Your Ultimate Guide to Conversion Funnel Optimization

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Conversion funnel optimization or the process of improving how you turn potential customers into paying ones is an indispensable ecommerce process, but did you know that 68% of businesses have never even identified what their funnel is?

Successful online transactions depend on how your conversion funnel is designed, which should always contain a good dose of strategy, structure, revenue-based goals, funnel analysis and data testing. Ecommerce funnels can take on a very long and complicated form where unfortunately, businesses and customers can get lost along the way.

In this article, we will discuss our version of conversion funnel optimization which contains only five simple and straightforward steps + an in-depth exploration and tactics for each.

Quick overview of a conversion funnel

When thinking about a conversion funnel, the image that usually comes to mind is that of an actual tube or pipe with a wide opening at the top and narrows down as it reaches the bottom.

A common visualization of the conversion funnel is represented by the AIDA diagram below.

AIDA diagram

It is a simple image that captures the four essential steps of the sales process where AIDA stands for:

  • “A” for awareness – potential customers must be aware first of the product you have before you can sell it to them
  • “I” for interest – as you build interest around your product, unfortunately, not everyone who is aware of it will be interested to purchase it
  • “D” for desire – people who are intent on purchasing your product will desire to have it
  • “A” for action – the actual act of buying the product

Although common, the AIDA concept is not the only visual representation of an ecommerce funnel. It can be more elaborate with more added steps similar to the diagram below.

Conversion Funnel Optimization diagram

A funnel can also be taken not as a noun, but as a verb, which is to guide or direct something through a funnel. And when you guide your potential customers through your funnel, you will notice that not everyone who enters reaches the funnel’s end. It is because the funnel has holes at every step.

Take a look at the diagram below for visualization.

Conversion Funnel Optimization with exit stages

What happens to your potential customers who exit your funnel at different stages? You can guide them into a different funnel or you can simply draw them back or retarget them in the very same funnel they entered in.

Now that you know the basics of an ecommerce funnel and understand how it works, we can now take a look at a funnel built with just five simple and straightforward steps that you can use and apply for your own business.

Create awareness and attention

At the core of this first step is making the product you are selling a perfect fit to the audience or market you are attracting.

You are in business for a simple reason – to solve the problems people have in their lives and to move them to a more satisfied “after” state. But before you can even do that, you need to create the right awareness about your business and attention to the solutions (or the products) that you are offering.

So, how do you create awareness and attention?

You can do it through great content that will nurture and resonate with them. What does your product solve? How can it make their lives better? What’s in it for them if they buy your product?

While some may resort to traditional media like TV commercials, newspapers and radio ads, there are tons of cost-effective digital marketing alternatives that will help you get the word out there faster.

Publish your content on your ecommerce blog, newsletters, emails and official social media accounts and create awareness through paid, owned or earned advertising. Create ads on search and on popular platforms like Facebook and Instagram to encourage traffic to your pages.

Today’s SEO is actually content marketing so make sure to infuse your content with the right keywords and at the right density. Use tools that will help you generate relevant keywords you need to invest on as well as the terms your customers are likely to use when looking up products you happen to sell.

By creating the SEO strategy that you know will work for you, it can effectively drive qualified leads into your sales funnel and turning them into buyers as can be seen in the illustration below.

ecommerce funnel starting with SEO

Remember though that when visualizing your ecommerce funnel, always start with your content then follow it up with SEO or social media. Content, after all, is what binds these powerful media together. And as algorithms are becoming smarter, it is important your content speaks to real people and not to search bots.

Let your potential customers consider you

Even when you have created awareness and attention, only a small portion of your target market will actually respond and be interested to what you are offering. After all, consumers process a lot of things first before they start converting. It can take them overnight or even a couple of months to decide whether they should buy your product or not.

They consider if the price of the product offered to them meets their budget, if it is of good quality and if it will last them a long time. Some even only consider a product good if their family and friends are using it, which stresses the importance of social proof.

