Skip to content
What is a Conversion Funnel?

Conversion Funnel

Start selling online now with Shopify

Start your free trial

What is a Conversion Funnel?

A Conversion Funnel is an ecommerce term that describes the different stages in a buyer’s journey leading up to a purchase. The funnel metaphor illustrates the gradual decline of the number of potential customers as they are guided through the conversion path.

The Conversion Funnel is often divided into “upper funnel”, “middle funnel”, and “lower funnel”, which helps to determine the right marketing tactics to increase conversions. It is also normal to hear terms like “top of the funnel”, and “bottom of the funnel”, which mean the same at “upper funnel” and “lower funnel”. All these terms reference the level of education that a potential customer has of a product and the closer they are to purchasing it.

  • “Top of the Funnel” or “Upper Funnel”
    A user is just starting to do research about a product and is unsure about technical requirements or exact needs with the product. They might spend time research different brands right now and try to understand which brand would suit their needs.
  • “Middle of the Funnel” or “Middle Funnel”
    Users are clued into the most popular brands and may have signed up for some email campaigns to receive information about products from these brands. They have built up expectations about what they want now and will disregard brands that they see as not able to provide good value and quality for them.
  • “Bottom of the Funnel” or “Lower Funnel”
    Users have now decided on their favorite brands now and start to look for reviews and information from customers to really inform them on what they will get when they purchase from them. Remarketing and long-tail keyword optimization will help you to stay in the mind of your users at this stage of the conversion process.

The Levels of a Conversion Funnel

Although the model of your Conversion Funnel will largely depend on the type of business you’re running, it is typically broken down into 4 levels: “awareness”, “interest”, “desire”, and “action”. The purpose of building a conversion funnel is to have more people traveling through each stage and ultimately completing the last step or taking the desired action. Even though every stage in the funnel has its own purpose, such as to attract new visitors or to build their interest in your products, the one overarching goal is to drive them to the final conversion stage.

How to Optimize your Conversion Funnel

  • Awareness. The first step in your conversion funnel will be to pull visitors in. As the name suggests, you can do this by raising awareness of your business and products. Determining the sources that are currently driving most of your quality traffic will help you make better-informed decisions about what tactics are most effective. Most ecommerce businesses rely on attracting targeted traffic through advertising, social media and content marketing campaigns, and organic search.
  • Interest. Once you start driving traffic to your website, the next serious task is to build visitors’ interest in your products and services. Engaging content, irresistible offers, and visually striking design will prove to be very handy at this stage. At this point, it is also important to put some measures in to see whether your baiting tactics are working. Something as simple as asking prospects to sign up to your newsletter in exchange for a discount or free shipping will help you gauge their interest in your brand.

  • Desire. The next natural step is to build trust and desire and help your prospects learn more about your brand and products. Visitors that reach this funnel stage are considered highly qualified leads and need to be nurtured to move down the funnel. Email workflow campaigns that are designed to deliver targeted, personalized content are a reliable technique to keep prospects engaged and coming back to your website.

  • Action. The final and most important is the action stage. Up until this point, your leads have been traveling through the funnel and taking smaller actions, such as signing up for your newsletter or downloading an eBook, which are often referred to as micro conversions. Yet your ultimate goal is to persuade your leads to convert and make a purchase. If a lot of visitors churn at this stage, it indicates that your lead nurturing tactics are in poor shape.

When you map out your conversion funnel, you will see that only a small percentage of the visitors that land on your website actually reaches the final level. That’s why even the smallest improvements at each level can have a significant impact on your bottom line. To optimize your conversion funnel you have to understand your customers’ behavior and identify the causes of the funnel “leaks” at each stage.   

How to Optimize Your Conversion Funnel

The easiest way to start thinking about your sales funnel optimization is by breaking it down into the major portions – upper, middle, and lower. The function of the upper funnel is to attract new visitors. The middle funnel is responsible for turning new visitors into qualified leads and the lower funnel is where the macro conversions, or purchases, happen. Each part of the conversion funnel should be approached differently, therefore, different marketing techniques are employed.

  • Upper funnel optimization. The traffic you’re sending to your online store will largely determine the effectiveness of your conversion path. If you’re generating junk traffic and bringing visitors that have no interest in your products, the robustness of the sales funnel won’t matter in the slightest, as people will drop off immediately. Focusing on driving quality traffic is the first step to optimizing the upper funnel and there are various methods you can test:
    1. Optimizing your keywords for paid search and display ads
    2. Recalibrating the targeting of your social media ads (Facebook, Instagram, LinkedIn Ads)
    3. Creating unique, keyword-optimized content (blog posts, eBooks, guides, infographics, videos, etc.)
    4. Capitalizing on the power of social media

  • Middle funnel optimization. So you managed to pique people’s attention and they landed on your site, now what? That’s where the real work begins. The middle funnel is all about building trust with your prospects and demonstrating the benefits of your products. Depending on how long your conversion path is, you might need a number of different interactions with your customers to earn their loyalty and move them down to the next step of the funnel. An array of different tools and techniques are at your service here: testimonials, product reviews, case studies, community forum, price comparisons, various merchandising techniques, automated marketing campaigns, engaging content, and so on. Understanding your customer’s state of mind and expectations will play a major part in how successful your tactics are, so running continuous A/B tests and collecting feedback as well as tracking key metrics is a must.

  • Lower funnel optimization. As your leads trickle down into the last stage, you need to start pulling them into new conversion funnels. You’ve done all this hard work guiding them from the awareness stage to the final purchase, letting them go now would be a great loss. eCommerce businesses that can turn one-time buyers into repeat customers are on the right track to success. The more customer data you have, the more personalized and targeted experiences you can craft to keep them interested and wanting more. Once a lead has converted, pull it back into the nurturing phase and continue building rapport through targeted offers and email campaigns.

Optimizing Your Conversion Funnel Against Cart Abandonment

There are many reasons why a potential customer will abandon their cart. They could be just browsing, price comparing, or have forgotten to complete their purchase. Abandoned carts do not mean missed sales so you can still communicate with them, using email marketing, retargeting ads, or even push notifications. Campaigns you could run to decrease cart abandonment include:

  • Abandon Cart Emails; to remind the user that they have things in their cart,
  • Remarketing Campaign; highlighting the importance of one of the products in the user’s cart,
  • Push Notification; mentioning a price drop on a product in a user’s cart.

Start selling online now with Shopify

Start your free trial

Want to Learn More?

Is there anything else you’d like to know more about and wish was included in this article? Let us know!