Sales Funnel and Measuring Conversions as the Essence of Digital Marketing

If you have a website where you sell something, this is one of the texts that could be of benefit to you.

Whether you are selling goods, services, education, or just collecting people’s contacts – measuring conversions in the sales funnel is essential – all serious digital marketers do this.

What lies in the core of this?

After doing all the things from the text you are just reading, you will be able to log in to your site every morning and see from where you got much of your sales.

That way, you will know where you are investing and how much money you invest, what is efficient and profitable, and what is sucking out your money without having an effect.

So, every morning you will see, among other things, how many clicks and orders you have, and what is your conversion rate on which source of visit: Google search, link on a blog, banner, Facebook ads for specifically targeted groups, on someone’s post on Instagram or Twitter, through remarketing, etc.

So, for example, every morning you will see something like this:

Source of visitNumber of clicksNumber of ordersConversion rate
Google search10055 %
Link at someone’s blog50010.2 %
Banner at some site30031 %
Banner at some forum3003010 %
Facebook ad, target group women 20-302,000100.5 %
Facebook ad, target group women 30-401,000303 %
Someone’s post on Facebook20052.5 %
Someone’s post on Twitter50010.2 %
Remarketing501020 %

Nice, isn’t it? Here are just a few things that can be deduced from this table:

  • As many as 5 % of people who find you through Google, buy from you – it means that channel is trustworthy, so it pays off investing to ranking as better as possible in the search engine results.
  • A text written about us by a blogger brings a lot of visits, but a very small percentage of those people buy. It seems that this blogger is only read by some hangouters who do not want to buy anything. You should be terminating your cooperation with him.
  • A banner on a forum brings you 10 times better conversions than a banner on a website. People who read that site very rarely buy your product, and the readers of the forum are really excited about buying. You are canceling the cooperation with the respective site and increasing the budget for the forum.
  • From Facebook, you do much better with women aged 30-40. Women of 20-30 click more, but buy much less. You will increase the campaign budget for women from 30-40, and you will reduce the other.
  • That person on Facebook gives you a great conversion rate. He/she seems to be followed by some people who are really interested in what you have to offer. You will make some even stronger cooperation with her.
  • A tweet from that person sent you a lot of visits, but a very small percentage of those people buy. Not such a good benefit of that person’s followers, at least when it comes to you.
  • Remarketing absolutely rocks (these are ads that ‘chase’ a person after being on your site). You need to invest as much as possible in remarketing.

As you can see in this fictional example, when conversions are measured, the complete marketing activity makes full sense.

You know exactly whether you are investing well, whether it is coming back to you, and you know how to make further decisions.

All serious Internet marketers do this. If you are selling something online and you do not have conversion rates set up, it is the same as trying to play football in the fog.

You may sometimes accidentally score a goal, but you have no idea what is happening on the pitch.

Of course, you are probably wondering how this conversion metric is set up and how to ‘turn it on’ on your site?

You need to do a few things, so let’s go in order.

First, a little theoretical introduction and then ‘where to click’.

Sales Funnel

Internet marketers look at everything through the so-called ‘sales funnel’.

When one marketer asks another for advice on how to increase sales, the first thing a colleague will say is “Let me see what your funnel is.”

All these things that seem like real marketing to amateurs – the number of likes and followers, beautiful images, banners – it is all really irrelevant, and the only thing that matters is: how a funnel looks.

What is this famous sales funnel? It is a funnel consisting of individual rings, which can be drawn for any digital campaign in the world.

Such, just a drawn funnel does not make much sense until certain things are written next to the individual rings.

So let’s take one specific campaign as an example.

Example: Sales of Weight Loss Products

Let’s say you decided to build a website to sell a product, e.g. weight loss products.

The site, which you should probably build on a platform that is specialized for creating online stores, presents the benefits of these products, describes how they treat sugar addiction and how they are taken during the day so that a body would not look for sugars and harmful carbohydrates. There is an order button at the bottom of the page.

We will now assume that you have only one source with which you bring people to the site: Facebook advertising.

You have placed an ad with a proper headline and copy for the target group of e.g. people from the city where you established your business and who are interested in losing weight.

Every day, people who are targeted watch this ad on Facebook.

One part of them clicks on this ad, they look at the presentation on the site, and one part of the visitors decides to buy your products.

We will now imagine a sales funnel for this campaign.

The idea is to think about the whole process that your customers go through and to single out each specific segment in which one part of them falls off.

In the case of the example with weight loss products, the funnel would look like this from the top to the bottom (from the biggest ring to the smallest):

  • 100 % – people who have seen the banner on Facebook
  • 20 % – people who clicked on the banner
  • 10 % – people who have been on the site for more than 20 seconds
  • 3 % – people who clicked the “Buy” button
  • 2 % – people who made a purchase (filled in the order form to the end)

In the first step, you have 100 % of people who have seen the ad on Facebook. Let’s say 20 % of them clicked on an ad.

The next step in the funnel is a measure that tells you whether the person became interested in what is written on your site or left immediately.

We have defined here to measure who has been on the site for more than 20 seconds, but it can also be 10 seconds or one minute – depending on how complex the page you are sending them to is. 

Let’s say 10 % of the initial 100 % people remained in that step.

If too many people disperse in this step, it means that your site is bad – bad design, the copy is not good enough, the landing page as a whole is not good, etc.

The next step would be the people who clicked the “Buy” button. There are now 3 % remained. Not everyone who clicks “Buy” will really do that.

One part of them looks at the price and delivery costs and gives up.

Maybe you appear suspicious to others, or for any other reason they give up buying at the last moment. So, you dropped to another 2 %, and that is the final conversion figure in this funnel.

