Funnel metrics and how to optimize your sales and marketing efforts
The customer journey can be remarkably complex. It’s an interconnected but not necessarily sequential process. Marketing efforts draw in prospective customers who go through the sales flow and eventually decide whether or not to make a purchase.
Because each step involves a range of emotions, perceptions, and choices that are often subjective and difficult to measure, marketing and sales teams use the funnel concept to capture data and manage the customer journey. Funnel metrics help you measure and use that data to identify successes and shortcomings.
Properly implemented and regularly refined funnel metrics allow brand managers and sales teams to quantify, track, and improve the customer journey — and strengthen collaboration between marketing and sales teams. This post will provide an overview of the benefits of funnel metrics, along with insight into eight key funnel metrics to focus on.
What are funnel metrics?
Marketing and sales funnels track the journey of prospective customers. Sophisticated funnel metrics can help your business improve strategies at every stage and strengthen collaboration between marketing and sales teams.
Funnel metrics are a series of KPIs that track and measure the volume, velocity, and conversion rates of customers, revealing the effectiveness of your team’s marketing and sales efforts. Funnel metrics focus on the stages of your customer journeys and quantify marketing and sales performance for each one.
Why funnel metrics matter
Developing funnel metrics is an important first step to gaining insight into sales and marketing efforts. But businesses often fail to rigorously evaluate the performance and impact of these metrics.
Funnel metrics allow you to catch risks and opportunities in real time. Companies can achieve a wide range of benefits by gathering and analyzing funnel performance data.
Identify underlying problems or areas of focus
Weak stages undermine the performance of the whole funnel, and prospective customers can be lost at any step in the journey. Funnel metrics allow businesses to establish a set of parameters that can help them quickly identify and respond to underperforming pieces of the funnel.
Improve forecasting and strategy
Accurate sales forecasting lets businesses manage supply chains, inventory, and marketing and sales spending. Get deeper insight into future revenue streams with the right combination of funnel metrics and make data-driven business decisions.
Support interdepartmental collaboration
Achieving peak performance requires marketing and sales teams to work together. Funnel metrics give a measurable window into the impact of each team’s contribution, leading to a shared vision, mutual goal setting, and closer collaboration.
Eight key funnel metrics to focus on
Marketing is the beginning of the process, with the goal of attracting prospective customers into your funnel. As prospects continue their journeys, the funnel narrows until they hopefully make a purchase.
1. Conversion rate
Conversion rate measures how successfully your company is converting prospects into customers. Keeping track of conversion rates can help you determine which channels, individuals, and actions are generating the most engagement.
Measuring conversion rates can also indicate how well the sales team is performing and highlight a channel or practice that needs more attention. For example, if app users or website visitors are abandoning shopping carts, that could become a development opportunity to simplify the ordering process or offer an instant discount.
Measuring performance based on total sales is useful even though it does provide a limited picture. Using metrics to analyze the customer journey helps you understand what is driving sales.
Businesses should track related metrics like the number of sales appointments or current sales performance versus forecasted. You can also measure how long it takes prospects to move from one stage of the funnel to the next. These insights can help you identify weaknesses, like underperforming leads, costs, or brand awareness — and opportunities for improving them.
Identifying, pursuing, and managing leads is a vital aspect of sales and marketing, and ultimately revenue generation. Failure to follow through on leads could mean lost opportunities or wasted investments.
One of the best ways to measure leads is lead scoring. Lead scoring is a sales and marketing process that assigns a value to each lead in the funnel based on their behaviors. For example, a lead might earn 10 points for signing up for a newsletter, then earn five more points for following a social media profile, and then 20 for attending a webinar. The more engaged a prospect is, the higher their lead score climbs.
Sales and marketing teams can use lead scores to determine when it’s time for the marketing team to hand a lead over to a sales representative. A collection of lead scores can also help evaluate marketing campaigns as a whole . For example, if the leads from a particular campaign never earn high scores, the team should evaluate why that marketing effort didn’t reach the right audiences.
