Conversion Funnel

Think about the steps you take when you first learn about a new brand. Perhaps you read about a product in a blog article and you’re interested to learn more. You navigate to the brand’s website, browse their product collections, sign up for a discount code, and maybe even add an item to your cart. Whether you continue the checkout process and order the product or abandon your cart and close the website, you’ve spent some time moving through the brand’s conversion funnel.

The conversion funnel is the journey a customer takes from their first interaction with a brand to making a purchase. This is not always a linear path — customers might encounter the same brand across different platforms and channels as they move through the buying journey. When a new customer finally completes a purchase, they have successfully “converted” from a lead to a buyer.

You can think of the conversion funnel, or purchase funnel, as a model that represents the flow of people as they move through different stages of your marketing strategy.¹ These stages typically include an awareness stage where customers first discover your brand, a consideration phase where they engage with your brand to learn more, and a conversion phase where they make a purchase.

This funnel-shaped model illustrates the steady decline in the number of people at each stage of the conversion process, with the largest pool of potential customers entering the top of the funnel and only a small portion of those initial prospects trickling out the bottom as customers.

Unfortunately, conversion funnels are full of gaps — not everyone entering your funnel will exit out the bottom as a paying customer, and many users will leak out at various points along the way. Understanding what causes people to leave your funnel early can help you pinpoint potential issues or opportunities to nudge customers from one stage to another. This often means delivering targeted information to people based on where they are in your funnel, increasing the likelihood that they’ll resonate with your marketing and eventually convert into customers.

Conversion Funnel Stages: The buying steps people go through after learning about a business. While conversion funnels vary in their number of stages or steps, most can be broken into three main phases: awareness, consideration, and conversion.²

Awareness Stage: Also called the top of the funnel (TOFU), this is the stage where people become aware of your brand for the first time. People in this stage are typically looking for solutions to problems or answers to questions. Their first point of contact with your brand might take the form of a blog article, social media post, online advertisement, or even a mention of your brand on a podcast.

Consideration Stage: Also called the middle of the funnel (MOFU), customers enter this stage after they have engaged with your brand. For example, they might subscribe to an email list, sign up for a free course, or follow your brand on social media. At this point, people are committed to finding a solution to their problem and considering your brand as a potential option. They might look for more information on your website, read customer testimonials, or reach out to your customer service team with their questions.

Conversion Stage: Also called the bottom of the funnel (BOFU), this is the last place potential customers land before taking action and making a purchase. These customers are ready to buy but might need a final nudge before they convert. This is where many brands offer a free trial or product demo to build customer confidence and give them a reason to commit.

AIDA Model: A model depicting the four cognitive stages a customer goes through as they navigate the conversion funnel.³ The AIDA acronym stands for Attention, Interest, Desire, and Action. This model provides a framework for understanding customer behavior and pinpointing what content or information customers need in order to move to the next stage of the conversion funnel.

Click-Through Rate (CTR): A metric that measures the effectiveness of an advertisement as the percentage of people who click an ad out of the total number of people who see it.⁴ To calculate an advertisement’s CTR, divide the number of clicks it receives by the number of times the ad is shown. For example, if 100 people open your marketing email and 24 people click a link that brings them to your website, your email would have a CTR of 24% (which would be very impressive).

Conversion: Occurs when a user takes a desired action, such as making a purchase, filling out a form, downloading a file, installing an app, opening an email, or clicking a link.

Conversion Rate: The percentage of users who complete a desired action. Conversion rates don’t always measure clicks — they can refer to any conversion events throughout your funnel. For example, you can calculate a conversion rate for the number of people who sign up for your email list after reading a blog post or the number of people who entered a giveaway after seeing a social media post. You can even measure the conversion rate for your entire conversion funnel as a whole.

The idea of the conversion funnel emerged in 1898 when American advertising pioneer, Elias St. Elmo Lewis, developed a model to represent the journey a customer takes from the moment they first learn about a brand to the moment they make a purchase. St. Elmo Lewis was adamant that all advertising must have four basic characteristics — it must attract attention, maintain interest, create desire, and encourage action.⁵ Today, this advertising framework is referred to as the AIDA model.

In developing this model, Lewis was inspired by William James, a prominent philosopher and psychologist who has since been coined the father of American psychology. Many of Lewis’s ideas about marketing are rooted in James’s work on human cognition and behavior. James theorized that mental states — such as desire and will — drive behavior, and Lewis effectively introduced this concept to the world of advertising through his AIDA model.

Marketing professionals were quick to adopt the AIDA model as a method to move customers through these cognitive stages, targeting users with content designed to drive behavior. The AIDA model is still in use today and is fundamental to the contemporary conversion funnel.⁶

The conversion funnel has become foundational to modern marketing. In business, there are two main ways to increase sales: increase the total number of people who enter your conversion funnel or increase the percentage of people who convert into customers. Typically, it’s easier and more cost-effective to boost conversion rates than attract more visitors to your website.⁷ Plugging holes in your conversion funnel, so to speak, can minimize the number of people who leak out, effectively increasing your revenue without increasing your audience.

