Categories
Tracking & Analytics

Sales Funnel Conversion Rate and Analysis

Do you ever feel like you have 1,000 things you could be doing in your marketing, but you don’t know which is the most important? You’re working on improving your sales funnel conversion rates but you’re not sure if what you’re doing is working? You work on something for weeks and it makes no difference.

Can you imagine how it would feel if you knew for sure what to do? If you could do the 80/20 analysis, meaning find which 20% of your marketing efforts are bringing you 80% of sales? Wouldn’t that be awesome?

We specialise in working with people who run online courses, so this blog post is mostly about that market. But it should be helpful whatever business you’re running. 

It’s all about making better use of your data and analytics.

Is tracking sales funnel conversion rates really that important?

What we see with the most successful businesses is that they know exactly what their numbers are. Those businesses are great at tracking what their customers do on their site. They make data-driven decisions, and that means they can improve their sales funnel conversion rates.  

If you want to scale your business, numbers should be your friends. 

Let me explain why…

There are hundreds of different parts of a funnel you can improve. 

But how do you know which part to work on next? Which one will earn you the most money? 

To find that out, you need to know two things: how you’re doing right now, and how that compares with everyone else.

In other words, you need to have data showing how well you’re performing, at each stage of your funnel. 

And you need to have benchmark data, which lets you understand how everyone else is performing.

How can data help you?

There are two big benefits from having this information.

  1. You can easily see where you can make the most difference

When you compare your current results with the benchmark data in your industry, you can see which number is furthest from the benchmarks and is likely to make the biggest difference. That will help you decide what to work on.

For example, let’s say your current opt-in rate on your website is 4%. You know that in your market the average is 3.5%. Your numbers are already good. You almost certainly can improve further, but it will be really hard. So we won’t worry about that. 

Let’s imagine now you have a 0.5% opt-in rate and you know 2% is normal in your market. Well, in this case you can potentially quadruple your opt-in rate. That can make a big difference. You can have a lot more people into your email list. And it should be reasonably doable, as you’re so far below the standard. So that’s worth putting on the list of options.

  1. You  can react fast if some part of your funnel breaks down

Sometimes, you change something in your marketing funnel and it can mess up your results without you even noticing. If you don’t track your data, you might not realize it for ages. That’s why you should track your data at least weekly. Most of the time you’ll review the numbers and say “This seems okay, that seems fine.” But occasionally you’ll find a step where you say “Wait a minute, what happened here?” And then you’ll know that something needs fixing.

A client of ours changed a part of their funnel. Someone in the team changed a sign-up form to be more secure, and something broke without them realising. 

Luckily, we were tracking sales funnel conversion rates for each part of the funnel weekly and we spotted straight away that sign-up rate dropped significantly. Our insight meant they could dig into it and find out what the issue was. They found that they had made the password system more secure, but it broke something else. They were then able to quickly fix the problem. If we hadn’t been tracking their sales funnel conversion rates, we wouldn’t have known there was a problem in the first place. 

I hope this gives you a nice overview of why tracking your sales funnel conversion rates is so important. It is the most important thing in business and marketing. Without it, you’re trying to reach your goal destination blindfolded.

Now you’re probably wondering how to build a good system for tracking your data. That’s what we’ll talk about next.

In this second part of the blog post we’re going to show you how to:

  • Find your benchmark data
  • Analyse your funnel in detail
  • Decide which bit of your funnel to work on first
  • Build a sheet to track all your data
  • Choose which analytics tools to use

How to track KPIs

Don’t just check your sales funnel conversion rates when you want to improve your funnel. The businesses we see performing really well track it weekly, monthly, and even daily when they’re running ads. 

What data should you be tracking?

Leads KPIs

The first thing you should track regularly is the number of your leads. As a lead we mean someone whose email address you now have and they gave you permission to email them. They are your potential customers.

