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Conversion Funnel

What is a Conversion Funnel?

A conversion funnel is a series of steps that customers go through on their journey from initial awareness of a product or service to making a purchase. In ecommerce, the conversion funnel typically includes steps such as website visits, product views, adding items to the shopping cart, initiating the checkout process, and completing the purchase.

Understanding how Conversion Funnels work

Let’s say that an online retailer had 10,000 website visitors, 5,000 of whom viewed a product page, 2,500 of whom added an item to their cart, and 1,000 of whom completed the purchase. To calculate the conversion rate for each stage of the funnel, we can use the formula:

Conversion Rate = (Number of people who completed the stage / Total number of people who entered the stage) x 100%

Product page views: (5,000 / 10,000) x 100% = 50%
Cart additions: (2,500 / 5,000) x 100% = 50%
Purchase completions: (1,000 / 2,500) x 100% = 40%

In this example, we can see that the conversion rate from product page views to cart additions is 50%, which is a relatively strong performance. However, the conversion rate from cart additions to purchase completions is only 40%, which suggests that there may be issues with the checkout process that are causing customers to abandon their shopping carts. The online retailer could use this information to identify areas of the checkout process that may need improvement, such as unexpected shipping costs or a lengthy checkout form, and take steps to optimize those stages to improve the overall conversion rate.

Why Conversion Funnels are important

The conversion funnel is an important concept in ecommerce, as it provides businesses with a framework for understanding the customer journey and identifying opportunities to improve the customer experience and increase conversions. By optimizing the conversion funnel, ecommerce businesses can reduce the number of customers who abandon the purchasing process, increase their conversion rates, and ultimately drive more sales and revenue.

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