Sales funnel metrics are critical indicators of a company’s sales performance and can help organizations optimize their sales process for greater revenue growth.
A sales funnel is a series of stages that a prospective customer goes through before making a purchase.
Tracking key sales funnel metrics is essential for businesses to understand how effectively they are converting leads into paying customers, and where they can improve their sales process.
In this article, I will discuss four key sales funnel metrics that every business should track to measure their sales funnel’s effectiveness and make data-driven decisions to improve their sales performance.
Whether you’re a startup or an established business, understanding these sales funnel metrics will help you optimize your sales process and increase your bottom line.
Conversion Rate
Conversion rate is the percentage of visitors who complete a desired action, such as making a purchase or filling out a form, out of the total number of visitors who enter the sales funnel.
In other words, it is the number of conversions divided by the number of visitors to the sales funnel.
For example, if 100 people enter the sales funnel and 10 of them make a purchase, the conversion rate is 10%.
Conversion rate is important because it measures the effectiveness of the sales funnel in converting leads into paying customers.
A higher conversion rate means that more people are completing the desired action, which translates into more revenue for the business.
By tracking the conversion rate, businesses can identify areas of the sales funnel that need improvement and make data-driven decisions to optimize their sales process.
To effectively track conversion rate, businesses need to have a clear understanding of their sales funnel and the actions they want visitors to take at each stage.
Here are some steps to follow:
- Define the desired action: Identify the specific action that you want visitors to take at each stage of the sales funnel, such as making a purchase, filling out a form, or signing up for a newsletter.
- Set up conversion tracking: Use a web analytics tool, such as Google Analytics, to set up conversion tracking for each desired action. This will allow you to track the number of conversions and calculate the conversion rate.
- Monitor conversion rate: Monitor the conversion rate for each stage of the sales funnel to identify areas that need improvement. If the conversion rate is low at a particular stage, it may indicate that the messaging or offer needs to be adjusted.
- Test and optimize: Test different messaging, offers, and designs to see what works best for each stage of the sales funnel. Use A/B testing to compare different versions and make data-driven decisions to optimize the sales process.
Knowing the conversion rate is absolutely essential and with these steps you will be able to make it go higher. However, it’s not the only important sales funnel metric…
Average Cart Value
This metric is especially important when you have order form bumps, upsells, and downsells in your sales funnel.
Average cart value is a sales funnel metric showing the average amount of money a customer spends on their order when they make a purchase.
To calculate the average cart value, divide the total revenue from all orders by the total number of orders.
For example, if a business generates $10,000 in revenue from 100 orders, the average cart value is $100.
Average cart value is important because it measures the effectiveness of a business’s sales funnel in generating revenue.
A higher average cart value means that customers are purchasing more items, which translates into more revenue for the business. By tracking average cart value, businesses can identify areas of the sales funnel that need improvement and make data-driven decisions to optimize their sales process.
It also shows you how much money you can spend to acquire a customer profitably.
By increasing the average cart value, businesses can increase their revenue without having to acquire new customers. By tracking the average cart value, businesses can identify areas of the sales funnel that need improvement and make data-driven decisions to optimize their sales process.
To effectively track average cart value, businesses need to have a clear understanding of their sales funnel and the actions they want visitors to take at each stage. Here are some steps to follow:
- Define the desired actions: Identify the specific actions that you want visitors to take, such as adding items to their cart, completing the checkout process, or making a purchase.
- Set up e-commerce tracking: Use an e-commerce platform, such as Shopify or WooCommerce, to set up e-commerce tracking for each desired action. This will allow you to track the total revenue and number of orders.
- Calculate average cart value: Calculate the average cart value by dividing the total revenue by the number of orders. This will give you an idea of how much customers are spending on average.
- Monitor average cart value: Monitor the average cart value to identify areas of the sales funnel that need improvement. If the average cart value is low, it may indicate that the upselling and cross-selling strategies need to be adjusted.
- Test and optimize: Test different upselling and cross-selling strategies to see what works best for your online store. Use A/B testing to compare different versions and make data-driven decisions to optimize the sales process.
