How To Use E-commerce Sales Funnel To Boost Business Growth?

What is E-commerce sales funnel and how to use it

Making a purchase is not straight forward, every customer goes through multiple stages before they complete a purchase. They first check out your website, go through your product listing, shortlist a few products, read reviews, visit your competitors’ websites, and eventually come back to you to place an order. Without you having realized it, your customers have traversed through an E-commerce funnel. 

Every stage in this funnel has an important role to play and influence the chances of conversion. In this guide, we will take you through all the stages of an E-commerce sales funnel, along with some handy tactics you can employ for optimization. 

What is An E-commerce Sales Funnel?

An E-commerce sales funnel is a conceptual framework used to describe the different stages that a potential customer goes through when making a purchase online. As you would have rightly guessed, the funnel is a representation of the customer journey and not a specific path or a predefined process. It is simply a way to categorize all the potential customers of your online business into different buckets based on how close they are to being converted into customers.

Benefits of creating an E-commerce Sales Funnel

Here are some advantages of implementing an E-commerce sales funnel for your brand:

1. Optimize Customers’ Journey

By creating an E-commerce sales funnel, you know everything about the customer’s journey, right from when they landed on your website to when they completed a purchase. This means you have better visibility over various drop-off points in the customer journey, and you can try eliminating those bottlenecks.

2. Improve Customer Experience

An E-commerce funnel is designed to enhance the overall customer experience by minimizing friction and confusion. It ensures that customers find what they need quickly, reducing the chances of frustration and cart abandonment. You, as a business owner, can play your part by using a sales funnel to provide right information at the right time to your customers. Ultimately, improving experience and conversion rates. 

3. Stay Ahead of Competition

An E-commerce funnel helps in fine-tuning your marketing efforts by providing key data related to customer interactions. You will know what works and what doesn’t in your business and industry as a whole. Data-driven approach in marketing will help you stay ahead of your competition.

4. Reduce Cart Abandonment

An E-commerce funnel allows you to build retargeting strategies to remind and persuade customers who have abandoned their carts. It can also help make necessary changes to your website to reduce cart abandonment. For instance, if most of your customers are leaving at the checkout stage of the funnel, you can minimize distractions and barriers, thereby reducing cart abandonment rates.

Stages Of E-commerce Conversion Funnel

Stages of E-commerce sales funnel 

Here are the 5 different stages of a typical E-commerce conversion funnel – 

1) Awareness Stage

The awareness stage in an E-commerce sales funnel is the phase where your potential customers become aware of your brand and products. This is the broadest part of the funnel, where you cast a wide net to attract a large audience, also known as top of the funnel. During this stage, your target audience might not have a purchase intent. In fact, many of them might be discovering your brand for the first time. 

What should you do?

This is one of the most important stages of the E-commerce funnel because you can attract many users to your online store. Based on the information you provide, these users might become your customers. Hence, your goal here should be increasing brand awareness and top of the funnel recall. Here are some key steps you can take:

  • Optimize your website for search engines to increase your visibility
  • Establish a strong presence on social media platforms by sharing relevant content.
  • Constantly engage with your social media followers and run targeted ad campaigns to increase brand awareness.
  • Use pay-per-click (PPC) advertising on platforms like Google Ads and Meta to reach a wider audience. 
  • Collaborate with influencers who can promote your products to their followers.

Example

Farida Gupta, the popular clothing brand, has mastered the art of the awareness stage. They post regular brand-specific content on platforms like Instagram and Facebook to improve brand visibility and attract more visitors to their website. 

Example of E-commerce brands creating awareness about the product

Source: Farida Gupta

2) Interest Stage

In this stage, your potential customers have demonstrated interest in your product but have not yet committed to making a purchase. They may have engaged with your website by browsing products or adding items to their cart. Your primary goal during the interest stage must be to further engage and nurture these potential customers and move them closer to making a buying decision.

What should you do?

