted many users to register on their website.

This portrays the company's achievements.

3. Outline the scope of improvements

Based on the results of analysis, the company can infer insights on areas that it deviates from standard performance.

This allows the company to take corrective actions to reach their goal.

For example, if the company faces highest drop off rate from visiting website to wish listing products, then the company needs to improve the product in terms of quality and price.

This indicates the need for product development and innovation.

4. Helps in determining strategies

The corrective actions to be taken by the company requires a deep thorough process on how to achieve the goal.

Attracting customers through various marketing strategies affirms customer satisfaction and loyalty.

Businesses need to cope up with the latest trends alongside their regular operations to promote their brand integrity.

These collective actions to attain the long term objectives of the firm measure to formulation of strategies which are facilitated by funnel analysis.

Here's how you can use funnel analysis

The data collected for the analysis could be interpreted in many ways. It can even be used in combination with UX tools. Let us look at the different ways in which funnel analysis can be applied:-

1. Conversion

We discussed the macro and micro conversions wherein the former refers to the company's goal and the latter refers to the steps involved in reaching the goal.

Here, using funnel analysis, the company can identify the number of users engaged in each step specified or identified by the company.

For instance, it specifies the number of users on various pages of the website, henceforth, signifying the areas of improvement.

2. Time

Funnel analysis helps in determining the amount of time that the user spends on each page and the time taken to move forward to the next step or page in the website.

This time factor signals the conversion time, thereby giving specified details on customer activity.

Time could be a significant factor in detailing out the viewpoint of the customers.

It reviews their interest in parts of the website, hence showing the operation sequence.

3. Frequency

Frequency could be measured for various factors such as time spent on various pages, frequency of visiting the website, frequency of repetitive actions, etc.

This helps in determining how often or how many times a user is performing the same action which will ultimately denote the user's interest.

This helps in encouraging conversion by taking appropriate measures.

4. Heat maps

It is a color coded graphical technique in data analytics.

It is a visualization tool that shows the volume of events that matter most.

Such a UX tool comes handy to determine the exact user action that proves to be problematic or stands as a hurdle in achieving the target.

For instance, heat maps could be placed on high exit pages to determine the user action that helps spot issues.

Heat maps detect mouse clicks, scrolls, etc allowing the company to find the elements that were ignored.

In this way, funnel analysis could be integrated with UX tools to better understand the problem.

Tools for funnel analysis

#1 ReplayBird

ReplayBird is a digital user behavior analysis tool that provides easy to understand metrics and insights.

You can improve your software's user experience with both qualitative and quantitative data on user interactions.

As a user behavior analytics ReplayBird also provides funnel analysis that visualizes the step by step conversion of your sales funnel.

#2 Google Analytics

It is a software tool offered by Google which collects data and information from websites and applications for interpreting the same.

It processes the data to give insights on business performance.

Funnel analysis can be performed using the much efficient program of Google Analytics to spot the areas of development in a website and business.

#3 Heap

It is a platform that gives insights on customer journeys for a business.

This digital platform generates reports based on the customer activity in a business thereby processing the data to derive at an understanding of the performance.

#4 Mixpanel

It is a digital platform that analyses user interactions for products on the internet.

It is a helpful tool for e-commerce based businesses to track their user activity using funnel analysis.

#5 Adobe Analytics

Adobe - Data & Insights software provides features for funnel analysis. It a helpful software tool to perform funnel analysis.

This tool has features to ascertain conversions which is a major factor in funnel analysis.

While the tool is a combo kit for performing analysis, it also acts as a greater contributor to marketing campaigns and other such activities.


Customers are important stakeholders of a business who act as a strong force in determining the business operations.

They impact sales, revenue and brand integrity through their behavior, responses and actions.

That is why, acquiring customers and retaining them is critical to any company.

Furthermore, it is to be noted that funnel analysis helps in managing the strategies of a business.

Such tools are a measure of evaluation and control in a business environment.

Overall, funnel analysis is a wonderful tool to track user activity which in turn points out the key areas of development in a business.

ReplayBird - Driving Revenue and Growth through Actionable Product Insights

ReplayBird is a digital experience analytics platform that offers a comprehensive real-time insights which goes beyond the limitations of traditional web analytics with features such as product analytics, session replay, error analysis, funnel, and path analysis.

With Replaybird, you can capture a complete picture of user behavior, understand their pain points, and improve the overall end-user experience. Session replay feature allows you to watch user sessions in real-time, so you can understand their actions, identify issues and quickly take corrective actions. Error analysis feature helps you identify and resolve javascript errors as they occur, minimizing the negative impact on user experience.

	ReplayBird Dashboard
ReplayBird Dashboard

With product analytics feature, you can get deeper insights into how users are interacting with your product and identify opportunities to improve. Drive understanding, action, and trust, leading to improved customer experiences and driving business revenue growth.

Try ReplayBird 14-days free trial

Further Readings

What is Conversion rate optimization & 13 ways to increase CRO
In this article, you will learn what conversion rate optimization is and how CRO helps in analyzing business website pages are converting your visitors into customers.
5 Reasons Why Your Conversion Rates are Low
Conversion rates are the most effective way to understand the performance of your website. Conversion is the key interaction a visitor has with your website and your business.
5 Tips to Increase SaaS Conversion Rate
Conversion is the key element of a SaaS website’s success. All online SaaS businesses need their site visitors to sign up, take up a trial, and buy the service.
Content writer at ReplyBird, I'm excited about understanding SEO from a distinct POV. I write about how brands can use user experience to improve and benefit businesses and SAAS.

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