Understanding your business’s sales funnel is critical. If you don’t monitor your funnel on a consistent basis, you won’t be able to properly gauge its efficiency. That’s where funnel metrics come in.
Explore the meaning of e-commerce funnel metrics and the benefits associated with them, as well as our list of useful sales funnel metrics to focus on. But first, take a look at our sales funnel metrics definition.
What are sales funnel metrics?
Before we get onto the definition of sales funnel metrics, it’s important to understand the meaning of the sales funnel itself. Essentially, the sales funnel is a marketing concept that maps the journey your customers go on when they make a purchase. The “funnel” is used as part of the analogy because while there may be large numbers of potential customers at the top-end of the sales funnel, relatively few end up making it down to the bottom to make a purchase.
As your potential customers – sometimes referred to as prospects – pass through each stage of the sales funnel, they exhibit a deeper commitment to making the purchase. The four stages of a basic sales funnel are as follows: awareness, interest, decision, action. Sometimes, additional stages, such as “re-evaluation” – when your sales offerings include contracts or subscriptions that need to be renewed – are included in the SaaS sales funnel.
By optimising the sales funnel, you can increase the number of sales made by your business. So, what are sales funnel metrics? Simply put, they’re ways of measuring the efficacy of your company’s sales funnel. E-commerce funnel metrics can help you to pinpoint inefficiencies and gaps within your funnel. Once you know where you’re going wrong, you can take steps to improve your funnel and start bringing in more customers, thereby boosting your bottom line.
3 useful e-commerce funnel metrics
Sales funnel metrics are important, particularly for SaaS companies. So, how do you go about getting the most out of your e-commerce funnel? Here are three of the most beneficial SaaS sales funnel metrics that you should be paying attention to:
Traffic – Firstly, you’ll need to measure the number of visitors who enter each stage of your funnel. Initially, you should measure website traffic, which provides a baseline metric for how many people are entering the funnel. However, many visitors won’t advance to the latter stages of the funnel on their first visit, which is why it’s so important to measure return traffic as well. It’s important to remember that every visitor to your website isn’t a prospect. As such, you should measure the number of qualified leads that you’re generating as well.
Conversion – Next, you should measure the conversion rate at each stage of the sales funnel. This provides you with a better understanding of the efficacy of your marketing and sales campaigns. Look at the conversion rate of visitors to leads, leads to MQLs (marketing qualified leads), SQLs (sales qualified leads) to sales opportunities, and sales opportunities into confirmed sales to see how effective you are at each stage. It also makes sense to track your overall conversion rate (the higher, the better!).
Value – Finally, you should explore the value of your sales funnel and ROI depending on the source of your leads. That way, you can determine which marketing channel is generating the most money for your business, which gives you a clearer sense of where to focus your marketing efforts. Think about cost per lead, cost per opportunity, cost per sale, as well as the lifetime value of your customers (LTV) from each channel.
The benefits of getting your SaaS sales funnel metrics right
There are a wide range of advantages associated with finetuning your sales funnel metrics. Firstly, it can help you identify specific areas to focus on. Rather than simply guessing why your conversion rate isn’t as strong as you might expect, insightful SaaS sales funnel metrics can provide you with the data you need to make specific changes to your sales and marketing strategy, thereby addressing the problem effectively.
In addition, e-commerce funnel metrics provide you with clear key performance indicators (KPIs), giving you actionable insight into how to increase sales.
Who is GoCardless
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.