What is a Funnel?

Think about your online business. You obviously want your prospects to visit your website, learn about what you do, check out the pricing details, and then convert - complete a purchase, fill out a form, or even sign up for your newsletters. This is where the funnel comes in. It is an analytical method that shows you meaningful data regarding how visitors move through your website. It defines the various stages that they might go through before converting or leaving. This top-down approach is wide at the top and narrow at the bottom, giving the concept the functionality of an actual funnel.

By dissecting every stage of the funnel and understanding the motivations that drive customers from one stage to another, you can create the right strategies, improve the user experience and influence the outcomes at every step.


History of Funnels: The concept of Marketing Funnels had existed long before computers even came into existence. The theory was first put forward in the year 1898 by an American Advertising Advocate, Elias St. Elmo Lewis, who was a marketing guru of the time. The funnel model eventually went on to be associated with the concept of AIDA - Awareness, Interest, Decision, and Action - in the year 1924 by William W. Townsend in his book Bond Salesmanship.

While the funnel's core concept has remained the same in the past 100+ years, a few variations have been developed to incorporate the needs of the modern-day digital selling landscape. It is also referred to as the Purchase funnel or Buying funnel today. It considers a few more stages, such as the Repurchase Intent and changes in consumer behavior patterns due to overhauling technologies.

Types of Funnels

While the terms ‘Marketing Funnel’ and ‘Sales Funnel’ are often used interchangeably, there is a stark contrast between them. Let's take a deep dive to understand how they are different and how they connect.

Marketing Funnel

The Marketing Funnel deals in creating as much interest in the company’s product/service as it is humanly possible. If you have distinct marketing and sales departments, the bottom of your marketing funnel is usually the top of your sales funnel. The involved steps in marketing often are:

Sales Funnel

Now that your prospect has the intention or interest to buy your product, marketers move the details of this prospect to the sales teams. The sales funnel then goes begins:

How to set up your funnel

The key to creating an exceptional funnel is building it backward. Ask yourself - what do you want your website visitors to do? Do you want them to sign up, order your products, or avail of your services? Once you know what the end goal looks like, map the process back to your pages receiving the highest traffic. In case you have multiple goals or starting points, the ideal scenario is to have a dedicated funnel for each of them. For instance, the funnels of the homepage and landing page can (and should) be different and tracked separately. 

Building a website conversion funnel is not an easy task. It takes a lot of deliberation to get it right. You need to carefully scrutinize the path your visitors are taking and the type of content that is working to shape the customer journey. Here is how you can define and optimize every step of your funnel to come up with a funnel that converts the most number of visitors:

Map the ideal buying process

To start creating a funnel for your online business, you need to put yourself in your prospect’s shoes and understand how they move through your website. This information can then be leveraged to map an ideal path.

While this works, your visitors are also likely to follow other paths through the site. The best bet is to build multiple funnels and track all of them for maximum conversions. This will also help you understand how to visualize your funnel for the most optimum conversion scenario.

Define conversion goals

Define conversion goals for each step of the funnel and set up a way to track them. You can easily do this by setting up funnels with Freshmarketer and using the resulting analytical data to measure its performance. Conversion goals typically fall under the following categories: 

  • Destination - the webpage the user is visiting
  • Duration - the amount of time spent on each page
  • Pages/session - the number of pages visited by the user in one session
  • Event - the final action that the user takes to complete the goal
Leverage the right content

Regardless of whether it is a part of your funnel, every page of your website should be rich in terms of content. That's because content plays a significant role in pushing leads from one funnel step to another. It also helps you unearth new pages that you can include in your funnel for better conversion.

Content is an opportunity for you to showcase your brand in the right light, address your prospects' needs, and distinguish your company from your competitors. Content curation ideas for each funnel stage can look like these:

  • Top of the Funnel (TOFU) - blog posts, emails, newsletters, checklists, ebooks, webinars, podcasts, infographics, guides, or tutorials.
  • Middle of the Funnel (MOFU) - testimonials, expert ebooks, case studies, demos, product or service-based whitepapers, FAQ pages, etc.  
  • Bottom of the Funnel (BOFU) - free consultation, support articles, how-to's, pricing page, live demos, and more.
Identify the leaks

Whatever funnel stages you define or website pages you include, there are bound to be some holes at each level. Users who are not interested in converting lose out in each funnel stage, and the ones who qualify make it to the next level. You need to identify the elements of web pages that are causing visitors to drop-off. For instance, a long and complicated checkout process on an ecommerce page can lead to a high cart abandonment rate.

