Ecommerce Funnels: Secret to Massive Profits!
By Sonaksh Singh Rawat on
A well-optimized ecommerce funnel is the key difference between successful ecommerce businesses and those that struggle. Perfecting an ecommerce funnel strategy enables businesses to effectively market unique brands and differentiated products without complication.
The ecommerce industry, having seen an impressive spike of 27% growth in 2020, has maintained a notable annual growth rate of around 16%. Customers are increasingly seeking out brands that align with their style and values, emphasizing the importance of an efficient ecommerce funnel.
Let’s take a look at a few examples, metrics, and ecommerce funnel templates that are pertinent exclusively to ecommerce businesses.
What is an Ecommerce Marketing Funnel?
The structure of an ecommerce marketing funnel varies among companies, influenced by factors like product range, pricing strategies, target demographics, and primary marketing platforms. This ecommerce funnel includes four crucial stages:
- Top of the funnel
- Middle of the funnel
- Bottom of the funnel
- Customer retention
Top of the Funnel (TOFU)
At the initial stage of the ecommerce funnel, the focus is on increasing traffic and brand awareness.
Examples of what’s in this stage:
- Social media marketing is widely recognized in the realm of ecommerce funnel marketing, often characterized by posts that are both engaging and informative.
- Influencer marketing represents a notable strategy, involving collaborations between brands and social media content creators. This help enhance product visibility and attract a broader audience.
- Social media ads leverage the potential of platforms like Instagram among others, aiming to captivate and expand the customer base.
- Search engine ads are crucial for visibility. For instance, brands like Food52 and Made Trade exemplify success by ranking high for specific search queries, such as “bamboo cups” on Google.
- SEO content marketing is illustrated through resources like detailed blog posts, including those highlighting the top wood vanity mirrors of the year by Wayfair.
Middle of the Funnel (MOFU)
Capturing email addresses and nurturing leads is crucial in the middle of the ecommerce funnel. At this stage, customers are typically aware of the brand and recognize they have a need, actively searching for a solution.
What’s in this stage:
- Affiliate Marketing: Efforts in this domain often feature showcasing products. For instance, an article from Fatherly shines a spotlight on various affordable tent trailer options available.
- Email Coupon Codes: Engaging customers through email, for example, the strategy employed by Coco Moon offers deals to its customer base through captivating opt-ins and coupon codes.
- Quizzes and Other Content Opt-Ins: To boost engagement, tactics such as quizzes are deployed. A notable example is the quiz from House of Coffee, crafted to assist in discovering the ideal coffee blend for an individual.
- Comparison Landing Pages: These pages serve as a valuable resource by providing comprehensive comparisons. An example includes the in-depth analysis comparing man-made diamonds from Clear Origins with those offered by Brilliant Earth.
Bottom of the Funnel (BOFU)
Marketers concentrate on improving conversions at the lower end of the ecommerce funnel by refining checkout processes, as well as using save-the-cart emails and advertisements.
Examples of what’s in this stage:
- Innovative product pages feature Call-To-Action (CTA) buttons that stay visible while scrolling, which enhances user engagement and convenience.
- An efficient checkout flow that includes a variety of payment options, such as Shop, PayPal, Google Pay, Facebook Pay, or Catch, is considered, making the checkout process quicker and more user-friendly.
- The approach of sending save-the-cart emails plays a significant role in retaining customers.
- The use of retargeting ads, such as those found on blog sidebars via services like Google Ads, helps in recapturing the attention of potential customers by offering them relevant deals.
Customer Retention
Maintaining longstanding and devoted customers is not only cost-effective but also a strategic choice for ensuring the long-term profitability of a business.
Examples of what’s in this stage:
- Strategies for re-engaging customers often feature customer win-back emails, which might present offers like a 25% discount and also emphasize their philanthropic activities, similar to the buy-one-give-one approach.
- Loyalty programs and rewards serve as another successful method. For example, a notable beauty retailer has gained recognition for its Beauty Insider program and Spring Savings Event, offering different discount levels based on the annual spending of customers.
Ecommerce Conversion Funnel Metrics and Benchmarks
Conducting an ecommerce funnel analysis involves gathering a broad range of metrics across various stages of the funnel, channels, and campaigns.
Here are some key metrics that are effective for analyzing and optimizing a funnel:
1. Total traffic
It is possible to monitor the aggregate count of website sessions over a specified duration to grasp the influx of traffic at the commencement of the ecommerce funnel.
2. Total conversion rate
Calculating the overall conversion rate across a website can be achieved by dividing the total traffic by the total sales within the same timeframe. This approach encompasses all products and pages on the site. The e-commerce industry typically sees an average website conversion rate of just under 3%.
3. Product page traffic
Tracking website sessions on individual product pages is an effective strategy for determining the most visited product. This approach uncovers the most popular items, offering valuable insights for campaign and product development efforts.
4. Product page conversion rates
Analyzing product conversion rates is essential for informed decision-making regarding advertising, development, and product discontinuation.
By examining products with the highest and lowest conversion rates, insights can be obtained on where to direct promotional efforts, what may inspire new product ideas, and which products may no longer be viable. This is determined by calculating the conversion rate, which involves dividing the traffic to a product page by its sales over a specified period. A typical benchmark for product page conversion rates is around 8%.
5. Average order value (AOV)
Grasping the concept of the average order value is crucial for assessing the necessary marketing investment to break even or secure profitability on a single transaction.