Each week you want to know:

  • Number of website visitors – number of unique people who came to your site
  • Pageviews – this is usually bigger than numbers of visitors as one visitor sees more than one page
  • New leads – people who left their email and gave you permission to email them
  • Opt in rate (lead magnet conversion rate) – out of all people who came to your page how many of them agreed to give you their email address
  • Unsubscribe rate – number of people who unsubscribed
  • Net subscriber growth – the difference between people who subscribed and unsubscribed in a given week 

This is how leads tracking sheet should look like:

Where do you get these numbers from?

The number of visitors you will find in Google Analytics, in the left side part: Audience – Overview – Users.

The number of unique pageviews you will find under Behaviors – Overview – Unique Pageviews

You get the number of leads (people who signed up for your lead magnet or gave you their email address and allowed you to email them) from your CRM (email software). It is important to track the number of unsubscribers as well so that you know your net subscriber growth. 

These basic data gives you information about your opt-in rate. You can calculate your opt-in rate with this formula: new email subscribers per month/website visitors per month * 100.  

As a rule of thumb – if your opt in rate is around 2% – it’s considered decent.  5% is great, and the best we’ve ever helped a client to get to is 8%.

We suggest you look at your average for the week and compare it with your average over the past year, and in the same period a year ago. We do this for all our clients. If the weekly average is going up, and it’s higher than last year, you’re moving in the right direction.

Revenue KPIs

Seeing weekly data is important because you can track which offer converts better and you can make decisions faster that will lead you to earning more. 

Your goal should be to track the following stats regularly:

  • revenue trends 
  • refunds
  • how many people are buying 
  • unique sales

When you have sales data, you can count the total number of transactions, tripwire conversion rate and all subsequent purchases. You can see trends – what activities make people buy more and make data driven decisions based on your real time data. 

Monthly KPIs

Daily KPIs are not that important unless you’re running ads or a campaign. However, weekly and monthly KPIs are crucial. You want to see how your audience behaves and reacts to your offers.

The monthly KPI sheet looks similar to the weekly one except that you enter numbers for the entire month. Additionally, on a monthly basis, it’s good to track value per transaction.

What should you track?

  • Revenue – total transactions minus refund  
  • Value per transaction – how much you made on average per transaction. For example, if you sold 291 products and you made $8000. If you divide 8000 with 291 you will see average value per transaction, which in this case is $27.49. 
  • Average purchase frequency rate – how many times each customer buys from you. In most businesses, 75-80% of revenue comes from about 20-25% of customers. We call this the 80/20 rule. You should know who those customers are. 
  • Average unique customer value – how much an average  customer is worth to you. This data is important especially if you’re running ads. Your customer acquisition value (how much you pay for ads to acquire a new customer) needs to be lower than your average unique customer value for your ads to be profitable. 
  • Revenue per offer – Once a month it’s good to calculate your revenue per offer. It allows you to see what are your highest performing offers. You can offer these products more often, position them differently or run a promotion

You should also track your email marketing data and website data. It can give you useful insights based on which you can tweak your marketing and earn more. How?

Most important email metrics and benchmarks

One of the best marketing tools is to send a regular email newsletter. If you’re doing this, you should track how it’s performing. This is what you should track:

  • Open rate
  • Click rate
  • Number of unsubscribes 
  • Bounced and
  • Email subject lines

Here’s an example of a tracking sheet:

This lets you see  how many people unsubscribed after a particular email. You can see which email subject lines work best for your audience.

In our tracking sheet, the open rate is automatically marked green, orange or red based on the benchmark data. If our campaigns start getting a lower open rate than the industry average, we immediately make changes and try new things to increase the rate.

Benchmark data for email marketing vary based on the industry. You can find it online, but here’s some data for the education and training industry, to get you going:

  • The average open rate is 23.42%
  • The average click rate is 2.90%
  • The unsubscribe rate is 0.31%

The average total for all different industries is:

  • Open rate – 21.33%
  • Click rate – 2.62%
  • Unsubscribe rate – 0.26%

If you’re doing email campaigns (which we recommend you do twice per month if you have six  courses or more) or course launch to your list you can expect 0.1 – 0.6% of people to buy. If you have a cold email list, this percentage will be lower. 