This is the stage when customers start to compare different options, including yours. So you must help them by showing why your products are better than others. The best way to do this is by educating them about your product and its benefits. Here are a few things you could do: 

  • Get them to sign up for newsletters. This way, you can share important information about your brand and products with them on a regular basis. 
  • Simplify the site navigation by including a user-friendly faceted search. The objective is to take them quickly from browsing the website to the state of contemplating whether to add the product to the cart. 
  • Have an exit strategy. Most visitors will exit your website after going through the details. You could entice them to stay by having a pop-up with discount codes. 

Example

Hamleys, the renowned toy brand, lets customers subscribe to their newsletter on their website. Once subscribed, customers are regularly sent updates about new primary arrivals. The primary goal of this activity is to pique the visitors’ interests and get them to place their first order.

Example of brand using E-commerce funnel 

Source: Hamleys

3) Desire Stage

This is the middle of the funnel stage where your potential customers are convinced about the potential of your product but might have some reservations. It could be the pricing or benefits they are getting. Your goal at this stage must be to eliminate all the skepticism and doubts they have in their mind about your products. All they need is a little push from the brand to make the purchase. 

What should you do?

In this stage, you must go beyond product features and talk about the actual benefits the customers will get by purchasing from you. Formulating your statement in the form of benefits, not features, will convince your customers to go ahead with the purchase. Here are some strategies you could adopt: 

  • Include high-quality pictures and videos of your products that highlight the benefits offered. 
  • Provide incentives like free shipping or discount coupons to convince the customer to complete the checkout. 
  • Include social proof and reviews on the product page to reinforce the quality of your products.

Example

Here is Pepperfy, the furniture retailer, offering and highlighting time-sensitive discount coupons on every product detail page. Such incentives will convince most customers to add the product to their cart and proceed to checkout. 

Example of brands offering discount

Source: Pepperfry

4) Action Stage

This is the stage where your leads are going to turn into customers. They are completely convinced about purchasing from you and are on the verge of placing an order on your website. Even though it may seem like you are going to gain a new customer, you must be careful. The action stage (also known as bottom of the funnel) is where maximum cart abandonment occurs. If your checkout process is not seamless, people will abandon their carts. 

What should you do?

You must make the buying process as seamless and user-friendly as possible. Successfully guiding customers through the action stage results in completed purchases and, ideally, satisfied customers who may become advocates for the brand. Here are some ideas you can adopt: 

  • Auto-populate most of the checkout fields 
  • Offer multiple payment options to customers
  • Ensure that the checkout process is mobile-friendly 
  • Create a secure environment for completing payments

Example

Myntra, the fashion brand, has created a seamless checkout experience for its customers. Besides auto-populating most of the checkout fields, it offers a variety of payment options so that the customers always go ahead with the purchase. 

Example of E-commerce brand offering seamless checkout

Source: Myntra

5)  Re-engage Stage

Your relationship with customers doesn’t end with them making the purchase. You need to retain and convert them into repeat customers. The goal of this stage is to reignite the interest among your existing customers and remind them of the value the brand offers. This stage not only helps rekindle relationships with existing customers but also leverages the data and insights gathered from their previous interactions to create tailored and effective marketing campaigns.

What should you do?

This stage of the E-commerce funnel requires strategic and targeted approaches to reconnect with past customers and revive their interest. Here are various strategies you can adopt:

  • Encourage your buyers to share feedback on their shopping experience.
  • Send personalized email campaigns and recommend products based on their past purchases or browsing history. Also, offer exclusive discounts or promotions.
  • Implement loyalty programs that reward repeat customers with points, discounts, or exclusive access to new products. 
  • Craft special offers tailored to the individual customer, such as birthday discounts or anniversary rewards. Personal touches can rekindle their connection with your brand.

Example

FabIndia has an excellent loyalty program to re-engage its existing customers. Once you enroll in this program, you need to shop across their stores to earn coins, which you can later spend on shopping with them or their rewards partners. This is a great way to make customers continue to shop with them and increase their customer lifetime value. 

