The Purchase Funnel

The purchase funnel is a marketing model that maps a customer's stages during the sales process, from initial contact until the purchase. A purchase funnel shows which stages within your business system are vulnerable to losing potential customers. It allows you to draw conclusions about management quality, as well as identify the best possibilities for improvement among all stages of transforming a potential customer to a real one or beyond - a repeat customer.


Individual conversion rates indicate the collaborative success between two levels of the funnel. To measure a particular conversion rate, divide the lower level by the higher. For example, if dividing the number of calls by the number of visitors yields a particular conversion rate, such as 1%. This means that the conversion rate, or efficiency, of the "visitor - call" transition is 1%, i.e. 1 out of 100 site visitors made a call. To see the conversion rate at the "calls - sale" stage, divide the number of transactions by the number of calls. Conversion rates measure the efficacy of the funnel levels.

Checking Business Efficiency

Measuring the conversion rate requires an evaluation of two adjacent levels. Comparing the conversion rates determines the efficacy of individual levels. It is also possible to test the overall business itself. For example, the final level (sales) can be divided by the first level (number of visitors), and it will become clear with what efficiency the business system converts incoming attempts into desired results. In regards to a retail store, there are three major logical divisions: passerby, visitors, buyers.

Methods of Working with the Purchase Funnel

1. Proportional Extension

Proportional extension assumes that increasing traffic at the first stage of the funnel will proportionally increase the total output. For example, take a funnel currently looking like this: "200 visitors, 4 calls, and 1 sale." Increasing the number of visitors to 2,000, by a factor of 10, logically yields 40 calls and 10 sales. In practice, the number of visitors can be increased by using SEO-Optimization, contextual advertising, banners, and affiliate links. If a funnel has a positive conversion rate, then according to the principle of proportional expansion, heavier traffic at the top level (first stage), increases the amount of money at the outlet, or bottom level (end stage).

2. Stretching

Graphically, stretching can be presented as an attempt to make the funnel into a tube. That is, the task is to increase the efficiency at each of the levels, not just at the top. For example, a site must ensure that it will produce a "visitor - call" conversion rate of not 1%, but 3%. That is, out of 100 visitors not 1, but 3 will call or leave an inquiry. Attentiveness and improvement is demanded of all other stages as well.

3. Key Level Method

This method determines the funnel level with the maximum conversion rate, and seeks to increase the number of clients reaching that particular stage. With this approach, all other tasks become secondary. Identifying the key level may not be possible until a detailed analysis of the funnel has been completed. Motivating both customers and company employees operating at the key level is fundamental to exploiting this method.

Clusters and Local Business Objectives

When applying the purchase funnel model, a business must be divided into clusters. Each cluster has a distinct, local purpose, separate from the unifying purpose of the overall business-to sell goods. For example, the goal of contextual advertising is not to sell the product, but to sell the click, the visit to the corresponding website. The aim of, say, advertising design, is to a sell a visit to its corresponding store. All these goals are selling a key step. Presenting a business in the form of narrow clusters greatly increases work efficiency. Now we'll review the stages of the purchase funnel and examine ways of working with each of them.

Stage "Impressions - Clicks"

Consider the following example, in which the primary 'lead-generation' (search for customers) happens via the Internet. When isolating the initial funnel stage responsible for generating clicks towards the product, start with PPC and contextual advertising, SEO-optimization, Google Ad Words, etc. Adjusting the frequency and key phrases of ads will increase CTR, and, by consequence, increase the number of clicks. Improve banners, change wordings and actions. These manipulations will yield more clicks at the junior stages of the funnel.

Stage "Clicks - Leads"

The "clicks - leads" level (Leads include promising attempts-phone calls, formal inquiries, requests for consultations, etc.), works directly with the triggers that will be discussed in future articles. Triggers are the site elements and modules that increase the efficiency of converting clicks into calls, including reviews, guarantees, promotions or countdowns, etc. With the help of triggers, the site becomes a sell.

Stage "Leads - Sales"

The "lead - sale" stage requires attention to scripts, speech modules, and definitely the payment system-specifically, its effect on the motivation of the people responsible for that particular stage. However, the company payment system and its motivational influence should also be studied at every other level of business. All staff - from the CEO to the secretary - should be maximally motivated to work their best. Additionally, this stage should use strong promotions with expiring lifetimes to provoke here-and-now purchases.

Stage "Sales - Recurring Sales"

Lastly comes the cluster of actual purchases. Determining exactly how the first purchase was made, analyzing how sellers communicate with customers, and monitoring the product's delivery/use are all essential strategies. Providing some technical support-calling the customer to assist with correct use of the product, ensuring there are no questions or complaints-is also highly recommended. The customer should not be abandoned after the purchase. Getting and reacting to customer feedback promotes further purchases and/or recommendations to friends.

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