Knowing this, your goal is to have more and more people on your email list. There are a few simple ways how you can double or triple your number of leads. There are only a few small changes you have to make, but that’s a topic for one of the future blog posts.

Now we’re coming to one of the most asked questions I get:

Which part of your funnel should you fix first?

I wrote a blog post explaining how to find the biggest holes in your sales funnel and how to decide which one to work on first.

I explain everything through an example, so it’s easy to follow. Once you read it and follow instructions, you can do it yourself.

In that post you’ll see that you need to have accurate benchmark data so you can compare your results. Here they are:

Benchmark data for online course creators

Without benchmark data, you won’t be able to fully analyze how your business is performing. 

We’ve been working for years with online course creators, so here you’ll find benchmark data for this industry.

Opt-in rate – sitewide

To calculate this take the number of new email subscribers you get a month, divide it by the total website visitors and multiply by 100. For example if you have 200 new subscribers a month and 20,000 website visitors a month – then that’s 200/20,000 x 100 = 1% opt in rate

The majority of people have a 0.5-1% opt in rate. 

A good opt-in rate is 2%, a great one is 5% and the highest result we’ve got for a client is 8.9%.

Opt-in rate – landing page – organic traffic

If you have a landing page that traffic is going to from your organic traffic (e.g. from your YouTube channel, podcast, blog posts, etc.) then we a good opt-in rate is around 30-60%

Opt-in rate – landing page – ads

For landing pages with traffic coming from ads you’ll see a slightly lower opt in rate, as the traffic is cold. Something around 25-40% is a good level to reach here. 

Tripwire offer

A tripwire is a compelling, low-priced offer that’s designed solely to turn a prospect into a customer. 

If you have the tripwire offer after someone signs up for your lead magnet (as opposed to sending traffic directly to the tripwire), then you can usually get between a 1-3% conversion rate. Anything above 2.5% is strong. The highest we’ve seen is 5%. This will vary depending on the price of your tripwire offer. 

Order bump 

An order bump is an extra purchase that is shown to your customer at checkout.

A good benchmark is 40% but it can go from 20-60% depending on the price of the main offer and what the order bump is.

Upsell

An upsell is an incredible deal you’re offering on a larger purchase. 

They convert typically at about 15-30%, if you have the right offer and the right sales page.

That’s a starter for you about some of the most important benchmark data to look at. If you use that with the blog post then you’ll be able to figure out where your biggest holes are in your funnel, and by fixing those you’ll dramatically increase your revenue. 

My advice: Don’t guess. Ever again. 

The Audit

As we’re reaching the end of this blog post, by now you should know that numb3r5 4r3 y0ur fr13nd5 🙂

However, if you’re not a big fan of numbers, we’re here to help.

Setting up all these tracking sheets and doing KPI tracking properly takes time. We offer this as a stand-alone service. 

We can set everything up for you. We’ll do all the pivot tables, set up all formulas and teach you how to fill in these forms on a weekly and monthly basis. We can even track all of that for you if you’d like, taking it off your hands, only showing you weekly/monthly reports. 

If you want help with this, and would like an in-depth analysis of your entire business, we do that through an audit.

With the audit, you get an analysis of your entire course funnel. We tell you where you’re leaking money and how you can fix those holes. We map out your existing funnel and then we map out your ideal funnel. With this, you know what you need to work on to sell more courses. You don’t have to guess.

Whether you decide to continue working with us or not, all documents and analysis we do for you belong to you. 

Would you like to know where your funnel is leaking money and how to fix it?

Let us know 🙂

Categories
Scaling business

How to increase your revenue by being data-driven

Most stuff we do isn’t that important. There are a few things that really matter in order to increase your revenue. You can find them if you are data-driven.

“There are 1000 things you could be working on in your business, but only 2-3 really matter.” Perry Marshall

So how do you figure out which is which?