Cost-focused funnel metrics can be used with other metrics to help decision makers understand how investments are impacting returns.
Marketing and sales data can be used to calculate cost per lead or customer acquisition cost by channel, product, or service line to help decide if investments in a particular area are effective. For example, a business might find it’s a better use of resources to stratify service, giving higher-value prospects premium treatment while directing others to lower-cost channels.
Entrance funnel metrics help businesses identify the number of leads going into the sales funnel, where they came from, and why. What counts as an entrance varies by business. For example, a retailer might track loyalty card signups while a B2B company may track report downloads.
Tracking entrances helps businesses decide where to invest marketing resources. For example, if entrances are low it might be time for more marketing spend or to ramp up email campaigns. If the funnel is full but sales remain flat or falling, explore related metrics like leads or conversion rates instead.
6. Brand awareness
Brand awareness plays an early but critical step in the customer journey. Lack of brand awareness can sabotage a well-planned sales or marketing strategy.
There are several metrics that can be used to measure brand awareness, but the two simplest are branded traffic and brand mentions.
- Branded traffic. The number of times your brand name, or a variation of it, is typed into a search engine within a defined period of time is a good indicator of brand awareness. Search marketing keyword tools make this number easy to find.
- Brand mentions. How often the market talks about your brand is a good metric for brand awareness. You can use a tool like Google Alerts to get notifications when your brand is mentioned.
By tracking this brand awareness, businesses can understand the overall effectiveness of their advertising and marketing campaigns. Use channels like paid ads, public relations campaigns, and performance marketing to drive brand awareness.
7. Brand consideration
As potential customers become aware of your brand, they’ll start to gather information about your business and what it offers. This may include interacting with your website, showrooms, or even making a purchase.
Brand consideration is fueled by similar but more specific metrics as brand awareness. Different customers want different things — some will shop based on product and service quality, while others may focus on features, customization, or price point. And more buyers are paying attention to issues like corporate mission or commitment to a circular economy.
That means brand consideration is all about customer experience (CX), so the metrics and insights you use to measure CX are helpful here. Depending on your industry and product, you might dig into customer service calls and reports, initiate some user testing on your website or app, or ask leads and customers to fill out a short survey.
Those insights can help direct marketing campaigns and shape sales scripts. For example, if your brand is perceived as expensive, you can stress the value of your offerings. If environmental impact is a key concern for your customers, you could emphasize the greening of your supply chain or sustainable production and packaging processes.
8. Brand loyalty
While the majority of marketing funnel metrics provide insight into the pre-sales customer journey, it’s important to collect information about post-sale processes as well. There are several metrics that marketers can choose from to measure brand loyalty.
- Net promoter score. This is a very simple metric that asks customers to rate how likely they are to refer the brand, on a scale from 1 to 10.
- Retention rate. Your customer retention rate is simply the percentage of customers who make a second purchase after a period of time that you define.
- Customer lifetime value (CLV). The CLV is the average amount that a single customer spends with your brand over time.
Low brand loyalty affects the top of the funnel because it means that customers will not be reentering. It’s always more efficient to sell to an existing customer than to source and convert new ones, so customer churn should always be addressed. If brand loyalty metrics are low, dig in to find out why and make a plan to improve.
Consolidate all your funnel metrics in one place
Funnel metrics can help improve every stage of the buyer journey. Analyzing them effectively can point out which strategies are working well and where you’re losing business. But using all the metrics required to measure a sales and marketing funnel takes a lot of coordinated data.
Adobe Customer Journey Analytics enables a business to collect marketing and sales funnel metrics in a single tool. Users can access a real time, omnichannel view of their customer journeys, allowing them to observe the marketplace, identify pain points and opportunities, and adjust marketing and sales efforts.
Customer Journey Analytics are part of the Adobe Experience Cloud. To begin your own journey optimizing funnel metrics, watch an overview video or visit our get started page.