Example of E-commerce brand offering loyalty program

Source: FabIndia 

Steps To Create E-commerce Funnel

A well-structured E-commerce funnel can become your pathway to nurture and convert visitors into loyal customers. Here are the steps to create an effective E-commerce funnel – 

1. Define Your Conversion Event

The first step in building an effective E-commerce funnel is to define your conversion event. This is nothing but the specific action you want your users to take on your website to get them closer to becoming valued customers. A typical conversion event could be:

  • Adding an item to the cart
  • Adding a product to the wish list
  • Subscribing to your newsletter
  • Joining the loyalty program

Defining your conversion event in the early stages offers clarity on your primary objectives and enables you to create a seamless user journey that will help your business achieve those objectives. 

2. Establish Your Buyer Persona And Identify The Customer Journey

In order to create a funnel that resonates with your audience, you need to thoroughly understand your target audience. And the best to do this is via detailed buyer personas. To the unversed, a buyer persona is a fictional representation of an ideal customer. It will typically have details such as demographics, interests, pain points, and preferences. 

Once you have created the buyer persona, map out the customer journey. You need to identify specific touchpoints where these potential customers interact with your brand. This, in turn, will help you align your funnel stages with the buyer’s path. But how to do this? Let us find out in the next step. 

3. Map Funnel Stages With Triggers To Move People Through The Funnel

To map out the different stages of your E-commerce funnel and align them with where your potential customers are in their buying journey, you need to first consider the different triggers that will push them down from one stage of the funnel to another. For instance, if a visitor sees one of your product listing pages, you need to find out what could be their subsequent actions. Will they explore further about the product? Will they directly add the product to the cart? Will they close the website?

By understanding different scenarios, you can strategically implement triggers that guide visitors through each stage — from awareness to becoming loyal customers. For instance, if you’re a clothing brand and you think maximum customers have questions about sizes and fitment, you can include a size chart on the product page and(or) add true-to-size tags to eliminate any doubts in the minds of customers. This will eliminate the friction that was present between the two stages of the funnel so that the potential customer can easily pass through. 

4. Optimize Website Landing Pages For Conversion

Your landing pages are one of the most critical elements of your E-commerce funnel. It is the first touchpoint between your brand and a potential customer. It sets the tone for the entire customer journey, right from the awareness stage to the action stage. If your landing pages are poorly optimized, you risk losing valuable prospects in between the funnel stages.

So, you need to ensure that they are designed with conversion optimization in mind. They should be able to clearly direct the visitor to perform a specific action. It could be clicking on the add to cart button or signing up for newsletters. Ensure that every page has the following:

  • Compelling headlines
  • Clear value propositions
  • High-quality images
  • Prominent call-to-action (CTA) button
  • Social proofs like testimonials and reviews

5. Use Other Channels To Drive Your Website Traffic

The E-commerce funnel is all about getting continuous traffic flowing to your website. So, it is important to diversify your traffic sources by leveraging other channels as well. It could include social media, PPC ads, email marketing, affiliate marketing, etc. By diversifying your traffic sources, you not only increase your website traffic but also tap into different audiences, demographics, and behaviors. This helps in creating a more comprehensive and resilient E-commerce funnel that will drive more visitors to your website. 

Each channel should be strategically used to attract potential customers to your website. For instance, if you own an E-commerce store selling jewelry, you can use social media platforms like Instagram and Pinterest to showcase visually appealing images of your jewelry pieces. This will enable you to engage with a highly visual audience. Similarly, you can use paid advertising on Google to target users in a particular city. Meanwhile, for email marketing, you can segment your subscribers based on their past interactions with your brand and send personalized product recommendations or exclusive discounts.

6. Retarget Casual Shoppers Who Abandoned Their Shopping Cart

Retargeting is the process of re-engaging potential customers who have progressed through the initial stages, such as the Awareness and Interest stages, but abandoned their shopping carts as they moved down the funnel. Retargeting is nothing but a strategic effort to recapture these valuable leads, guiding them back into the funnel and encouraging them to complete the purchase. 

