Introduction to Analytics: Funnel Analysis

We've encountered quite a few people lately who are interested in Mixpanel and metrics but don't know much about the details. It seems like an introductory course could be really helpful.

Today I'd like to introduce an idea that has been around for a while, but you might not have heard of called Funnel Analysis.

What is Funnel Analysis?

A funnel is a well-defined flow on your website - the checkout process, registration, lead generation - anything where users take a series of actions before reaching some sort of goal.

So, the very first thing to do is find where these funnels occur. One example would be splash page -> demo -> sign up. This obviously varies depending on your business, but almost everyone can benefit from figuring out their funnels and how users flow through them.

To analyze this funnel, you have to find a few different things:

  • Current conversion rates (do you know this?)

  • Current dropoff rates

The conversion rate is pretty obvious - what percentage of users who hit the registration page are registering? - but the dropoff rates are less so.

At every stage in the funnel, you lose some people. Generally a lot of people. Even if your front page is entirely focused on getting people to try your demo or sign up, you will likely lose at least half of your visitors before they make it to the next step. You will also lose people who make it to the download page or registration page, who will just decide not to continue. It's important to be able to figure out where you stand before you do any tweaking.

How it will help you

If you've made it this far, I'm sure you see the possibilities - by constantly measuring this funnel, you can see how the changes you make affect user behavior.

You can also find bottlenecks in the process. You might find that there's one page with a 90% dropoff rate that is killing conversions. When you find that out, you can start testing variations of the page and watching your dropoff rate and conversions.

Fixing the dropoff

The first thing to do is approach the problem from the point of view of a user. Move through your funnel and think about the bottlenecks objectively. If you can identify things that annoy you or turn you off, you have a good chance of increasing your retention.

Some possible issues to consider:

  • Do you require registration to continue?

  • Is there an obvious way to continue?

  • Is there something wrong with the design on that page?

Another possibility is that you aren't focusing enough on what you want your users to do next. You might want them to continue to the purchase page, but they could get distracted by ads, menu links, etc. It's important to remove distractions at the critical points in your funnel, and to make the desired action the easiest to take.

Conclusion

Figuring out your funnels is one of the most important things you can do to increase your quantitative understanding of your website. It's critical to get the starting measurements - the dropoff and conversion rates - before you change anything. That's the only way you can know the effect of the changes you make.

By constantly tweaking and measuring, you should be able to really improve your number of conversions.

We want your input!

Mixpanel is working on a better, simpler funnel analysis and we would love to hear what you want to see. Please leave comments or email me at tim@mixpanel.com with any suggestions. If you have tried other funnel analysis software we want to hear all about their flaws!