Track These 5 Conversion Funnel Metrics To Identify Areas for Growth
You’ve spent many hours building a sophisticated sales funnel.
Now it’s time to analyze the conversion funnel metrics to figure out if it’s working to meet your business goals. There’s only one problem. There are so many metrics you have to keep track of that you’re getting overwhelmed.
So how about we make it easy by focusing on only 5 conversion funnel metrics that directly impact your bottom-line?
Track the data these 5 metrics provide to find out where funnel leaks are and to decide what to focus on to meet your sales goals.
These 5 metrics are:
- Sales conversion
- Desktop vs. mobile conversions
- Sales velocity
- Visits by source
- Cost per acquisition
1. Sales Conversion Metric
Imagine meeting a friend who looks pale and disorientated. Your immediate thought is most likely that there’s something wrong.
That’s what it’s like when you look at the sales conversion metric. You see the numbers and you immediately get an idea of the state of things. It tells you how many of the leads that enter your funnel have turned into paying customers.
Here’s the formula to measure sales conversion:
sales conversion rate = (number of sales / total number of visitors ) * 100
Track the sales conversion metric every month instead of waiting until the end of the year. This way, you can immediately see any dips or rises in sales. Check its trajectory every month and you get an overall idea of your funnel’s health.
Apart from the overall sales conversion metric, also keep track of the conversion rate for each stage of the funnel. This means gathering data on how many of the leads turn into qualified leads and then into paying customers.
Doing this allows you to see where the possible bottlenecks are. This then gives you actionable insights to optimize your sales pipeline.
2. Desktop vs. Mobile Conversion
There’s a good reason why mobile conversion is not at the same level as that of desktop devices. User intent is different. Desktop users are more often in the buying state of mind than are mobile users.
But just because most mobile users aren’t ready to buy doesn’t mean you shouldn’t optimize your site for them. A good percentage of these users will convert if you lessen friction points and give them enough motivation to buy.
So here’s what you do.
Go to Google Analytics and compare the desktop vs. mobile conversion in your funnel. You’ll likely find that visitors on mobile devices do not convert as much as the visitors who visit your site through their desktop devices.
But here’s where this becomes useful to your business. Study the journey that your mobile users take from the top of the funnel to the bottom of the funnel. Where do most of them drop off?
When you have this data, you can then make educated guesses on possible reasons why mobile users are leaving without converting. This will help you identify the direction of your next optimization tests.
This was what we did when we worked on Matthew Woodward’s agency which led to mobile conversion increases as high as 48%.
Are you excited yet? Great. Here’s a video on where to find the data for mobile conversions on Google analytics and what you need to look out for.
3. Sales Velocity
It’s easy to get confused by the word sales velocity. You’d think it’s going to show you the speed at which a lead turns into a sale. Yet sales velocity is expressed in terms of dollars. Not speed.
Let me explain.
Here’s the formula to calculate sales velocity:
Sales velocity = (number of opportunities * Average Deal Size ($)* Conversion Rate) / Sales Cycle Length
And here’s an example of that equation using real numbers.
The sales velocity is $68/day. This doesn’t mean a lot by itself. But when you compare it to your sales goals, it will begin to make sense.
This is how Josh Bean from GetBase explains this:
“According to the equation, your personal sales velocity is $68 per day. That means you have a sales velocity of $2,112 per month. If one of your sales goals is to close $8,000 worth of deals by the end of the quarter, you’re going to fall about $1,600 short at your current sales velocity.”
This means that you’ll need to make your sales velocity move quicker (or go higher if you’re looking at it in dollar numbers), to meet your sales goals.
Here’s how you do that. If you look at the formula again, there are 4 other metrics to identify first to find the velocity rate: number of opportunities, deal size, win rate and sales cycle length.
Mathematics tells us that if you change any one of these metrics on the other side of the equation, the answer also changes. So how do you increase the velocity rate so you’ll reach the quarterly sales goal? Just change at least one of these four metrics.
Andrew Nguyen says in Bizible, sales velocity is a useful metric because it captures trending information around time and money, two basic but fundamental measures of performance. Perhaps you can generate business faster by decreasing the sales cycle. Or maybe generate more business by maintaining a good win-rate and short sales cycle.
As you can see, sales velocity is vital to understanding the health of your conversion funnel right now. And more importantly, what immediate actions to take to reach your business goals.
4. Visits by Source
The quality of a site’s traffic affects its conversion rate. A website can have lots of visitors. But if most of them are not interested in what the site is selling, then you can’t expect them to convert.
This is why knowing your site’s traffic sources and how each traffic performs in your sales pipeline is another conversion funnel metric worth tracking.
Here’s Jesper Åström showing where you can find this on Google Analytics and how you can use this information for website optimization.
Here’s what I suggest you do.
Look at the data for each source of traffic and analyze how each of them converts. Then refine that data further by finding out at which stage of the funnel most of them drop off.
As you do this, you may find that visitors from different traffic sources have different conversion rates. Once you know this, you have some decisions to make such as:
- Should you spend more time optimizing your site for the source of traffic that already converts well?
- Is it worth optimizing your site for the visitors from an underperforming traffic source?
- If visitors from one traffic source drops off in specific pages on your site, why do you think this is? What can you improve so they keep moving down the funnel?
As you go through this analysis, also consider the nature of the people from specific traffic sources. For example, traffic from a search engine tends to convert better when your site has a page that addresses their search query well. On the other hand, social media traffic is more exploratory and may not convert as well as search traffic.
I guess what I’m saying is this: sometimes, it’s them, not you. 😉
5. Cost Per Acquisition
If you want to make sure you’re making more money than what you’re spending on customer acquisition, then keep track of the cost per acquisition (CPA) metric.
Here’s the formula to measure CPA:
CPA = total spend / total number of sales
This is easy to figure out when you know exactly the cost of a campaign like when using Google or Facebook ads.
However, the total spend on marketing channels like social media and SEO is not easy to track. There are ways you can do it, but it’s not 100% accurate. It’s still worth doing it though. The data can help you decide whether or not it’s worth your time investing in these traffic sources.
If you want to learn more about how to do this, here are a few resources that will set you on the right path:
- How to measure social media ROI with Google Analytics
- How to measure content marketing strategy with Google Analytics
Apart from these 5 metrics, there are many other conversion funnel metrics you can track. But these should give you enough data to see how effective your funnel is and what to focus on to improve conversions.
Here are the five metrics again:
Most people think more traffic = more sales.
The real part is to make the most out of the traffic by CRO.