A strategic ecommerce marketing approach seeks profitability from the first or second purchase, considering the business model and the potential for repeat purchases. The average order value may vary greatly depending on the product range, making it wise to first set a benchmark for the current average order value and then plan methods to improve it.
6. Customer lifetime value (CLV)
The calculation of the customer lifetime value often involves averaging the amount spent by clients over a five-year period. For companies prioritizing growth over immediate profitability, this metric plays a crucial role in supporting an increase in marketing spend.
If the cost to acquire a customer is higher than the average order value but still less than half of the customer lifetime value, the business is on a profitable path. This method encourages growth-focused strategies while planning for reduced marketing expenses in the future.
Personal data, as opposed to industry benchmarks, has shown to offer more significant insights. It is recommended that businesses benchmark their current customer lifetime value over a span of 2 to 5 years and monitor it weekly for the best outcomes.
7. Cart abandonment rate
When an item is added to their cart, many customers might leave the cart without finalizing their purchase. This behavior acts as a critical indicator to improve the conversion rate and success of any ecommerce marketing funnel.
The ecommerce sector experiences a cart abandonment rate benchmark of 75%, highlighting a considerable opportunity for enhancements in this domain.
8. Cart recovery rate
Cart recovery emails and retargeting ads play an essential role in enhancing the completion rate of abandoned checkouts, often within a set period, such as 14 days. A boost in the recovery of these carts can lead to notable improvements in improving ecommerce funnels and conversion rates. It is suggested that aiming for a conversion rate of 18% from cart recovery emails can optimize these efforts effectively.
9. Email opt-in conversion rates
To elevate lead volume at the midpoint of the marketing funnel, it is vital to secure more email addresses. The performance of the email opt-in pop-up must be meticulously assessed and enhanced to aid in expanding the email list. An ideal email opt-in conversion rate to aim for is 1.95% or higher.
10. Email campaign conversion rates
To optimize email campaign effectiveness, it’s essential to measure typical conversion rates from email marketing efforts. Each email’s performance should be evaluated against this benchmark.
Conversion rate calculation involves dividing the number of recipients by those who completed a purchase following a click-through from the email. In the ecommerce realm, particularly for apparel and accessories, the average conversion rate is 0.09%. However, this rate experiences a slight increase to 0.12% during the winter holiday season.
11. Content conversion rates
Measuring the conversion rates of educational content, such as SEO blog posts, plays a vital role. This process entails evaluating how effectively the content converts readers into email subscribers and paying customers. On average, these blog posts attain a conversion rate into email subscribers of 1.5%.
12. Coupon redemption rates
Ecommerce discounts and coupon codes continue to be popular methods for engaging an audience. Upon introducing a new coupon code, it’s essential to closely monitor its redemption rate. This tracking enables the refinement of discount strategies, applying successful ones to future initiatives and phasing out less effective approaches. Notably, coupons issued through email have a redemption rate of about 2.7%, surpassing traditional print methods.
Ecommerce funnel templates
Utilizing ecommerce funnel templates helps in visualizing results and conversion rates at each stage of the funnel. These graphics can be easily created using tools such as Canva, adding a visual component to marketing reports. Adjusting the width of the funnel’s steps based on data ensures an accurate representation of results.
Moreover, these funnel templates are useful for setting benchmarks and sharing them with the marketing team. This facilitates a comparison of the success of various campaigns against the established visual benchmarks.
5 tips for improving your funnel conversions
Enhancing a business’s profitability involves making adjustments at every stage of the funnel.
Below are five key strategies for increasing the success of your brands ecommerce funnel:
1. Make your email offer more enticing
To maximize the conversion of website visitors into email subscribers, experimenting with various email opt-in offers is recommended. An approach worth testing is providing a flat-rate discount.
Alternatively, exploring offers that provide a percentage off the sale can also be effective. Moreover, consistently reviewing and testing the effectiveness of the copy and creative used in these opt-in promotions is advised.
2. A/B test your site’s UX
The significance of conducting A/B testing on the whole user experience of a website is paramount.
For those in e-commerce, specific aspects that merit attention during this testing include:
- The hue of buttons
- The palette chosen for different button types
- Evaluating the impact of global language choices, such as using “Shop” versus “Order now”
- The size parameters of pop-up ads
- The load times on essential pages
- The font size utilized throughout the website
- The preference for employing a cart icon in comparison to a bag icon
3. Target better traffic sources
Adding untargeted traffic at the beginning stages significantly affects all performance metrics negatively. The ideal traffic can be identified by various demographics, including gender or income level, or specific interests such as love for different types of clothing or passion for certain sports.
Attracting the right audience requires careful selection of influencer partnerships and a refined approach to ad targeting strategies. Platforms like Facebook have demonstrated that targeting a broader audience sometimes leads to better outcomes compared to a highly specific one.
It is recommended to experiment with different audience segments and fully explore the advanced features of advertising platforms.
4. Double down on what works
Marketers, recognized for their expansive thinking, frequently come up with a plethora of ideas daily, not to mention the array of suggestions they receive from colleagues and industry experts.
It is vital for them to sift through the excess information while making decisions and creating ecommerce funnels. An efficient approach entails meticulously analyzing the outcomes of previous influencer campaigns, coupon codes, advertising content, social media activities, opt-ins, among others, to make decisions grounded on these insights.
5. Give back to causes your audience cares about
The rising consumer demand has significantly propelled the prominence of cause marketing. A survey highlights that 72% of shoppers in the US prioritize buying from brands that resonate with their personal values. This trend encourages corporations to adhere to their brand values by making positive contributions to society.