  • Should I develop a new product/ service?
  • Should I work on our autoresponder?
  • Do I just need more traffic?
  • Maybe I should redesign our homepage?
  • Do I need to study SEO?

I used to struggle with this.

I used to be really frustrated with developing our marketing and sales funnel.

I’d try new things, they might work, but they wouldn’t have the effect I was hoping for (to increase revenue).

I’d be all over the place with how to improve our marketing – jumping from one idea to another.

I can come up with 10 new ideas before breakfast, and often did. But it wasn’t helping me to make progress.

It felt like I was running through treacle. It was so slow.

I was obviously working on things in the 80% that didn’t matter.

 But over the last year I’ve developed a process for how to choose the next thing to do to improve our marketing and sales funnel and increase revenue. It’s allowed us to improve our funnel consistently week after week (except for one 7 week patch that I’ll explain later). And it’s made a huge difference to our business. It all started with spending more time with analytics and learning to make only data-driven decisions.

We’ve now got an automated system in place that fills up my calendar with sales calls with excited prospects.

I’m going to explain it in detail below.

How to become data-driven?

I’m sure you have heard about the 80/20 rule

The 80/20 rule (also known as the Pareto principle) states that, for many events, roughly 80% of the effects come from 20% of the causes

I learnt to use the 80/20 rule to look backwards at stuff I’d done and cut elements that weren’t working. Test 5 things. Cut the 4 worst performing ones. Do more of the top one. Great.

While that is great, and I regularly do that, I always wondered about using it to look forwards rather than backwards.

It’s easy to spend weeks implementing five different tactics before figuring out which is the best one.

Was there some way of figuring out what thing to work on in advance, rather than using the brute force approach of trying a bunch of stuff then cutting what didn’t work.

Could I figure out “What should I do next?” instead of “what should I stop doing?”

I thought about this many times over the years. I was sure that other people were managing this somehow. But I couldn’t find a specific process to follow.

80/20 Sales and Marketing talks about this a lot, but it doesn’t show step by step how to do it.

I found this article by Taylor Pearson useful where he talked about limiting factors.

“I’ve found that thinking in limits is frequently the best way to identify, and do, the obvious.

“Once I’ve defined the problem as a system with constraints or limits, I have the desired outcome that I can think backward from to see what the limits are and re-allocate my energy to address the appropriate limit.”

Taylor Pearson

I also found this article by Nate Smith useful where he said he focused on parts of people’s funnels that are underperforming.

Based on these and my own experience I’ve developed a data-driven process that I use once a week to identify the next thing to improve. An 80/20 SOP if you will.

It’s been life-changing for me.

We’ve been making improvements faster than ever in our marketing funnel, so I thought I should share it.

80/20 SOP – Basic version

Step 1

Write down the steps in your marketing and sales funnel. Let’s imagine this is:

Google ads —> Landing Page —> fill in enquiry form —> phone call —> sale

Step 2

Write down the conversion rate at each stage. For example:

Google ads $5
Conversion % from click to sign up on landing page = 13%
Conversion % from call to sale = 30%

Total cost per sale $128

Step 3

Look up an ok conversion % for each step. 

* Google ads – depends on your keywords, buts let’s say you find its $4
* Landing pages – depends on your offer, but let’s say about 20 – 25%. Some get much higher, but that would be an ok number.
* Call to sale – 33%. Really good is 50%.

We’re looking for which one is the easiest to improve considerably.

Google ads are already pretty close to a decent level. Landing page is way under average. Call conversion rate is quite close to average.

So, a data driven decision would be: the obvious place to focus is on the landing page.

Step 4

Research which elements of landing pages will have the biggest impact. Most people agree it’s:
1. Audience you’re sending there
2. Your offer
3. Headline

Figure out which of these might need improving.

Make a change to that thing and track the results.

