What is Funnel Analysis? A Complete Guide for Quick Results

Erin
January 25, 2024

Your funnel is leaking.

You’re losing visitors.

You’re losing conversions and sales.

But you don’t know how it’s happening, where it’s happening, or what to do about it.

The reason? You aren’t properly analysing your funnels.

If you want to improve conversions and grow your business, you need to understand how to properly assess your sales funnels to set yourself up for success.

In this guide, we’ll show you what funnel analysis is, why it’s important, and what steps you need to take to leverage it to improve conversions.

What is funnel analysis?

Every business uses sales funnels, whether they know it or not.

But most people aren’t analysing them, costing them conversions.

Funnel analysis is a marketing method to analyse the events leading to specific conversion points.

It aims to look at the entire journey of potential customers from the moment they first touch base with your website or business to the moment they click “buy.”

It’s assessing what your audience is doing at every step of the journey.

By assessing what actions are taking place at scale, you can see where you’re falling short in your sales funnel.

You’ll see:

Where prospects are falling off.
Where people are converting well.

By gaining this understanding, you’ll better understand the health of your website’s sales funnels and overall marketing strategy.

With that knowledge, you can optimise your marketing strategy to patch those leaks, improve conversions and grow your business.

Why funnel analysis is important

Funnel analysis is critical because your funnel is your business.

When you analyse your funnel, you’re analysing your business.

You’re looking at what’s working and what’s not so you can grow revenue and profit margins.

Funnel analysis lets you monitor user behaviour to show you the motivation and intention behind their decisions.

Here are five reasons you need to incorporate funnel analysis into your workflow.

1. Gives insights into your funnel problems

The core purpose of funnel analysis is to look at what’s going on on your website.

What are the most effective steps to conversion?

Where do users drop off in the conversion process?

And which pages contribute the most to conversion or drop-offs?

Funnel analysis helps you understand what’s going on with your site visitors. Plus, it helps you see what’s wrong with your funnel.

If you aren’t sure what’s happening with your funnel, you won’t know what to improve to grow your revenue.

2. Improves conversions

When you know what’s going on with your funnel, you’ll know how to improve it.

To improve your conversion funnel, you need to close the leaks. These are areas where website visitors are falling off.

It’s the moment the conversion is lost.

You need to use funnel analysis to give insight into these problem areas. Once you can see where the issue is, you can patch that leak and improve the percentage of visitors who convert.

For example, if your conversion rate on your flagship product page has plateaued and you can’t figure out how to increase conversions, implementing a funnel analysis tactic like heatmaps will show you that visitors are spending time reading your product description. Still, they’re not spending much time near your call to action.

This might tell you that you need to update your description copy or adjust your button (i.e. colour, size, copy). You can increase conversions by making those changes in your funnel analysis insights.

3. Improves the customer experience

Funnel analysis helps you see where visitors spend their time, what elements they interact with and where they fall off.

One of the key benefits of analysing your funnel is you’ll be able to help improve the experience your visitors have on your website.

For example, if you have informational videos on a specific web page to educate your visitors, you might use the Media Analytics feature in your web analytics solution to find out that they’re not spending much time watching them.

This could lead you to believe that the content itself isn’t good or relevant to them.

But, after implementing session recordings within your funnel analysis, you see people clicking a ton near the play button. This might tell you that they’re having trouble clicking the actual button on the video player due to poor UX.

In this scenario, you could update the UX on your web page so the videos are easy to click and watch, no matter what device someone uses.

With more video viewers, you can provide value to your visitors instead of leaving them frustrated trying to watch your videos.

4. Grows revenue

This is what you’re likely after: more revenue.

More often than not, this means you need to focus on improving your conversion rate.

Funnel analysis helps you find those areas where visitors are exiting so you can patch those leaks up and turn more visitors into customers.

Let’s say you have a conversion rate of 1.7%.

You get 50,000 visitors per month.

Your average order is $82.

Even if you increase your conversion rate by 10% (to 1.87%) through funnel analysis, here’s the monthly difference in revenue:

Before: $69,700
After: $76,670

In one year, you’ll make nearly $80,000 in additional revenue from funnel analysis alone.

Different types of funnel analysis

There are a few different types of funnel analysis.

How you define success in your funnel all comes down to one of these four pillars.

Depending on your goals, business and industry, you may want to assess the different funnel analyses at different times.

1. Pageview funnel analysis

Pageview funnel analysis is about understanding how well your website content is performing.

It helps you enhance user experience, making visitors stay longer on your site. By identifying poor performing pages (pages with high exit rates), you can pinpoint areas that need optimisation for better engagement.