Consumers also consider how the brand appeals to them overall – does it have a good reputation? Is it socially responsible? Favorable impressions and not-so good ones get into consumers’ long consideration process.

And then there’s also relative performance where consumers compare your products with other brands. How do you measure up against your competitors?

Although consideration is a long and arduous process, this step in the ecommerce funnel can be remedied by making two kinds of offers.

One kind of offer is something that’s highly-specific, appeals to your target customers’ emotions and is hard to resist that people will give you their contact information in exchange of it. This is called a lead magnet where you make a great offer in order to get qualified leads. Lead magnets are offers placed in a landing page designed and optimized to convert.

Another kind of offer you can make is a low-ticket offer that transforms a person’s relationship with you from a hot lead to an actual customer. Try to acquire as many buyers as you can with this kind of offer. Trying to sell to someone for the first time is hard, but if you give them a reason to do so, it will be easier to sell to them the second, third and fourth time around.

Show your main offer

Now that you have attracted people in your target market and have transacted with them through your offers, nurture the purchasing stage they are in by introducing your main product.

At this stage in the ecommerce funnel, you need to heighten the interest and appeal of your product to your buyers. Similarly, being at this stage also means getting rid of the factors that may be preventing you from creating a sale.

These interferences or frictions can take on many forms.

It can be a lack of energy (e.g. I’m tired to get my credit card from my wallet so I’ll put off buying this), forgetfulness (e.g. I don’t remember seeing this product before!), checkout problems (e.g. I don’t understand the checkout process, it’s too complicated) and money (e.g. I can’t buy this if the only mode of payment is a debit card or COD).

The best way to survive these interferences or frictions is to remove them and provide a solution to make their lives and decision making processes smoother.

If it is the lack of energy to complete the payment process, integrate PayPal as part of your modes of payment. There is no need for them to reach for their wallet to enter their credit card number. And even if your potential customers memorize their credit card numbers, there is less effort for them to complete a purchase.

If the problem is forgetfulness, incorporate as much details as you can from your prior offers to your product pages. Or better yet, lift exact copies from your product pages to the offers you are giving out. The disconnect will definitely be fixed if you are consistent with your communications.

If it is the checkout process that’s keeping you from making conversions, optimize it. It’s truly a big loss to see all your prospective customers leave you and more so if they drop out from what could be one of the finalizing steps to a conversion.

Diversify your payment options too if the lack of it is what’s keeping you from making a sale. Especially for your higher-priced products, credit cards with optional installment plans should help you even more convert your traffic into paying ones.

Once they are on the right path to converting, consider offering a profit maximizer too, like upselling or cross-selling products or a subscription to your loyalty program. Be creative with your profit maximizers as this can significantly increase your average order values and lifetime value.

And even when your potential customer sees past your core offer, you can retarget them through Facebook remarketing ads, PPC or email marketing to keep them back in the fold. Sometimes, people forget what their intentions are for buying or considering your product and a good ounce of reminders from you is all that’s needed.

Make sure to creatively map out your return path with frequent yet strategic communication, influencing people that have shown interest in your products to visit your website again and consider (finally) to buy that product from you.

Once that desirable offer is coupled with less friction, you are now poised to convert.

Encourage customers to return and refer

The relationship between a store and its customers does not end once a sale is made. In fact, it is just the beginning of what is hoped to be a loyal and long-term partnership.

Sell again! Keep those lines of communication open – email, social media, newsletters and even SMS – so you can sell your customers more products. These products can be related to the one they already purchased or a totally different one lifted from your new selections.

Never underestimate the power of referrals or word of mouth too as nothing is more encouraging than customers helping you sell your products to other people.

However, just because your customers are happy and satisfied does not necessarily mean they will automatically refer it to people they know. Sometimes, they need a little push to write about your product or a little token of appreciation in exchange of their good word about how you operate.