80/20 SOP – Advanced version

Phase 1 – map out your funnel

Map out your marketing funnel step-by-step on a piece of paper or a whiteboard

Add each step to a spreadsheet. Here’s a screenshot of the spreadsheet we use each week. If you want to be data-driven, get used to spending time in spreadsheets 🙂

Set up a model which predicts what would happen to your income if you change one of the numbers.

I’ll be honest. This is where it gets a bit mathsy. If you’re not comfortable with percentages or Excel then this might be hard work, so I’ve included a copy of our spreadsheet for you to start from.

Here’s a copy of the spreadsheet we use each week.

Here’s how the numbers work

  • revenue line at the bottom = revenue of enquiries x 75% (average % of projects that are won)
  • Enquiries = calls x 58% (average conversion percentage from call to enquiry)
  • Calls applied for = webinar attendees x 20% (average percent who book a call)
  • etc.

The model we use is in the second worksheet of this spreadsheet.

Find data for what other people with as similar a business as possible are achieving at each stage, and put a benchmark level of what you think should be possible to achieve (not the best of what others are getting, but something that seems totally realistic).

Step 2 – identify which area to focus on

Identify which of your numbers is furthest from the benchmark.

Try changing that number in the model and see what happens to the revenue number at the bottom.

Make a data-driven decision: if it has a big effect on your income then that’s probably the area to focus on.

Check that if you change that number it won’t cause problems elsewhere (e.g. you can increase number of enquiries, but you don’t have time to deal with any more enquiries).

If there are a few contenders then you also might want to change that number back and play around with changing other numbers.

So we might start by saying that we want to make more sales, but by the end of this phase we should have a much more specific focus.

For example, this week I’ve identified that we have good numbers of people registering for the webinar, attending the webinar, staying to the end of the webinar, signing up for a sales call and making an enquiry, but only 36% of them buy, and other people are achieving as high as 80% conversion rates from enquiry to sale. This makes me think I could get to 50% reasonably easily.

I also looked at what happened if I tripled our ad budget. According to the model, this would increase our income dramatically, but I only have 13 slots per week for calls, and that would take me over that 13 number. That suggests that the number of slots for sales calls is another limiting factor we could look at that would make a big difference. Maybe next week.

Step 3 – Narrow in more on the problem

So we’ve used the 80/20 rule so far to find what the top area is. Let’s use it again to narrow down to the highest impact element of that area. The one most likely to make a difference.

This is the least well-defined step of my data-driven process. I currently do this through a combination of meditation, research and editing.

I’ll write out the problem as clearly as I can. I’ll then meditate and get my head as clear as I can. Then I’ll read back through the problem and edit it till it’s clearer. I’ll then do some research into where we’re weakest in that step. Then I’ll read back through the problem and edit it till it’s clearer.

I might repeat this process about five times over the course of several hours. This is quite time consuming, but I’ve found it’s worth it because it gets me narrowed in on that top, most effective action.

For example – in the last phase I got to the point where I knew I wanted to increase the conversion % of enquiries to sales from 36% to 50%+. What is the current problem?

I went back through our CRM to look at all the jobs we didn’t win, and identified as best I could what we should have done better. I got this down to 3 things:
– I haven’t followed up with some of the people who didn’t buy, and they still might buy. The reason I didn’t follow up is the task for following up either didn’t get added or was lost with too many other tasks in my CRM
– I didn’t follow my own sales call system every time because there are some bits that aren’t mapped out precisely and because I couldn’t always remember every step

Other things that I looked at were whether to offer bonuses to make our proposals a better offer. Or to focus on how to build more rapport with clients.

I can definitely be better at building rapport, but I’m pretty good already.

I could definitely test adding bonuses, but this is something where my gut tells me that I could actually make things worse. If I offer our online training as a free bonus to someone who we’re wanting to run a campaign for then there’s some dissonance there. And I’m not sure what else we’d offer as a free bonus.

Phase 4 – Identify the top options for solving that problem

We’ve used the 80/20 rule to identify the top area, then we’ve used it again to choose the top issue within that area. Now we’re going to use the 80/20 rule to focus in on the top things to do to address that issue.

