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Drive More Conversions – How to Generate an Ecommerce Acquisition Funnel

Tips & Guides — 05 Aug 2022

The Guide to eCommerce Acquisition

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Drive More Conversions – How to Generate an Ecommerce Acquisition Funnel

Did you know that over 97% of consumers who visit your online store will leave without buying anything? Whether they’re “just browsing” or shopping around for the best deal, the vast majority of customers will abandon their cart at some point in their journey.

Given the amount of your marketing budget that goes into acquiring leads and converting them into paying customers, this average can seem deeply disheartening. Yet with careful and creative optimization of your sales funnel, you can rise above the average, increasing conversions and lifetime value.

It helps to conceptualize the customer journey as a marketing funnel—a multi-staged process that takes large numbers in at the top and winnows them down to a smaller number of committed buyers at the bottom. However, as you’ll find out it’s not always a linear process from A to B. Indeed, each stage of the funnel can be tweaked and improved to boost your KPIs.

From social ads to partnership marketing, there’s always more you can add to your sales funnel strategy. Read on to discover how to visualize, generate, and optimize your ecommerce acquisition funnel from awareness to customer retention.

What is an Ecommerce Acquisition Funnel?

The ecommerce conversion funnel is a way of visualizing the consumer buying journey, as well as the processes a brand implements to acquire and retain customers.

This analogy takes the significant drop-off of potential customers into account, signifying this with movement from the wide top of the conversion funnel to the narrow spout at the bottom. 

However, while the number of potential customers inevitably decreases, the viability of this audience increases with it, meaning time and resources are spent more wisely on the right customers.

The goal of the sales funnel is, on the surface, to promote and enable as many successful sales as possible. However, beneath this overarching aim are wider-reaching goals: To educate visitors, gain leads, convert these into customers, and bring those customers back in the future. The conversion funnel helps brands to achieve these steps as efficiently as possible.

The general look and flow of a customer acquisition funnel is the same across brands and industries, forming a scaffold for individual brands to build their strategies upon. These strategies could include site optimization, organic or paid marketing, or partnerships with other brands and agencies.

Ecommerce Acquisition Funnel

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How to Construct an Ecommerce Acquisition Funnel

Before you can visualize your funnel, you will need an end goal for it to lead to. This is the time to solidify your idea of the “conversion event”. This is the desired action which you wish users to take, and which you will base your key performance indicators on.

This event is usually a complete purchase, which is a sum of smaller actions such as clicking through to your ecommerce website or adding an item to the cart.  Your ongoing optimization will focus on removing any roadblocks which come between these micro-conversions and complete purchase.

Now it’s time to sketch out the different stages which lead to your goal—these will most often follow the structure of a buyer’s journey through your ecommerce platform. For example, your potential customer may find your name via a search engine, land on your homepage, browse your products, add an item to their cart, go to checkout, and finally click purchase. 

These events can be mapped out onto your conversion funnel from top to bottom, with potential customers dropping off at each stage. Your aim is now to identify why those customers are dropping off, and address this by optimizing marketing channels and user experience.

The goal for your acquisition funnel is a constant improvement over time. While you may start with a fairly generic recipe for success, your sales analytics will enable you to experiment with different elements and create a process that is unique to your brand and customers.

What Does an Ecommerce Acquisition Funnel Look Like?

If this is your first time thinking of your sales journey as a funnel, it can help to draw it out physically to optimize each step for maximum sales. 

Start with the familiar shape of a funnel: Wide at the top, and narrow at the bottom. Then, divide your funnel into three sections: The upper, middle, and lower sales funnel.

The users in the upper section are just looking or beginning their research. They are likely to be unsure about technical requirements or exact specifications. These users are mostly collecting information about different solutions, and exploring different brands to see which suits them best.

The users in the mid-funnel section have gone a step further. They are either coming to the funnel with a greater awareness of what they’re looking for, or have already researched popular brands. They are developing an understanding of what they want, and are beginning to sift through the available options, putting aside those that don’t give them what they need.

The users in the lower section of the funnel are much fewer, but you can think of them as a curated audience. Those who were not viable leads have been winnowed out, leaving you with committed buyers who have already made a shortlist—and your brand is on it. They may be reading reviews and testimonials to get a better idea of what they’re investing in.

At the bottom of the funnel is the goal you decided on earlier: Most likely a complete purchase, in which money changes hands. As you will discover, however, this isn’t the end of the journey. A happy customer will ideally become a repeat customer, refer friends and family to your brand, or even advertise for you via an affiliate scheme.

Sales Funnel

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Phases of an Ecommerce Acquisition Funnel

Each of the three levels of your funnel can be further divided into stages. These stages describe where your customers are on their buying journey, and allow you to target strategies to meet them where they are—and help them progress down the funnel.

Awareness Stage

You may think that the buyer journey begins when a customer lands on your home page. You would be wrong. The wheels are in motion long before this, when a consumer first becomes aware of your brand or store.

This awareness could come from many sources, from word of mouth to a Google search, to adverts on social media. At this stage, your brand needs to understand where most organic awareness comes from, and invest in boosting these channels.

Likewise, it could be that your target audience commonly uses a channel that you have not yet explored. Build a picture of your ideal consumer, considering their age, gender, locality, and interests. Then explore where your chosen demographic learns about new brands. 

