Ecommerce Conversion Funnel: Identifying high ROI solutions.

The ecommerce conversion funnel is an analytical technique ideal for ecommerce stores that are looking for the most Return on Investment (ROI) from their design and development efforts. Perfect for circumstances where budgets are tight and showing positive outcomes early on is important. 

In this article, we will discuss how to analyse and contextualise an ecommerce conversion funnel and will listen for what the data might be telling us. Combined with heuristic reviews (or even better, user reviews) it will offer us very specific ideas on where we should be focusing. 

Tl;dr

Use Google Analytics to draw your conversion funnel. Then use benchmarks for your sector to get some context. Then, conduct heuristic reviews or user reviews to identify pain points and opportunities. Finally, attack each stage of the funnel with implementations, and measure their impact. 

What is an ecommerce conversion funnel? 

The Ecommerce conversion funnel is a visual representation of how visitors navigate a website and buy (or not) products.

An ecommerce conversion funnel is made up of stages, with data that tell us how many users are going through every stage successfully – and how many we are “losing” along the way. 

What are the stages in an ecommerce conversion funnel?

What stages to include in the funnel is subjective. We are proposing these five: 

• User arrives to the site (for the first time), 
• User view an item, 
• User adds to basket, 
• User begins checkout, and
• User completes checkout (user purchases) 

The fact that in each stage we keep some users but lose others is the reason why this representation looks like a funnel, rather than a rectangle. The trick is of course, to keep as many users as we can, at each stage.  To be as rectangley as possible. 

One small thing – users do not necessarily have to go through each stage. A user might be able to add a product to their basket without visiting a Product Description Page (PDP), for example by using a “quick buy” button from a product grid. Therefore, when we draw our funnel, we will take this into account by keeping it as an “open funnel” (whereby steps are not mandatory).

How to analyse the current performance of your conversion funnel 

Now it’s time to get the real data behind the funnel. 

Building a conversion funnel is simple. Using Google Analytics (GA4) Funnel exploration, we can create a purchase journey made out of five steps: 

1. First visit. This means we are only paying attention to the users who’re visiting for the first time. This is important, because repeat visitors might have a higher tolerance for pain points, or navigate the site differently (eg, they might check out without adding items to basket because they already did that on another session). 

2. Item view. This event tells us how many people visit a Product Description Page (PDP). This KPI gives us an indication of the ability of the homepage, campaign landing pages or PLPs to get users to have a closer, more intentional look at the products.

3. Add-to-basket. Oh, this is a biggie. The rate at which people put items in their baskets is a key indicator of the health of the site. More specifically, it focuses the mind on the all-important PDP. Customers will leave the site if the PDP is not engaging or lack important information. Having said that, “quick buy” buttons on PLPs can also improve add-to-basket rates, and it’s a worthwhile feature to build on your site. 

4. Begin checkout. This tells us the rate at which users that have put items in their baskets will start the checkout process. Basket design can play a role in improving this rate. 

5. Purchase. Finally, this will tell us how many people that started the checkout process will successfully complete it. It is true that we can achieve more granularity, but as that will depend on the checkout design (and/or get a lot more complicated), we will leave it out for now. 

Now that we built this funnel we have the completion statistics for every step. Wahoo!! (if you need a comprehensive how-to, check this article on how to use Funnel Exploration on GA4),

 Now, we can add the data points to our funnel. Things are getting serious.

Using benchmarks in your conversion funnel

The problem with this data so far is that it’s hard to know what it means. It’s 54.6% completion of checkout good, or bad? Is 10% of users adding products to baskets great, or terrible?

Enter industry benchmarks. 

IMRG publishes web analytics data from ecommerce companies in their “data vault”. 

Retailers can opt-in to do a “data exchange” whereby they submit their own data for the right to enter the vault and compare their performance with industry benchmarks. 

Of course, it would be naughty to publish that IMRG data. Let’s make it up instead, and let’s see how it can help us start pinpointing areas of improvement. Let’s say the funnel data above is for a Fashion company (it isn’t) and therefore we will compare it to the fictional industry benchmarks for Fashion companies (which we can obtain from IMRG for real).

Interpreting the gaps between our data and industry benchmarks

Looking at the data above we can conclude: 

• The rate at which people check PDPs is average. This is telling us that the homepage and landing pages are doing a fair job of getting people into the product.

• However, the add-to-basket rate is very low compared to other fashion companies. This might indicate there are problems with the PDP. Is it missing key information? Are the pictures of good quality? Or even – prices too high? There are still a lot of questions, but focusing on PDP design will prove fruitful. 

• For those who have items in their basket, the rate at which they start the checkout is also average. This indicates there are likely no significant issues in the basket design. 

• Finally, the checkout completion is fairly low compared to the industry benchmark. We should assume there are pain points here. User reviews (whether live reviews or Hotjar recordings) can shed some light on issues at this crucial final stage. Or check our article on what makes a great ecommerce checkout.

However, be careful with benchmarks. Every business is beautifully unique. You might not be able to achieve parity with your industry peers via UX alone (if for example, your prices are too high or your products are not fit for customers). Equally, you might be able to surpass industry benchmarks if your brand equity and product-market fit is good. Use them only as a starting point. 

Conducting heuristic or user reviews of the user experience

Based on the above analysis, we have concluded that the checkout stage and the PDP are the two stages in the purchase journey with the most room for improvement. This doesn’t say there might not be valuable features in other areas. It just theorises that the priority should be here. 

Now, we can put the site under the microscope. 

Depending on the scope and resources of the project, you may be able to conduct some moderated user reviews, to see how actual users are navigating the site, with special attention to the problem areas. 

If the scope is smaller and you can’t afford user interviews, a simple heuristic review (ideally from a UXer) can be as good – especially for the most standard areas such as checkouts. 

Additionally, a good resource to conduct this analysis of the user experience is Baymard Institute, an independent UX Research Institute that conducts primary research with users on every imaginable use-case, including tons of ecommerce. Simply contrasting your current UX with their best practice guidelines can push your metrics in the right direction. It’s a paid service – but it’s worth it. 

If….	Example problems	Example solutions
Not many people are getting to Product Description Pages (PDPs)	Search is not easily spotted, or search results are poor Category navigation is not clear or easy to use The homepage doesn’t engage users	Re-design search and/or consider third-party search solutions  Improve filters on category navigation, or menu design Redesign the homepage to bring products to life in engaging ways
Of those that get to PDPs, not many put them in their baskets	The PDP is missing key information such as delivery costs and times or product info (eg dimensions) The product photography doesn’t engage customers	Make sure you understand what users expect to see here, and include it Consider more photography and more context. Also features like zoom or 360 views. Or video.
Of those that add products to baskets, not enough people start the checkout	There is an issue with the design of the basket – it might miss key features, such as promo codes.	Review the design of the basket, ideally in user reviews. Consider a different basket design (eg mini-bag)
Of those that start the checkout, not enough finish it	Users are surprised by delivery costs Too many steps or fields There is no guest checkout	Include delivery information on PDP Simplify the checkout  You need a guest checkout!