My next step is to find materials to study on that very, very specific problem and identify what everyone agrees on.

If I can I find one reliable expert and follow their advice.

If I read or watch information from a few people then I make a note of what they all agree on and start there.

For example – maybe one expert says that to improve the webinar conversion rate you shouldn’t teach, but should focus on inspiring people to believe they can achieve the objective.

Another expert says you should teach as much as possible.

Well – both work ok then. Don’t worry about that.

But if they both agree that you should give a clear and strong call to action at the end. Well – you need to do that.

I’ve found that this stage is a great point to get others involved. If I can put a very clearly defined problem in front of my contacts, mastermind, colleagues or even non-business friends then it’s sometimes possible to identify what to do really quickly.

For example – Heather Shannon from my mastermind was able to identify that I was talking too much in my sales calls and not asking enough questions and I immediately increased the conversion rate dramatically.

Steve Forrester was able to identify that I should implement SMS follow up in my Facebook Ad campaigns, and we got a huge increase in response rate.

Back to my sales example.

My problem was:
I haven’t followed up with some of the people who didn’t buy, and they still might buy. The reason I didn’t follow up is the task for following up either didn’t get added or was lost with too many other tasks in my CRM
I didn’t follow my own sales call system every time because there are some bits that aren’t mapped out precisely and because I couldn’t always remember every step

So it’s now reasonably straightforward to see that I should:
– Follow up better after sales calls
– Follow my own data-driven system better = role play sales calls more
– Map out every step of sales call better (eg write up answers to objections)

How can I do those things?

I watched this video from Chet Holmes about following up with prospects. He explains the process he recommends for effective follow up. I copied that and added a step to tag these follow-up tasks with people who made an inquiry as important so I do them first.

I watched another video from Chet Holmes about the sales process and identified that I don’t have enough questions about the prospects’ pain points in my sales call script. I ask one question, but then don’t dig deeper.

I went back through the last 20 projects we didn’t win and wrote up answers to the most common objections.

Then lastly I added a task to practice my sales call script every week.

In this process I also identified that I could probably improve this sales process by adding in bonuses and improving my close. But they aren’t solving the very specific problems I identified.

Phase 5 – Check if it’s the smallest possible thing

What I’ve learnt is that if I change anything big then it will take me longer to implement it, and it’s more likely that it will have an adverse effect on something else in my funnel.

Whenever you change something it affects other things. We want to make the most laser-targeted improvement possible.

I therefore identify the smallest possible thing I can do to fix the specific problem I identified.

By just changing the smallest possible thing, I’m taking the 80/20 rule to the next level.

Most results for least effort. That’s what 80/20 is all about.

Looking through what I chose I think those things are quite straightforward. So I’ve not got anything to cut, but normally I have a few things here to cut back down to size.

Phase 6 – Check it won’t break anything else

I found that if I made changes to two consecutive steps in my funnel it made it more likely they could affect each other and cause an issue. I also found that it was harder to tell which thing didn’t work if one of them turned out to be a bad idea.

For example, when I automated the webinar and change the call to action in the webinar then one didn’t work, but it took me 7 weeks to identify what the problem was. 7 painful, frustrating, weeks.

I’ve therefore started to only change things that are further apart in the funnel. I don’t have a hard and fast rule over how far apart the two parts have to be before changing, but quite a long way apart is the way that I’m thinking about it.

Results this has got me

For me this has been incredible and it’s meant that every week I’ve made an improvement to my marketing funnel that had a clear and obvious effect.

Avoiding temptation

On average this takes me 5 hours to figure out. I’ve found it’s really tempting to just come up with an idea and start working on implementing it. But that thing could easily be something that doesn’t have a very big effect at all. So I’m constantly having to remind myself to only work on the things I identify through this data-driven process.

I’ve spent months before working on things only to find out they had little impact long term. 5 hours is less than that.

How about you? Do you make data-driven decisions? How do you decide what to do next in order to increase revenue?