Optimizing every funnel stage for better conversions is how you devise the perfect funnel for your service/product and convert more visitors into paying customers. Heatmaps are a great way to identify funnel leaks. They are a visual representation of data where colors denoted values. Warm colors (red and orange) translate to high values, and cool colors (blue and green) demonstrate low values.

Bring in qualified leads

One of the best ways to devise a funnel that actually works is by bringing in qualified leads in the first place and regularly analyze the conversion funnel metrics. The larger the net you are using in the awareness stage, the more likely you will end up with non-qualified leads. Sooner or later, this is bound to interfere with your website conversion funnel's creation and optimization.

Once you have a working funnel set up, the last step is to overview the channels that are a major source of traffic and determine which of them are in sync with your buyer’s persona.

How to analyze your funnel

Making educated guesses about the funnel without adequate data to support it can be a recipe for disaster. Here is how you can set up a reliable funnel analysis process and begin driving actionable and dependable insights about website optimization. Funnel analysis provides you with a clearer sense of where your website visitors are dropping off and helps you unearth newer opportunities for growth and optimization.

Monitor crucial KPIs for your business

Every stage of a funnel can involve numerous metrics working in the background. You need to define which metrics are crucial for the success of your business. Some of the common KPIs that you can keep an eye on are:

  • The total number of conversions of the whole funnel during a specific reporting period (for website conversion funnels).
  • The number of daily sign-ups and active users (for platform conversion funnels).
  • Customer churn and revenue churn rates (for SaaS conversion funnels).
Leverage heatmaps to understand user behavior

Funnel visualization tools with integrated heatmaps are a great way to further understand user behavior (especially in real-time) and derive insights about every working element of the web page. Heatmaps are defined as the graphical representation of data in which the individual matrix represents stored values as colors.

Heatmaps show you where most activity occurs on your website. You can then take these areas into account while optimizing the web pages.

Visualize your funnel

Once you have the conversion details about every funnel step, the best way to dive deeper into the analytical framework is to visualize the funnel. This will provide you with a bird’s eye view of the funnel, and you can accordingly analyze it to take scalable decisions regarding optimization.

Funnel reordering

Visitors might not always navigate linearly through your website. Reordering is an excellent way to analyze funnels for their flexibility and explore every possibility that can improve users' conversion journey.

By rearranging the funnel steps, you can get powerful insights about who traveled through the other pages in the funnel, along with the percentage drop-offs for each page. Once you have set up the funnel steps, wait for the data to populate to understand if you need to reconsider your funnel's steps.

Freshmarketer provides you with dedicated reports about the functioning of every funnel step, including the capability of rearranging steps without pausing the tracking function.

Best Practices for Funnel Analysis

Think of your website’s conversion funnel analysis as the process of making a delightful sandwich. You need to define specific fundamental steps and time the ingredients perfectly to savor the taste. The same stands for funnels. Let’s take a look at the best practices that will help you devise and analyze a funnel in a way that aids your digital business with the maximum possible capacity:

Capture the Movement

It goes without saying that website conversion funnels are always in motion. It would be best if you analyzed them to understand the direction in which it is headed to make accurate forecasts for the future. You can do this in two ways:

Simultaneously, capturing the conversion rates for every step of the funnel is important to understand how it can be optimized for the ideal conversion scenario. You can do this by:

Measure Funnel Velocity

Funnel velocity is the rate of change of a prospect into a lead or a customer (depending on the goal of the funnel). Measuring this metric gives you an account of how fast prospects are moving through the funnel and how productive your funnel actually is. In addition to a bird’s eye view, you should also look at each stage of the funnel's velocity to pinpoint bottlenecks and spot opportunities.

Evaluate Sub Funnels

Marketing and sales funnels can also consist of certain sub-funnels, which can be defined by slicing the data based on key variables such as volume, conversion rates, velocity, and more. This will help you to identify the changes that can lead to more effective revenue growth.

Some examples of sub funnels include:

Determine Funnel Momentum

Once you have the idea of funnel velocity, movement, conversion rates, and the involved sub-funnels, you will be able to connect the dots and have a better idea of the future. Correctly forecasting the funnel's future results by analyzing the impact of every possible change made to it should be your next step.

Execute Cross-Funnel Comparisons

Your website can (and should) have multiple versions of the conversion funnel based on the various paths users are taking through the website before converting. To completely understand the areas which can be optimized, you should undertake an active cross-funnel comparison analysis. This will help you understand the business variables that you should focus on and the impact they would have on the overall revenues.