Optimize sales strategy with these 9 key funnel metrics

Highlights

You’ll learn about:

• Conversion rate: Measures the number of leads that buy your products or pay for your services
• Sales velocity: The rate at which the lead translates from the top of the funnel to the bottom
• Brand awareness: This is awareness of the brand and how familiar people are with it
• Cost per acquisition (CPA): Measures your cost to get one customer on board
• Brand considerations: Analyze brand favorability and purchase intent for customer engagement
• Brand loyalty: Evaluate your customer retention and loyalty for long-term success.
• Customer lifetime value (LTV): Understand the value customers bring during their relationship
• Churn rate: The percentage of customers who stop purchasing from your brand

Monitor these metrics to grow your business. 

Keep reading to learn more!

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Let’s face the harsh reality—not all your prospects will turn into customers. Not all customers will value your products or services, irrespective of ad spend or your marketing budget. Why?

Your customer’s journey is full of perceptions, emotions and decisions—many of which you cannot quantify. Analyzing your funnel gives you data on what encourages your customers to purchase and what demotivates them. Funnel metrics pinpoint key events in the customer journey, identify performance gaps and explore areas for improvement.

But why do sales and marketing teams stress so much on funnel metrics?

These metrics focus on different phases of your customer journey and sales cycle and quantify the performance of your marketing and sales teams for every stage. 

It’s not enough to know how many potential customers or leads you start with or how many leads convert to customers. 

What matters is what happened between the two ends of the funnel.

What are funnel metrics?

Funnel metrics are key performance indicators (KPIs) that track your customers' journeys from the moment they encounter your product to the point of purchase. These metrics primarily measure customer speed, quantity and conversion rate. Companies use the funnel metrics to understand their sales and marketing efforts. 

As the famous consultant Peter Drucker said: “What gets measured gets managed,” tracking your sales funnel metrics improves your funnel and starts bringing in more customers. 

What funnel metrics matter?

When you collect and scrutinize the performance of your funnel, you reap various benefits like:

Improves forecasting

Using the right blend of sales and marketing funnel metrics, forecasting how many actual sales you will have becomes easy. You understand your potential revenue streams. Precise forecasting helps you manage your inventory, marketing and sales budget and supply chain. You predict future sales volumes by understanding each funnel stage's drop-off points and conversion rates.

For instance, if data shows a consistent 20% conversion rate from a specific stage to a final purchase, you estimate future revenues based on the number of prospects at that stage. This foresight helps in resource allocation, inventory management and setting realistic sales targets, helping you meet market demand. 

Identify potential bottlenecks

Tracking metrics lets you pinpoint where prospects drop off or stall in the conversion process. For instance, if you lose prospects after the initial contact, you must improve your follow-up strategy.

By analyzing these metrics, you can examine specific stages of the funnel more closely. You can learn about the quality of initial interactions, the effectiveness of communication methods or the relevance of the solutions offered.

Enhances customer experience

With sales funnel metrics, you tailor your strategies to improve your customer experience. For example, if feedback indicates that customers value quick responses, implementing a live chat feature on the website can be beneficial. 

If your data reveals that customers appreciate detailed product information or reviews before purchasing, you can enrich your product pages with descriptions, high-quality images and user-generated reviews.

Optimizes marketing campaigns

Analyzing funnel metrics is useful for identifying what performs best for each stage. For instance, if data reveals high engagement with social media ads during the awareness phase, increasing investment in these ads makes sense. Moreover, if metrics indicate that email marketing is particularly effective during consideration, you allocate more resources to developing personalized and targeted email content. 

Improves ROI

Funnel metrics help you understand where you should allocate resources for maximum returns. For example, if webinars generate more qualified leads than other marketing activities, you can invest more in high-quality webinars. Also, if developers or other team members save time using a tool, it will reduce your overall spending and increase ROI. This targeted allocation ensures you use all your resources wisely. 

How has Contentstack helped Pella improve customer experience?

Pella struggled with a monolithic CMS that made content management tedious and slow, requiring extensive development work for customization and new product launches. To address this, Pella transitioned to Contentstack's headless CMS, which offered a decoupled front end and improved performance. Using Contentstack resulted in a 50% reduction in developer time, greatly reducing overall spending and increasing ROI. These types of results contribute to improving the customer experience and providing a 295% ROI on average.

After using Contentstack, Tod Hilton, Front-End Web Developer at Pella, said: 

“Contentstack is the best decision we ever made.”

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Key funnel metrics to track

Leads

Without leads, there’s no sales funnel. But how do you get the most value from your leads? Will tracking only the number of leads you have suffice? No. Because not anyone who knocks on your website is a lead. They become a lead only when they show interest in your services or products. Not tracking your leads effectively results in missed opportunities. 

The best way to track your leads is using lead scoring. Lead scoring is a funnel metric that ranks leads based on different criteria and data points to assess their readiness to make a purchase. In lead scoring, you assign numerical values to each lead you generate. Scoring of the leads depends upon the information the leads have submitted and how they engage with your brand or website. 

Lead scoring serves two purposes—allows the sales and marketing teams to prioritize leads and respond to them based on their score. Secondly, increase the rate at which those leads convert to customers. 

