Understanding and Optimizing the eCommerce Conversion Funnel

September 13, 2022 Julio Romero

Reading time about 7min

Understanding and Optimizing the eCommerce Conversion Funnel

Themba on Aug 23, 2022 7:47:49 AM

If you’ve never heard the term eCommerce conversion funnel, or have, but aren’t sure what it is and how it can help your eCommerce business, you’re in the right place.

As an eCommerce store owner, the fact is, you already have an eCommerce conversion funnel in place!

While that’s good, if you optimize it, it can be better, helping you get more customers.

But how do you optimize your conversion funnel and where do you even begin?

That’s where we come in.

In this article, we’ll look at exactly what an eCommerce conversion funnel is, the different stages prospective customers take through it, and what you can do to optimize each stage of your conversion funnel so that you can generate more sales.

Ready? Let’s dive right in!


Table of Contents


What is an eCommerce conversion funnel?

An eCommerce conversion funnel, sometimes also referred to as an eCommerce sales funnel, are the steps a visitor takes on your website from when they load your page until they convert and make a purchase.

In other words, an eCommerce funnel shows how a visitor progresses into a consumer.

Generally, there are fives stages in the eCommerce funnel:

  • Awareness– landing on your website
  • Interest – viewing a product page
  • Desire – adding a product to their cart
  • Action – buying a product
  • Engagement – engaging with the brand and becoming a brand advocate

It’s important to remember the difference between a marketing funnel and a sales funnel. While the former captures the attention of prospects and creates awareness of a brand and its products or services, the goal of the latter is to create a sale.

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What are the stages of the eCommerce conversion funnel?

As mentioned above, generally an eCommerce conversion funnel has five stages.

With this sales funnel you can understand where your visitor is and what you can do to move them to the next step.

1. Awareness

In this first phase, you’re looking to attract visitors that might be interested in buying your products.

Visitors are only getting to know about your brand at this stage and are looking at your products or services to see if they like your brand and what you have to offer.

At this stage, you need to give visitors educational content about your brand that helps them understand why it is better than your competitors.

To do this, make use of inbound and outbound marketing, blogs, webinars, social media, and anything else that can make your visitors more aware of your offerings.

Be sure to target the audience that’s most likely to move on to the next step of the eCommerce conversion funnel to avoid wasting your time, energy, and marketing budget on people with no chance of converting.

How to Optimize this Stage:

  • Use surveys to learn how visitors found your site:
    • Look out for any trends.
    • Are any marketing initiatives paying of at this stage?
    • Use the feedback to learn what is and isn’t working, and focus on your best-performing strategies.
  • Use omnichannel marketing:
    • Engage with people across different channels to understand:
      • Who your audience is, and
      • What channels they use to discover brands.

2. Interest

At this stage, you want to attract visitors to your products or services.

A great way to do this is by capturing their email address so that you can send them your blog posts, newsletters, or guides that tell them what you do and what you have on offer.

How to Optimize this Stage:

  • Ensure intuitive navigation:
    • Is it easy to navigate from page to page?
    • If visitors encounter issues like website bugs, a slow-loading page, or broken elements, they are more likely to drop out of the eCommerce funnel before they convert.
  • Ensure categories reflect search intent:
    • Can visitors easily find what they’re looking for?
    • Can they filter categories to find the right product?
    • Are products miscategorized?
  • Create content that answers questions:
    • Build trust and remove blockers with content that solves a problem for them.
    • Use video reviews, case studies, how-tos, and blog content

3. Desire

Now that you’ve got your visitors interested in your offerings, it’s time to increase their desire for it.

At this stage, visitors are looking at the problem your offering can solve and how it is different and better than what your competitors are offering.

Since you’ve got your visitors’ attention, you should let them know about the benefits of your offerings, rather than its features, to build desire.

Use attention-grabbing strategies such as high-quality product images, enticing product descriptions, honest reviews, and product videos to help encourage visitors to make a purchase.

How to Optimize this Stage:

  • Make the add-to-cart experience seamless
    • Identify elements that inspire visitors to add a product or service to their cart
    • Find out what’s standing in their way
  • Personalize with targeted email messages
    • Personalized emails build intent
    • Keep visitors moving through the funnel
  • Offer personalized discounts
    • Make your prospective customers an offer they can’t refuse
    • Offer time-sensitive discounts or promotions related to items in their cart to create a sense of urgency

4. Action

Now you’ve finally reached the stage where it’s time to earn some moolah!

At this stage, you want your visitors to visit checkout with their chosen products, add their payment information, and make the purchase. This is also the stage where you’ll experience the most dropouts.