Check out our article on effective ways to get more product reviews from your customers as product reviews can help measure customer satisfaction. You can also come up with activities like contests on social media aimed at getting your customers submit user generated content. UGCs are not only cost-effective in terms of marketing, but a real testament of how social proof works.

The aim of the return and refer stage at this point in the ecommerce funnel is to turn your customers into evangelists, recommending your brand and what you are offering to others.

Keep on testing your funnel

When it comes to conversion funnel optimization, testing should always be a part of your process. As the ecommerce funnel is not just a funnel but a cycle, it is important for you to know how your potential customers are flowing through your process, at what point do they force themselves out and what keeps them in.

Of course, any form of testing begins by taking a good look at your data because only then will you be able to come up with strategies that will help reduce, if not prevent, prospects falling out of your funnel and moving them back in.

With your Google Analytics data in place, collect and analyze traditional data, like page views, average time on pages, bounce rates, exits and other metrics that will measure the effectiveness of your campaigns.

Aside from these traditional data, collect and analyze also your customers’ engagement. What are some metrics and data sources that can measure engagement? These can be scroll depth, review and rating systems, pagination, video watch length, read time, average time per reader and on-page behavior analytics.

If you are using social media marketing, you can refer to insights from your Facebook, Twitter, Instagram and Pinterest analytics. Ecommerce heatmaps are great sources too of data to see how your leads are interacting with your website from the homepage to the checkout page.

Once you have these different forms of data in your hands, you can now get to the heart of conversion funnel optimization – testing.

Make sure that when performing split tests, you are measuring interaction with the campaigns and the website design you created and its impact on your conversions.

You can start your funnel analysis and testing by putting your homepage to a split test. Here are some elements of your homepage that you can test to help improve your conversion rates:

  • headline copy and font
  • CTA copy and color
  • slides and images
  • videos
  • navigation and category menus
  • search bar

Aside from your homepage, A/B test your checkout page too. Here are some of the elements you can test:

  • a guest checkout option vs. just a login checkout
  • coupon code field
  • trust and security seals
  • CTA colors and return policy info
  • Form length and number of fields

The checkout page is a critical step into the whole buying process and you should do a variety of tests regularly on its different pages – the shopping bag, sign in, shipping and delivery pages – to ensure that it is always working towards your conversions.

For your marketing messages via email, consider doing a split test for that too and measure if click-through rates are increasing with every change you do. Try testing these email features out:

  • plain text or HTML email
  • dynamic content
  • personalize subjects and email headlines
  • CTA copy and colors

And if you are actively marketing on social media, make it a part of your funnel analysis also by split testing on the following:

  • times and days in a week to post – which ones generate the highest engagement?
  • use of polls – will these be effective in generating retweets and social commentaries?
  • images that will improve sharing and engagement rates
  • social buttons – are these effective in blog sharing?

Use split testing tools like Optimizely, MixPanel and Leanplum to guide you in this stage of conversion funnel optimization.

Remember: Testing is a continuous process of conversion funnel optimization. After one successful change on your site, go and conduct another test. It is by doing these minute changes that you can make your ecommerce site more converting than ever before.

Conclusion

Conversion funnel optimization is not an overnight process. Even its structure and form takes time to build and perfect. Depending on how you construct your funnel steps and how clear it is for your potential customers to understand what they need to do, you need to regularly refine your ecommerce funnel for better conversions.

To recap, our conversion funnel only consists of five simple, straightforward steps:

  1. Create awareness and attention
  2. Give your potential customers good reasons to consider you
  3. Show them your core offer and retarget them if they fail to respond the first time
  4. Keep them coming back and refer other people as well
  5. Analyze and test your funnel

So, now’s your turn. Are you using conversion funnel optimization to analyze and improve your ecommerce efforts? What are your unique steps? Let us know in the comments below!

About the Author

John Komarek is the founder of Pixelter. He helped over 63 e-commerce businesses boost their mobile sales by up to 183.5%. He uses advanced UX research, A/B testing, and AI-driven personalization to deliver the results. Learn more about how he can help you grow your sales.

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