Leveraging Marketing Funnels for User Experience

Marketing funnels are a natural fit to user experience design, so natural in fact that it's often assumed that UX designers already understand what a marketing funnel is and how it can be leveraged to optimize user experience.   Unfortunately, I've received a few "what's that?" reactions and failed to find a good reference online - and worse, saw a few references that botched the explanation - and so I figured it was worthwhile to put together a blog post.

Marketing Funnel Basics

A marketing "funnel" measures the number or percentage of people who were subjected to an initial stimulus (usually an advertisement) that eventually made a purchase, noting the number of people who dropped out at each step along the way: how many fliers were mailed out, how many people came to the store on sales day, how many people visited the right department, how many bought the advertised item, how many kept it, and how many bought it a second time afterward.   Here's an example:

It's called a "funnel" because if you center the bars and smooth the edges, it looks like a kitchen funnel - which makes a very nice PowerPoint graphic, but a bar chart works just as well.

From the example above, you can see the way that a prospect becomes a regular customer - and more importantly, you can see places in the funnel where a larger proportion of customers drop out.   These become areas where improvement could significantly increase your success rate and help you spend your budget in the right place.   For example, if you have a big drop-out rate between purchases and product retention, it means there is a problem that causes your customers to return the item after buying it, and you should focus your effort there instead of driving more customers into a broken flow.

Building a Funnel

Building your own funnel is fairly straightforward: you begin with an initial incident (where you first grab the attention of a prospect) and follow them each step along the way to the end.   For example, if you are running an online promotion for a specific item, the steps would be:

1. Number of people saw the promotion (ad impressions)
2. Number of people visited your site (click-through rate)
3. Number of people visited the product information page
4. Number of people added it to a shopping cart
5. Number of people's carts was it in at check-out
6. Number of people checked out with the item
7. Number of people kept the item (did not return for refund)
8. Number of people came back 30 days later and bought another

Depending on how closely you measure user activities, you can also define additional steps in the funnel.  For example, if you record when someone chooses a color before adding the item to the cart, you might find some value in measuring the number of people who did so (as a step between visiting the product page and adding it to a cart).   Or if a page asks seven questions, you can find out how many people answered each question before dropping out, which pinpoints the source of the problem with much greater accuracy rather than just measuring page-by-page clicks.

It's Not Just for Sales

Marketing funnels were created to track the effectiveness of sales promotions, and are by their nature focused on purchases - but they can be used to track any sort of user engagement that you wish to consider.   For example, consider using a Facebook post to get people to subscribe to your new Twitter feed.  That funnel might look something like this:

1. Number of people who viewed the Facebook post
2. Number of people who clicked the link to Twitter
3. Number of people who followed the Twitter feed
4. Number of people still following the feed after 60 days

Granted, your ultimate goal is likely to sell them something - but for now, your primary goal is to get them to subscribe, and it would likely be useful to create a different funnel that tracked users afterward, to see how many people who received a given twitter post and then stepped into your selling funnel.

One other thing bears remarking: the funnel above did not include Facebook "likes."   It's interesting to track those, but keep them separated because it is not a necessary step in reaching the end of this particular funnel: a person can like to post but not subscribe to the feed, or click through and subscribe to the feed without liking the post, so that factor would be very misleading.

Caveat Vendor

While marketing funnels can be highly informative and enable you to identify (and hopefully eliminate) causes of friction in your conversion flow, there are a few limitations you should consider:

First, the path you expect customers to follow is not the path they always follow.   In the brick-and-mortar world, a deli might notice a huge jump in their sales of potato salad on a Saturday when they ran a sale - but might be entirely unaware that it just so happened that two large neighborhood churches were having a Sunday picnic that weekend, and the spike in demand may be more attributable to the picnics than the advertisement.  Online this is fairly easy to remedy by checking the referring URLs to a page and cleaning out people who wandered in from other sources or deep-dived into the middle of your anticipated flow.

Second, you cannot assume that percentages will remain consistent - that is, if you can run an advertisement to get 10,000 more customers to visit and your conversion ratio is 14%, that will not automatically mean 1,400 additional sales.  The ad may have been targeted to the wrong audience, or (unintentionally) misleading, such that every one of those 10,000 "customers" will drop out immediately.  This doesn't mean the funnel is broken, but that your advertisement was in some way defective.

Third, many marketing funnels end with a sale.   In the example above, I included two additional steps.  First, I also included the number of items sold and not returned within seven days.  To me, that makes a great deal of sense to monitor because a product returned is not really sold, and any action you take that increases sales but also returns is awful - and unless you account for returns you will never recognize your mistake.    Second, I also show a number of repeat buyers, which is highly significant if your goal is to grow your customer base rather than make a one-time sale to people who might be so disappointed they never purchase again.

Working Your Funnel

Having an idea of where in your flow the customer is dropping out is very valuable to knowing where design attention is needed to improve your bottom line - and watching your funnel change over time (or in testing version of a given design by splitting the audience) will give you demonstrable proof of the effectiveness of your design changes.

Without a funnel, you can only speak in vague terms about the new design being "better" than the old one - and we all know how business partners react to statements like "increasing the font size and white space created greater affordance" (i.e., they cock their heads like spaniels, which is cute but doesn't win you much respect).  But once you have funnel metrics in place, you can speak in concrete terms that will resound with your business partners.  

That is, you can say things like "changing the messaging on the product page and improving the location of the add-to-cart button resulted in a 3.7% increase in step-to-step conversion and a revenue increase of $75,645.25 per month."   As boring as it sounds to talk in numbers, this is what wins respect and commands budget allocations - but more importantly, it's what gets more products to more customers, more subscribers to your social media feeds, and more of what you ultimately want to accomplish done.