To avoid this, focus on your product pages and get rid of any friction elements that could lead to dropouts. This includes examining your checkout page to ensure that you only include the most necessary fields to make the process as simple as possible. Small tweaks like these can have a huge impact on your sales.

How to Optimize this Stage:

  • Create a seamless checkout process
    • Ensure navigation from product page to checkout occurs without any issues
    • Use clear Call-To-Actions (CTAs) to guide them to the checkout page
  • Offer unique discounts
    • This is a great time to offer last-chance discounts and promotions
    • Offers should be more urgent and time-sensitive than at the Desire stage
  • Send abandoned cart recovery messages
    • Remind customers that have added items to their cart but have not completed the checkout process to do so via SMS or email.

5. Engagement

The final stage is your opportunity to turn a one-time customer into a repeat customer and loyal brand advocate.

Retaining customers is a vital part of growing your business, so this step shouldn’t be overlooked.

You can do this by inviting your customers to sign up for newsletters and your social media channels to encourage repeat purchases. You can also send them a coupon or discount code via email or include personalized notes with the ordered products to leave a positive mark in their mind.

How to Optimize this Stage:

  • Encourage customers to follow you on social media
    • This builds trust and authority
    • Built relationships with your visitors and customers through valuable, relevant content
    • Offer free samples or trials to your followers
  • Add customers to your email lists
    • Share content related to the product or service your visitors and customers are interested in
    • Keep them engaged by sending related offers and content
  • Create content that informs and engages
    • Solve customers’ problems and build trust and authority
    • Use video content, testimonials, how-tos, and blog posts

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The Most Important KPIs for Conversion Funnel Optimization

Conversion Rate

Your conversion rate tells you how well your offer is received by visitors.

Determining your conversion rate is easy. All you need to do is divide the number of conversions you received during a specific time frame by the total number of visitors and multiply the result by 100 to get the percentage.

For example, if you have 1000 visitors and 150 conversions, your conversion rate would be 15%. Your analytics and advertising platforms should show you your conversion rate in their dashboards.

Click Conversion Rate

When measuring the standard conversion rate, if a visitor converts more than once, this will count as several conversions. The click conversion rate, on the other hand, measures the number of visitors that convert. Understanding this metric is important if you want to reduce churn.

While the conversion rate and click conversion rates might be similar for many businesses, the difference between them can be useful when you’re getting a lot of repeat conversions and want to know exactly what percentage of your visitors are converting.

To calculate your click conversion rate, divide the number of visitors who converted by your number of visitors and multiply the result by 100.

While the difference might seem small, clicks that don’t turn into sales means you need to take a closer look at online store for optimization opportunities.

Cart Abandonment Rate

Your cart abandonment rate is the percentage of visitors who’ve add items to a cart but don’t complete the purchase.

If you have a high cart abandonment rate, you might have an issue with your purchase process, or might be adding new information, such as additional shipping costs, at the very end of the funnel.

To calculate the cart abandonment rate, divide the number of completed purchases by the number of shopping carts created. Subtract this result from one, and multiply it by 100 for your abandonment rate.

This means that if you have 40 completed purchases and 500 shopping carts created, your cart abandonment rate would be 92%.

Add to Cart Rate

Your add-to-cart rate is the percentage of visitors who place at least one item in their cart during the session. This metric can help you determine how good your product selection, marketing efforts, and site usability is.

Customer Lifetime Value

Your customer lifetime value is the total revenue your business can expect from a single customer. This is determined by comparing the customer’s revenue value to your business’ predicted customer lifespan.

Using this metric you can determine which customers are the most valuable to your business.

To calculate your customer lifetime value, multiply your average order value by the purchase frequency rate to determine customer value. Then, multiply your average customer lifespan by your customer value to determine customer lifetime value.

Average Order Value

Your average order value is the average dollar amount spent each time a customer places an order on your store. There are many strategies you can use to increase your average order value, such as trying to get them to add more expensive items to their carts.

This metric will also help you determine if you’re bringing in the right visitors to your store since you want customers with a high AOV.

To calculate your average order value, divide your total revenue by the number of orders.

Retention Rate

Your retention rate shows you how often customers come back and purchase from you again, meaning it has a huge impact on your customer lifetime value.

You can use various different strategies to try and increase your retention rate, including offering more products, sharing frequent offers and perks, simplifying navigation, or raising your brand’s authority.

To calculate your retention rate, divide the number of users who make multiple purchases by the number of users who make one purchase.

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Wrapping up

Optimizing your eCommerce conversion funnel can be tricky, but by measuring the right metrics it gets a lot easier to identify issues and areas that can generate more sales.

Be sure to look at each stage of your conversion funnel – awareness, interest, desire, action, and engagement – and focus on what you can do to move visitors to the next stage.

Topics: eCommerce