Why do people leave conversion funnels early? Often, customers drop out of funnels because they’re never presented with the next steps to take. Depending on where they are in your funnel, people might need more information about the benefits of your product or a strong call-to-action (CTA) encouraging them to buy now. For example, adding an element of scarcity to marketing emails can boost your CTR, nudging people from the consideration stage to the conversion stage.⁸

By understanding how people move through each stage of the model, brands can effectively engage customers and address their concerns instead of waiting around for customers to reach out. This allows brands to meet customers where they are and provide real value when people need it most.

Unsurprisingly, conversion funnels have a significant impact on the customer experience. By gently guiding customers through your conversion funnel, you can help customers access the content and resources they need to make informed decisions, enhancing customer satisfaction and positioning your brand as a valuable source of information.⁹

One of the most common criticisms of the conversion funnel is the model’s inability to accurately predict consumer behavior. In reality, a typical customer’s buying journey is not linear—and this isn’t something we can completely change. People rarely progress in a straightforward path as they transition from potential customers to paying customers, and the conversion funnel fails to capture the complexities of the buying process. Marketing campaigns based on the linear conversion funnel risk being overly general and untargeted. 

Consider how today's consumers often seek multiple sources of information before making a buying decision. Many of these informational sources, such as social proof on social media, are out of your hands as a brand owner.¹⁰ You won’t always know what information people are getting about your brand, so it can be difficult to determine where they are in your conversion funnel.

Marketing experts suggest that the linear conversion funnel may have been more accurate in the early days of advertising where consumers gained almost all their information about a brand through mass marketing methods like mail flyers and TV advertisements. As a result, people generally moved through a predictable purchase path that no longer exists today.

For instance, evidence suggests that mobile and desktop users take different paths through the same conversion funnel, and mobile users tend to convert at a much lower rate overall.¹¹ Understanding these differences is key to engaging users based on where they are in the funnel.

Similarly, the conversion funnel seems to suggest that each customer relationship is a one-and-done deal.10 Although the funnel implies that customers leave the conversion process once they make a purchase, this is only the beginning of their relationship with the brand. The conversion funnel model does not account for this post-purchase relationship or provide any additional stages or actions in which marketers can maintain customer relationships. For example, brands can engage in cross-selling and referral marketing to boost customer retention and grow their audience, reflecting a more cyclical process than is illustrated by the linear conversion funnel.

Conversion funnels are unique to every brand. To illustrate this point, let’s dive into a contemporary conversion funnel used by CrazyEgg, a SaaS company that produces website optimization and monitoring tools for online businesses.

At the top of the funnel, CrazyEgg attracts people to their website through paid search ads and social media content.¹² Once a visitor lands on the company’s homepage, they're prompted to enter a URL to have the tool scan their website and pinpoint potential weaknesses. This URL field is surrounded by elements of social proof (well-known brands that use the product) and loss aversion tactics (free trial, cancel anytime), nudging users to take the next steps along the conversion funnel. CrazyEgg even offers an alternate step for people who are not ready to move forward, directing them toward more information to keep them engaged a little longer.

After a visitor enters a URL into the field, they’re prompted to create a free account. Again, CrazyEgg uses social proof — in the form of a customer testimonial — to prompt action from users who are still hesitant. A pricing page follows, encouraging users to choose one of three subscription plans. At this stage, people are interested in the product but may not be ready to take action and make a purchase. This is precisely why CrazyEgg reminds users about the 30-day free trial at this point in the conversion funnel. 

If the user selects one of these subscription plans, they’re well into the consideration stage of the funnel and quickly approaching the conversion stage. Here, CrazyEgg provides one last nudge, telling the user they’re only 60 seconds away from seeing a heatmap of their website. The user reaches the last stage of the conversion funnel once they enter their credit card information and commit to the trial. If they’re happy with the trial, there’s a good chance they’ll let their paid subscription start when those first 30 days are up.

If the user doesn’t sign up for a trial right away, CrazyEgg keeps them engaged by sending several informational emails — including one offering a 15-day free trial with no credit card required. Because the user is still considering their options, the company provides targeted content and valuable offers to move users further along the conversion funnel. 

Despite being surprisingly simple and straightforward, the CrazyEgg sales funnel is incredibly effective. They approach new leads by offering a valuable solution to customer pain points, nudge interested leads along with social proof, and offer a free trial to those who express a desire for the product. All of these marketing tactics are carefully tailored to meet people where they are in the conversion funnel and ultimately increase the likelihood that they’ll convert in the end.

User Journey Map

A user journey map represents each step users take when interacting with a product or service. While a conversion funnel is a more general illustration of the customer journey, a user journey map is tailored to an individual customer persona, representing the specific steps taken by a target user as they move through the funnel. This article dives into the user journey map and how it can be leveraged to improve the user experience.

Decision-Making Process

Strong conversion funnels are designed to influence users’ decisions, encouraging them to progress forward and eventually convert into customers. Understanding what factors drive these decisions is crucial to designing effective funnels. Learn about the steps involved in the decision-making process and explore some of the valuable research driving this field.

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