Here are some effective retargeting strategies you can adopt – 

  • Use tracking technologies like Pixel to monitor user behavior, such as cart abandonment, and then display tailored ads to those users on different platforms.
  • Create email marketing campaigns to target cart abandoners. Craft persuasive and personalized emails that highlight abandoned products, offer incentives like discounts, and provide a clear call to action to encourage a return to your website.
  • Send SMS or WhatsApp messages to cart abandoners with a personalized message and a link back to their abandoned cart.
  • Create a sense of urgency by including time-sensitive offers in your retargeting ads. Let customers know that their abandoned cart items are available at a discounted price, but only for a limited time.

7. Measure The Success Of Your E-commerce Funnel

The last step is to measure the success of your E-commerce funnel. Without measuring, you will be unsure of where improvements are needed and where successes can be amplified. You will also gain valuable insights into your customers’ behavior, pinpoint bottlenecks in the funnel, and assess the overall effectiveness of your funnel strategies. Remember – measuring the success of your E-commerce funnel is not just about tracking numbers; it’s about ensuring the long-term viability and growth of your online business.

Some of the tools that can help in this step are:

  • Google Analytics: It can help in tracking website traffic, user behavior, and conversion rates.
  • Heat Maps: Tools like Hotjar indicate how users interact with your website, helping you identify pain points and areas for improvement.
  • E-commerce Platforms: Platforms like Kartify come with built-in analytics and reporting tools. They offer insights into sales, product performance, and customer behavior within your online store.
  • Conversion Rate Optimization (CRO): Tools like Optimizely allow you to run A/B tests and multivariate tests on your website to optimize conversion rates at various stages of the funnel.

E-commerce Conversion Funnel Metrics & KPIs You Should Track

Tracking and analyzing key metrics and Key Performance Indicators (KPIs) at various stages of the conversion funnel is essential for optimizing your online sales strategy. Let’s break down these metrics into three critical stages:

1. Top Of The Conversion Funnel Metrics

These metrics measure the effectiveness of your funnel strategies in attracting visitors to your website. In other words, they provide crucial insights into the effectiveness of your top-of-the-funnel marketing efforts. Understanding and optimizing these metrics is vital for creating a strong foundation for your E-commerce journey, as they determine the quantity and quality of prospects entering your funnel. Here are some Top-of-the-Funnel metrics you need to measure:

  • Average order value per visitor (AOV)
  • Revenue per visitor (RPV)
  • Number of visitors to your site
  • Impressions
  • Average time spent on page
  • Bounce rate

2. Middle Of The Conversion Funnel Metrics

Middle-of-the-funnel metrics are important for evaluating the effectiveness of your efforts during the interest and desire stage. These stages are all about building relationships, gaining trust, and moving visitors closer to becoming paying customers. So, you need to measure the success of your lead generation and engagement strategies. This will help you identify opportunities for improving the conversion rate from casual interest to deeper involvement. Here are some Middle-of-the-Funnel metrics you need to measure: 

  • Number of free trial signups 
  • Conversions from a free trial
  • Number of paid accounts created using a free trial
  • The average revenue per customer (ARPC)
  • Email subscribers
  • The number of leads from organic search 
  • Number of leads from paid ads
  • Number of leads from social media
  • Quality of leads

3. Bottom Of The Conversion Funnel Metrics

These metrics are the ultimate indicators of your E-commerce success. They reveal the direct impact of your marketing efforts on revenue generation and customer loyalty. They provide insights into how effectively you are converting leads into paying customers and maximizing the value of each transaction. Here are some of the bottom-of-funnel metrics to track:

  • Customer Retention Rate (CRR
  • Customer Lifetime Value (CLV)
  • Customer Acquisition Cost (CAC)
  • Net Promoter Score (NPS)

Conclusion

Hopefully, by now, you can design your own E-commerce funnel and optimize it using the different strategies highlighted in this post. The more you invest in fine-tuning your funnel and these strategies, the better will be your conversion rates. 

If you don’t know where to start, ANS Commerce can help. We are India’s leading E-commerce expert, helping businesses navigate the competitive landscape of online selling. We can help you build and strategize the perfect E-commerce sales funnel for your business so that you can reap the benefits without investing too much time. To know more about ANS Commerce, contact us now.