Funnel Analysis: Increasing Your Paid Ads Conversion Rate With User Drop Off

The primary purpose of marketing is to increase conversions by getting more customers to buy (and buy more). But customers don’t come to your site and instantly make a purchase. They go through several stages, from the moment they land on your website to the point they purchase. This process is called the conversion funnel, and analyzing it will help you understand what compels or deters consumers from progressing to the next stage.

Understanding how customers progress through your marketing funnel can help you identify problems such as friction points in the customer experience responsible for user drop-off, technical issues with your site, and the opportunities that exist for conversion rate optimization. Even a slight increase in the conversion rate between stages could mean a lower cost per click (CPA) and higher return on ad spend (ROAS) – and eventually more sales and revenues.

This post will guide you in performing a funnel analysis to find and fix issues in your conversion funnel. We’ll train you on what to look for in your analytics dashboard and how to use this information.

How to analyze your funnel: funnel analysis method explained

Funnel analysis is the practice of mapping the flow of site visitors to a set of specific funnel stages that result in a conversion or signup. Businesses depend on funnel analysis to trace the user journey through their site, optimize it, and see how many will get to the conversion stage.

The “conversion funnel” gets its name because it narrows towards the end, just like the physical funnel. There are more visitors at the top than at the bottom, giving the shape of a funnel.

Funnel analysis chart

Figure 1: Funnel analysis. Source: Hotjar

Funnels are widely used in marketing functions because they help marketers identify the issues that cause users to leave before reaching the conversion point.

For example, many people could visit the homepage of an e-commerce site, but only a few get to see the thank you page after making a purchase. The typical conversion funnel for an e-commerce store looks something like this:

Homepage > category page > product page > cart > checkout > thankyou page

Funnel analysis tracks user interaction throughout the funnel and informs you how many visitors make it through each stage. It also highlights problems and areas of improvement in the customer journey to increase your conversion rate and revenues.

Google Analytics is one of the best tools you can use for funnel analytics. It allows you to set up “Goal Funnels” to track the steps leads go through to convert. The conversion action, in this case, could be completing a purchase on your online store, signing up for your newsletter, lead form submission, etc.

Follow the steps below to build funnel analysis on Google Analytics effectively.

Step 1: Define the channels you wish to improve

Before you do anything, you need to define the channels you wish to improve. Online marketing requires you to identify the best channels to connect with your target audience. Funnel analysis will show you how these channels are faring when delivering targeted traffic to your site or online store.

Some channels you could be considering include organic search, Google referral, Google Ads, direct or paid FB. You may not be sure which of these channels is the best for your business, but funnel analysis will help you identify the channels that help you achieve your conversion goals. As witnessed in your funnel report, the performance of these channels will also give you an idea of what needs to be done to attract high-converting visitors to your website.

Next, you’ll have to set the destination goal for your funnel.

What’s the primary purpose of all the marketing campaigns you’re running? What’s the one thing you want visitors to do after exploring your site? Do you want them to make a purchase, fill out a lead form, or sign up for your newsletter?

Add the desired action as your destination goal and the URL for the specific page. This will help you track how many people make it to the page from all the visitors that come to your site. With this information, you can calculate your paid ads conversion rate and compare it with your industry average.

Google Analytics allows you to select a pre-set goal or create a custom goal.

With this done, you will have to set the steps visitors move through before getting to the destination. Accompany each funnel page URL, so you know how many people completed the step. Since the number of people that get to your destination page will be lower than those who entered your funnel, funnel page analysis helps you see where user drop-off is happening and why.


Step 2: Visualize the data

Once your campaign is up, and your funnel is set, use Google sheets to visualize the data daily or weekly. Create a table and note how many impressions and clicks your ads get. You also want to know how many users view your landing page, progress to your checkout page, and eventually convert. Make sure you capture all these valuable metrics across several days to gauge your campaign’s true performance.

Figure 2: Campaign metrics example.

The above example shows that the conversion rate was low from the 18th to the 21st of June. Not many people are converting. We can see that the number of people landing on the page and coming for checkout is low. As a result, the sales are also low.

After reviewing this data, the account owners noticed that the landing page wasn’t correctly set to drive conversions. They decided that the landing page needed to be more persuasive, and the account got updated with additional copy. Thus from the 22nd of June, the conversion rate started improving.

Step 3: Replicate these across your campaigns

Funnel analysis isn’t just for your website funnel. You should also deploy the same techniques to improve the paid advertising strategies you’re working on.

For example, when you run Facebook Ads to promote your products on social, you need to track your campaign to see how many people you convert. You need to track the impressions the ad receives, the number of people who click your ad to examine your offer in detail, those who progress to your website to learn more about your products, and eventually, those who convert. Try to find out where you’re losing customers in the process and what can be done to progress as many people as possible to your conversion page.

As you do all these, you should consider your industry’s average conversion rate benchmarks. If you notice that your numbers are below the industry average, work with a conversion rate optimization agency to identify the best conversion rate optimization tips to improve your marketing performance.

strategy notes on board

What other areas can funnel analysis help with?

Here are other benefits of using funnel analysis on your website.

Improving user experience and reducing friction for purchases/actions on site

When you analyze your website funnel, the numbers will let you know how the user experience is. A huge drop-off between stages means that people aren’t happy to engage your website past a certain point. For your e-commerce store, the funnel data will inform you about the friction in your site and what you can do to make things better.

Identifying tech problems

Visitors could be leaving your site because some links on your site aren’t working. Funnel analysis will let you know where the dead links exist so that you can take remedial action.

Finding out which channels work best for you

Funnels are also useful in helping you identify the successes you can double down on. The Goal Flow feature on Google Analytics will help you filter your conversion actions by source, thus helping you see where your converting traffic comes from.

Testing different funnels pathways

Visitors may not always navigate your site linearly. Testing different pathways is an excellent way to check the flexibility of your funnel as you explore the best ways to improve your users’ conversion journey.

Decreasing costs

Funnel analysis will let you know the channels that aren’t generating enough converting traffic for your business. You will be guided to abandon these channels and reduce your costs.

Rapid decision making

Funnel reports are a great visual aid that help you with decision-making. There’s nothing like seeing a big ‘red’ drop off to inspire you to take action.

Because attracting and converting users is essential in growing your business, you should ensure you’re as effective as possible. Whether adjusting your onboarding flow, fixing bugs, or running perfectly-timed re-engagement campaigns, funnel analysis is a great activity to help you make informed decisions that improve the user experience while boosting conversion rates.

Work with a growth marketing agency, like the team here at Growth Marketing Genie, for practical funnel analysis that is designed to bring results.


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