So, out of 100 % of people who have seen an ad on Facebook, 2 % of them buy your products at the end of the funnel, and it is said that the conversion rate of your funnel is 2 %.

That is all you need to be interested in, not the number of likes and shares, virality, followers, and all those fun things that someone calls marketing.

You always have to check what is going on until the end of the whole funnel to make sure the campaign has an effect.

Now that you know this, you want to set up your site to see what your conversion rate is from various sources of traffic – because that is the essence of your complete marketing activity.

A few things need to be done, so let’s go in order.

“Thank You” Page – a Page That Reveals All the Secrets

The first thing you need to have on the site is the so-called “Thank You” page.

You have probably always considered it irrelevant – it is the page that appears after you order something, fill out a form.

Although it seems like a boring page that serves no purpose, it is actually crucial because you use it to measure conversions.

Every time someone comes to the “Thank You” page, it is a sign that the purchase is complete. That is the ultimate goal of your campaign.

You have to measure how many people have reached that goal. 

You probably already have such a page on your site, but if you do not have it, be sure to create one. It must be on a separate, unique URL, with the /thank-you extension at the end of your site’s URL.

This page can also be a simple, blank white page that just says “Your order has been sent, thank you” and a link to return to the home page. Nothing more than that. All that matters is that it exists.

So, the funnel on your site now looks like this:

  • You have a site that consists of one or more pages and you present a product or service on it
  • You have an ordering or scheduling form that can be on a separate page or within the site (it is better to have it on a separate page, so you can measure that as well)
  • You have a “Thank You” page which must be on a separate page

Setting Goals in Google Analytics

For the next step, suppose you already have Google Analytics installed on your site, which is the case with most sites today.

Be sure to check if Google Analytics is on both the order form and the “Thank You” page because it sometimes happens that the designer of the site forgot to put it on all pages.

You can do this by ordering your own product, and then looking at the “View Source” on the “Thank You” page.

If the Google Analytics code is there, that’s it. You no longer have anything to configure on the site itself.

Now login to Google Analytics, click on the “Admin” tab and find the “Goals” option.

Here, you will tell Google what the goal of your site is – without it, Google does not know what it is about, and your “Thank You” page for it is the same as any other.

Click on the red button “New Goal” and you will enter the form to define the goal. Here you enter the name of the destination and select the type “Destination”.

As you will see, there are a lot of interesting things that can be defined as goals. The next step is to enter the URL of the “Thank You” page, which is the goal.

Here, Google asks you to enter only the portion of the URL that follows the site address.

At the end of the complete URL of your page, you type “/thank you”. Click “Save”, and that’s it. From now on, you have a conversion measurement on your site and you will see where your sales are coming from.

Where Do You See Results and Sales?

From the next day, you can see the results if you go to the following section on Google Analytics: Acquisition>All Traffic>Source/Medium.

In the table you will see the section “Conversions”, there select the goal “Completed Sales” and see where your sales came from. From this point on, you start to do serious marketing.

However, this is not the end. You have now set up conversion tracking, but until you do another thing called campaign tagging, you will only see general results from sites that have referred people to you, without details.

For example, you will see all the sales from Facebook, but not specifically which banner, which target group, and so on.

In order to have a complete, detailed picture, you need to tag your campaigns, and then you will have the most concrete possible results. So let’s see how this important thing is done.

Campaign Tagging

Once you have set up your goals and “Thank You” page, all you have to do is tag every campaign you post on the Internet, so you know with laser precision where your sales are coming from.

This specifically means that each URL, a link to your site that is located on various banners, must have some special codes.

If you open, for example, Facebook, or any site that has some ads on it and click on any banner, you would see that the URL of the page you came to from that banner is usually not just something simple but a long URL with dashes, question marks, etc.

This is the URL that is tagged. So, someone added all those parameters, tags, to the extension of a regular URL.

These parameters tell Google where the visits came from, and based on that, it can link sales to the exact source from where they came.

How to Create a Tagged Marketing URL

Simply, by using a Google URL builder whose link is on the Google Support page.

Find the form there.

You need to type in the base URL, which is the link to the page you plan to send people to, as well as three other parameters that describe your campaign: source, medium, and name. Finally, click on “Generate URL”.

In the “Source” field, enter the source on which the link will stand. Here you can write something like: “facebook”, “newsletter”, “twitter”… The “Medium” field is the type of media through which you send the link. For example: “banner”, “prtext”, “post”… In the “Name” field, put a unique name by which you will recognize a specific campaign. For example, “spring2021” or “valentinesday2021”…

Every time you place a banner on the Internet, you link it to the tagged URL you created, not to a regular URL. Maybe the items “Source”, “Medium”, and “Name” seem a little confusing and sometimes you will wonder what to put where. But you will get used to it.

It should be noted that Google Ads has an auto-tagging option, which will automatically tag the URL for each keyword you pay for.

That way, you will know exactly which phrase, i.e. keyword, brings you the most sales. Based on that, you can get rid of phrases that waste your money and save your budget many times over.

For example, you advertise for two keywords on Google: “sugar substitute” and “weight loss”.

It turns out that only people who are looking for “weight loss” buy from you, while those who are looking for a “sugar substitute” just open your site and never order.

You will eliminate them from the campaign and save a huge part of the budget.

You can also apply this example when you have hundreds of keywords. Some phrases will always attract non-buying hangouters, while some will attract serious buyers.

As you can see, now marketing activities make sense. What people most often see and mention – the number of likes or the number of visits, is just the tip of the iceberg, more precisely the beginning of the funnel.

Until we measure what is happening to the very end, huge visits and likes do not have to mean anything at all.