2. Conversion funnel analysis

Next up, we’re looking at conversion funnel analysis.

This type of funnel analysis is crucial for marketers aiming to turn website visitors into action-takers. This involves tracking and optimising conversion goals, such as signing up for newsletters, downloading ebooks, submitting forms or signing up for free trials.

The primary goal of conversion funnel analysis is to boost your website’s overall conversion rates.

3. E-commerce funnel analysis

For businesses selling products online, e-commerce funnel analysis is essential.

It involves measuring whether your products are being purchased and finding drop-off points in the purchasing process.

By optimising the e-commerce funnel, you can enhance revenue and improve the overall efficiency of your sales process.

How to conduct funnel analysis

Now that you understand what funnel analysis is, why it’s important, and the different types of analysis, it’s time to show you how to do it yourself.

To get started with funnel analysis, you need to have the right web analytics solution.

Here are the most common funnel analysis tools and methods you can use:

1. Funnel analytics

If you want to choose a single tool to conduct funnel analysis, it’s an all-in-one web analytics tool, like Matomo.

With Matomo’s Funnel Analytics, you can dive into your whole funnel and analyse each step (and each step’s conversion rate).

For instance, if you look at the example above, you can see the proceed rate at each funnel step before the conversion page.

This means you can improve each proceed rate, to drive more traffic to your conversion page in order to increase conversion rates.

In the above snapshot from Matomo, it shows visitors starting on the job board overview page, moving on to view specific job listings. The goal is to convert these visitors into job applicants.

However, a significant issue arises at the job view stage, where 95% of visitors don’t proceed to job application. To increase conversions, we need to first concentrate on improving the job view page.

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2. Heatmaps

Heatmaps is a behaviour analytics tool that lets you see different visitor activities, including:

Mouse movement
How far down visitors scroll
Clicks

You can see which elements were clicked on and which weren’t and how far people scroll down your page.

A heatmap lets you see which parts of a page are getting the most attention and which parts go unnoticed by your users.

For example, if, during your funnel analysis, you see that a lot of visitors are falling off after they land on the checkout page, then you might want to add a heatmap on your checkout page to see where and why people are exiting.

3. Session recordings

Want to see what individual users are doing and how they’re interacting with your site?

Then, you’ll want to check out session recordings.

A session recording is a video playback of a visitor’s time on your website.

It’s the most effective method to observe your visitors’ interactions with your site, eliminating uncertainty when identifying areas for funnel improvement.

Session recordings instill confidence in your optimisation efforts by providing insights into why and where visitors may be dropping off in the funnel.

4. A/B testing

If you want to take the guesswork out of optimising your funnel and increasing your conversions, you need to start A/B testing.

An A/B test is where you create two versions of a web page to determine which one converts better.

For example, if your heatmaps and session recordings show that your users are dropping off near your call to action, it may be time to test a new version.

You may find that by simply testing a different colour button, you may increase conversions by 20% or more.

5. Form analytics

Are you trying to get more leads to fill out forms on your site?

Well, Form Analytics can help you understand how your website visitors interact with your signup forms.

You can view metrics such as starter rate, conversion rate, average hesitation time and average time spent.

This information allows you to optimise your forms effectively, ultimately maximising your success.

Let’s look at the performance of a form using Matomo’s Form Analytics feature below.

In the Matomo example, our starter rate stands at a solid 60.1%, but there’s a significant drop to a submitter rate of 29.3%, resulting in a conversion rate of 16.3%.

Looking closer, people are hesitating for about 16.2 seconds and taking nearly 1 minute 39 seconds on average to complete our form.

This could indicate our form is confusing and requesting too much. Simplifying it could help increase sign-ups.

See first-hand how Concrete CMS tripled their leads using Form Analytics in Matomo.

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Get the web insights you need, without compromising data accuracy.

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Start optimising your funnels with Matomo today

If you want to optimise your business, you must optimise your funnels.

Without information on what’s working and what’s not, you’ll never know if your website changes are making a difference.

Worse yet, you could have underperforming stages in your funnel, but you won’t know unless you start looking.

Funnel analysis changes that.

By analysing your funnels regularly, you’ll be able to see where visitors are leaking out of your funnel. That way, you can get more visitors to convert without generating more traffic.

If you want to improve conversions and grow revenue today, try Matomo’s Funnel Analytics feature.

You’ll be able to see conversion rates, drop-offs, and fine-tuned details on each step of your funnel so you can turn more potential customers into paying customers.

Additionally, Matomo comes equipped with features like heatmaps, session recordings, A/B testing, and form analytics to optimise your funnels with confidence.

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