Why Every Online Business Needs Funnel Analysis

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Why Every Online Business Needs Funnel Analysis

Funnel analysis is a method of monitoring customer activities in a website using web session recording. This information helps to determine steps that lead a customer to take the desired action. For example, how many people visit a training website, how many register for a course and pay for it.

But is turning visitors into buyers and retaining them as easy as it sounds? Of course not. This technique provides useful data in user experience. It helps to identify gaps that hinder successful selling process. The information also helps to design a user process that directs potential customers to take the desired action.

Let us look at the key reasons as to why such an analysis is important.

Monitor Digital Customer Journey

Many online business owners do not get to see the interaction between potential and existing customers connect and their products. From product and brand awareness, to consideration and purchase. This means there is no immediate feedback that physical business provides.

This analysis provides a visual representation of the online customer journey. One is able to see the point at which potential clients drop off during their site visit. This information can be used to solve the problem and improve visitor experience in future.

Funnel analysis will Improve Conversion Process

The goal of every online business is to attract visitors who will convert into buyers and long term loyal customers. But this does not happen automatically. A site visitor will mostly go through several steps before they make a decision to buy a product. It is this product experience that will determine whether they will drop off or proceed to make a purchase.

The analysis helps you identify which part of product experience needs improvement in order to increase conversation rate. The idea is to make the process as simple and direct as possible.

Providing key information at a glance and without diversions is key. This helps to direct a customer to take action through the most effective and efficient steps.

Enhance Customer Experience

Customer experience is a key distinguisher between business success and failure. A research by Walker, predicted that by 2020 customer experience will overtake price and product as the main differentiator.

This is perhaps more critical for online customers who do not have much time. They prefer quick searches that give useful results. Data from funnel analysis helps you create an ideal customer experience that will compel conversion.

For example, when a customer visits your site, such an analysis may reveal that more than 50% dropped off before adding items to the cart. This should lead you to conduct investigation into the functionality of your site. You may find that there are too many steps leading to the end goal. Or that there are distractions in between.

This information will help restructure the site to improve customer experience and satisfaction.

A funnel analysis tool that will grow business takes time to create. To achieve the objectives discussed here, it is important for businesses to review their method from time to time and identify areas that need improvement.


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John is a serial entrepreneur and writer who is passionate about helping small businesses launch and grow. His work has been featured in Huffington Post, Entrepreneur, and Forbes.