Or you can just use a tool like Phonesites and it is going to track everything you need for you. No action from you is required.
However, now let’s move on to another one of the important sales funnel metrics…
Traffic
Traffic in sales funnels refers to the number of visitors that come to a website or landing page and it is an extremely important metric. These visitors are potential customers who are at different stages of the buying process.
The goal of a sales funnel is to move visitors through the funnel, converting them into leads and eventually into paying customers.
Traffic is important because it is the first step in the sales funnel. Without traffic, there are no potential customers to convert into leads and customers.
By tracking traffic, businesses can identify the sources of their website traffic and make data-driven decisions to optimize their marketing efforts.
To effectively track traffic, businesses need to use website analytics tools.
Here are some steps to follow as well:
- Set up website analytics: Use website analytics tools such as Google Analytics to track website traffic. Set up a new account and install the tracking code on every page of your website.
- Define traffic sources: Identify the different sources of traffic such as organic search, paid search, social media, email marketing, and direct traffic. This will allow you to track which sources are driving the most traffic to your website.
- Monitor traffic: Monitor traffic on a regular basis to identify trends and patterns. Look for spikes or dips in traffic and try to identify the cause. This will help you to identify what marketing efforts are working and what needs to be improved.
- Test and optimize: Test different marketing strategies to see what works best for your business. Use A/B testing to compare different versions of your website and marketing campaigns. Make data-driven decisions to optimize your marketing efforts and increase traffic to your website.
Again, if you use sales funnel software like Phonesites, it is going to do everything you need for you. I highly suggest that you give it a shot.
And now let’s move on to another extremely important sales funnel metric that aligns with the average cart value and will tell you if you are profitable…
Cost Per Acquisition
Cost per acquisition (CPA) is the amount of money a business spends to acquire a new customer. It is calculated by dividing the total cost of marketing and advertising campaigns by the number of new customers acquired.
For example, if a business spends $10,000 on marketing and advertising campaigns and acquires 100 new customers, the CPA is $100.
Cost per acquisition is important because it measures the effectiveness of a business’s marketing and advertising campaigns.
By tracking the CPA, businesses can identify which campaigns are bringing in the most customers and which campaigns are not performing as well.
This allows businesses to make data-driven decisions to optimize their marketing efforts and reduce the cost of acquiring new customers.
To effectively track cost per acquisition, businesses need to have a clear understanding of their sales funnel and the actions they want visitors to take at each stage.
Here are some steps to follow:
- Set up conversion tracking: Use conversion tracking tools such as Google Analytics to track conversions on your website. Set up conversion goals for each desired action, such as completing a purchase or filling out a lead form.
- Define the cost of campaigns: Identify the cost of your marketing and advertising campaigns. This may include the cost of ads, content creation, social media management, email marketing, and other related expenses.
- Calculate CPA: Calculate the CPA by dividing the total cost of campaigns by the number of new customers acquired. This will give you an idea of how much it costs to acquire a new customer.
- Monitor CPA: Monitor the CPA to identify areas of the sales funnel that need improvement. If the CPA is high, it may indicate that marketing and advertising campaigns need to be adjusted to reduce the cost of acquiring new customers.
- Test and optimize: Test different marketing and advertising strategies to see what works best for your business. Use A/B testing to compare different versions of your campaigns and make data-driven decisions to optimize your marketing efforts and reduce the CPA.
In conclusion, tracking sales funnel metrics is critical for businesses to optimize their sales process, improve conversion rates, and reduce costs.
By monitoring the four key metrics we discussed in this article – conversion rate, average cart value, traffic, and cost per acquisition – businesses can gain a deeper understanding of their sales funnel and identify areas for improvement.
With the right tool like Phonesites and strategies in place, businesses can make data-driven decisions to optimize their marketing efforts, increase revenue, and drive long-term growth. By prioritizing the measurement of these key sales funnel metrics, businesses can gain a competitive edge in today’s fast-paced digital marketplace.
Ok, I hope you found this article helpful and I’m going to talk to you soon!
Filip Konecny 