For instance, a lead might accumulate 

• +10 points for requesting a free demo or trial of your product
• +15 more points for attending a webinar
• +10 points for opening a promotional email
• -10 points for visiting the career page
• + 5 points for liking your social media handles

In short, the more a lead engages with your brand, the higher the lead score and conversion. Some factors that affect a lead score are:

• Demographic information
• Online behavior
• Company information
• Social engagement
• Email engagement
• Spam detection

Conversion rate

Conversion rate is the most critical funnel metric—it shows the number of leads who buy your products. And since your main aim is to acquire as many customers as possible, knowing the conversion rate enables you to do so. By constantly monitoring conversion rates, you identify which actions, individuals and strategies reap the desired results. 

Conversely, just like a higher conversion rate indicates more sales and revenue, a low conversion rate is a precursor of issues in your sales funnel. For example, a low conversion rate can reflect your nurturing efforts falling short, meaning you need to train your sales team. Taking timely corrective actions ensures your team performs to the best of its abilities. 

Remember to track the conversion rate at each stage of the sales funnel. 

• Top of the funnel: The percentage of website visitors or leads that convert into engaged prospects, showing the effectiveness of your initial outreach and marketing efforts.

• Middle of the funnel: The percentage of engaged prospects that transition into qualified leads, reflecting the success of your nurturing and educational content.

• Bottom of the funnel: The percentage of qualified leads that convert into paying customers, demonstrating the efficiency of your closing strategies and final sales pitch.

Sales velocity

Sales velocity measures how fast your leads move through the funnel from their first interaction to the time they make a purchase. It determines your sales funnel's effectiveness and shows you its richness and health. 

A higher sales velocity suggests a great sales operation, while a lower velocity often reflects areas of sales performance that need improvement.

Brand awareness

Brand awareness refers to the extent to which the target clients can identify your brand and associatively recall it. Prospects can't become customers and buy from your brand if they have no idea who you are. The lack of brand awareness washes away the most committed sales and marketing efforts. You can use these metrics to measure brand awareness.

• Brand mention: Brand mention refers to the level at which people talk or interact with your brand in social networks, blogs, forums, news websites and other websites.
• Brand impression: Brand impression is how often people view your content and are exposed to your logo or brand name.
• Branded search volume: Branded search volume is the average number of occurrences of your brand name for a specific search on your search engine result pages. 

Cost per acquisition

The cost per acquisition is the cost of attracting and acquiring new customers for your products or services. With CPA, you can determine the ROI for all of your marketing actions.

Teams usually look at this metric to analyze email marketing, social media, paid advertising and other paid marketing efforts. If the CPA exceeds your business profitability, you might have to consider alternate marketing campaigns. Having a lower CPA is beneficial as it shows you’re spending less to acquire new customers. 

For instance, CPA helps you understand that redirecting your resources from high-value leads to less expensive channels might be more beneficial.

Brand considerations

When customers know your brand, they start to evaluate or consider your brand’s products and services. Brand consideration measures your customer’s interest and intent level of your customers towards your brand. Teams use brand considerations to understand how well your offerings resonate with your target audience. Track these metrics to measure brand considerations:

• Brand recall
• Brand favorability
• Purchase intent

Brand loyalty

Brand loyalty provides useful insights into the long-term relationship with your customers. To track brand loyalty, use these metrics:

• Net promoter score or NPS: NPS measures how satisfied and how likely you’re customer will recommend your products or services to others on a scale of 1 to 10. 
• Customer retention rate: The retention rate tracks if and how often customers return to purchase your products or services. A lower retention rate indicates customers face problems purchasing your products or using them. 

Customer lifetime value (LTV)

Customer lifetime value is the value a customer brings to your company over the course of their relationship. It considers the customer’s initial purchase, repeat purchases and average time spent with your company.

Sales and marketing teams measure customer lifetime value to know how loyal their customers are. When customers continue to purchase from time to time, your marketing efforts pay off and the customer lifetime value is high. The higher your LTV, the lower your customer acquisition cost. 

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Churn rate

The churn rate refers to the number of customers who stop purchasing your products or services over a period of time. In an ideal business environment, the churn rate should be zero. But this isn’t a realistic number. To better understand your churn rate, compare it with your industry. Teams reduce their churn rate by applying specific marketing and sales strategies, such as offering promotions or discounts. 

Contentstack provides analytics tools like Salesforce and Google Analytics to track and measure the performance of your sales and marketing efforts. You calculate key metrics such as churn rate, conversion rates and leads by analyzing millions of data points. Performance. You can use these tools to examine pipeline data, provide a list of prospects who are more likely to convert and suggest ways to move these prospects further down the pipeline.

FAQs

What are common funnel metrics?

Common funnel metrics include conversion rates, customer acquisition cost, customer lifetime, customer value, brand loyalty, brand consideration and brand awareness.

What are the 4 levels of the funnel?

The 4 levels of the funnel are awareness, consideration, decision-making and retention.

What is a funnel KPI?

Funnel KPIs are key performance indicators that measure the effectiveness of all marketing activities and sales efforts at each stage of the sales funnel.

Learn more

Tracking these nine funnel metrics fine-tunes the quality and efforts of your sales and marketing teams. After tracking these metrics, you build a frictionless customer journey, from discovery to customer success. 

If you want to drive sales, improve customer satisfaction, and achieve long-term success, track these sales funnel metrics before it’s too late. To know more, request a free demo.