Measuring the success of your sales funnel is crucial for the growth and profitability of your business. By tracking the 7 right metrics, you can identify areas for improvement and optimize your funnel for better performance.
You only need 7 metrics that can help you measure the success of your sales funnel in just few hours, and see real-life business examples to help you understand how to apply these metrics in practice and get the sell your product with the most profitable audience.💻💰
1. Conversion Rate💬:
Conversion rate is the percentage of visitors who take a desired action,
- Making a purchase,
- Filling out a form,
- Subscribing to a newsletter.
Tracking your conversion rate is crucial to understanding how well your sales funnel is working. 📈👀
For example,
if your website receives 1,000 visitors per month, and 50 of them make a purchase, your conversion rate is 5%.
If my B2B software company want to improve its lead conversion rates.
By tracking its conversion rate, the company discovered that its landing pages had a high bounce rate .
After optimizing the pages, the company saw a 32% increase in conversions. 💻💰
2. Average Order Value (AOV)💰
The average order value is the average amount a customer spends on each transaction.
Tracking your AOV is essential to understanding the purchasing habits of your customers and identifying opportunities for increasing revenue.💸💡
For example,
if your online store generates $10,000 in sales from 100 transactions, and the average order value is $100, you know that your customers tend to spend around $100 per transaction.
In reality,
An e-commerce store discovered that its average order value was lower than expected, despite having a high number of transactions.
By offering free shipping on orders over a certain amount, the store saw an increase in the average order value by 20%.🛍️🆙
3. Customer Acquisition Cost (CAC)
The customer acquisition cost,the amount of money you spend to acquire a new customer.
Knowing your CAC is crucial to understanding the profitability of your sales funnel.💰🧐
For example,
if your marketing campaign costs $1,000 and generates 10 new customers, your CAC is $100.
I saw A subscription-based meal kit company that wanted to increase its profitability📈.
By tracking its CAC, the company discovered that its Facebook ads were too expensive and not delivering enough new customers.
The company shifted its focus to other marketing channels, resulting in a 50% reduction in CAC.🍔👨👩👧👦💻
4. Customer Lifetime Value (CLTV)💰
The customer lifetime value is the total amount of money a customer spends on your products or services over the lifetime of their relationship with your business. Knowing your CLTV is essential to understanding the long-term profitabilityof your sales funnel. 💰💻
For example,
If your average customer spends $500 per year and stays with your business for 5 years, the CLTV is $2,500.
Last month I saw an online retailer who wanted to understand the long-term value of its customers.
By tracking its CLTV, the company discovered that repeat customers were more profitable than new customers. The company implemented a loyalty program, resulting in a 30% increase in CLTV💳📈
5. Sales Funnel Velocity🚀
Sales funnel velocity measures how long it takes for a lead to move through your sales funnel from initial contact to conversion. Tracking your sales funnel velocity is essential to understanding how quickly your sales funnel is delivering results.
For example,
if your sales cycle is 30 days, and your lead-to-conversion rate is 10%, your sales funnel velocity is 300 days.
6. Traffic Source📈
The first metric to measure is where your traffic is coming from. Knowing this will help you to understand which marketing channels are driving the most traffic to your website.
For example,
If you’re getting most of your traffic from social media, you may want to focus your efforts on creating more social media content to attract even more visitors.
One of my friends who owns a clothing store in New York City wanted to boost its online sales.
By analyzing its traffic sources, the store discovered that its Instagram page was driving a significant amount of traffic to its website. The store then created more Instagram content\ and saw a 30% increase in website traffic.🛍️
7. Customer Retention Rate🔒
The customer rate is the percentage of customers retention who continue to make purchases from your business over time.
This metric is essential for measuring the effectiveness of your sales funnel, as it determines how loyal your customers are and how likely they are to make repeat purchases.
You can see examples like an online marketplace in Florida wanted to improve its customer retention rate.☕
By launching a referral program📈 that rewarded existing customers for referring new customers, the marketplace was able to increase its customer retention rate by 20% in just three months.🤝
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