Using these metrics you could discover a whole new way to reach the right audience and rebuild your marketing strategy. You may decide to invest in a social media team or partnership marketing tools.

Consideration Stage

If your ecommerce marketing efforts were successful, new consumers will have entered the funnel and moved on to the next stage: Consideration. This involves browsing your products or services, finding out what your brand is about, and making a value judgment as to whether they want to engage further.

In the back of their minds, customers are already making a shortlist, weighing up your products against those from other brands. Your goal is to get your name on that shortlist, keeping consumers engaged and guiding them toward the buying stage.

Thorough and well-presented product information is key here. Too little information, and potential customers will be uncertain as to whether your products will work for them. However, they don’t want to sift through paragraphs of descriptive text to get the information they want. Capitalize on visual appeal, key features, and well-placed offers to keep consumers keen.

You may also be able to help consumers find a product on your site that aligns with their needs, decreasing the likelihood of dropoff at a later point. Consider a product recommendation engine or comparison wizard as part of your ecommerce site.

Decision Stage

This is the key moment that all your work so far has been pushing toward: The customer is ready to make a purchase. But don’t count your chickens before they’ve hatched, consumers still need guidance and reassurance that their decision is the right one before they click “buy”.

According to SaleCycle’s 2020 Ecommerce Report, 84.27% of shopping carts are abandoned. This could be due to factors such as expensive shipping, a complicated checkout process, or the need to set up an account.

At this point, it’s worth considering the user-friendliness of your ecommerce site. Can users navigate your cart, wishlist, and checkout easily? This is also a time to show off your customer service skills, with a pop-up live chat or a thorough FAQ page to maintain your potential customers’ trust.

It can also be beneficial at this point to offer a limited-time discount code via a lightbox popup. If a client is still on the fence in these last moments, a small gesture of good faith could be what nudges them in the right direction.

Email Marketing

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Purchase Stage

Here in the lower section of the funnel, you reach your short-term goal. These are the customers who have committed to buying, entered their shipping and payment information, and clicked “buy now”. Your work is not over, though.

Ensure happy customers by following up their purchase with a “Thank You” landing page and an order acknowledgement email. These can be automated via your ecommerce website, and act as a receipt to give customers peace of mind. You should also let customers know as soon as possible if there are any factors affecting your lead time, meaning that their order may be delivered later than expected.

Don’t forget the consumers who fell by the wayside, either. Start a retargeting campaign. This will remind customers who click away from your site of what they’re missing, with targeted ads for the items they viewed or abandoned in their shopping cart. This will bring those lost customers back into the top of your sales funnel.

Retention Stage

A conversion is not the end of your relationship with customers. Consider your longer-term goals such as increased revenue and growth, and redouble your efforts toward gaining repeat custom.

A loyal customer is “five times as likely to repurchase, five times as likely to forgive, four times as likely to refer, and seven times as likely to try a new offering” according to XM Institute. This means it is crucial to invest as much—if not more—effort in your previous customers as you do in engaging new ones.

A successful retention strategy will increase the lifetime value of each customer relationship and can lead to continuous repeat purchases, not to mention all the benefits of word-of-mouth marketing, good testimonials, and referrals from a known influencer.

Important Ecommerce Acquisition Funnel Metrics

You may be asking, “what is KPI in retail?” or wondering how to measure success in your acquisition funnel. There are several important metrics to consider when setting up your funnel. These will allow you to build a detailed picture of where your strategies are working, and where you’re losing customers.

Below, we outline some of the most common metrics to analyze, and how to set them.

Acquisition Funnel KPIS

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Conversion Rate

Simply put, your conversion rate is the percentage of visitors to your site who take the action you want them to—in most cases, making a purchase. However, depending on what you’re measuring there are many “micro-conversions” you may also wish to take into account.

To work out your average conversion rate over a specific time frame, simply divide the number of conversions within that time frame by the total number of site visitors during the same period. Multiply this result by 100 to get your percentage conversion rate.

For example, a site with 500 visitors and 80 conversions in a month would have a conversion rate of 16% for that month.

Ecommerce business platforms such as Shopify can automatically show your monthly and annual conversion rates as key metrics on your dashboard.

Click Conversion Rate

Calculating your conversion rate is simple at first glance, but what if the same customer comes back to make several separate purchases? Do the purchases count as a single conversion or multiple successes? To understand the difference, marketers talk about click conversion rate.

This counts the total number of visitors who convert, rather than the total number of conversions. While your click conversion rate doesn’t account for repeat customers in the same way your standard conversion rate does, it can be instrumental in understanding the effectiveness of your marketing tactics in bringing customers on board.

To work out your click conversion rate over a certain time frame, divide the total number of visitors who converted during that time by the total number of visitors, then multiply the result by 100.

Cart Abandonment Rate

This refers to the percentage of shoppers at your ecommerce store who add items to their carts but abandon those carts before completing the purchase. This is very common customer behavior, as many customers add items to their carts simply to keep track of them while still in the consideration stage.

Other customers may abandon their carts due to new information at the bottom of the funnel, such as a high shipping rate, which causes them to change their minds. Alternatively, the purchase flow could be a deterrent if it requires shoppers to sign up for an account or complete lengthy forms.

To work out your cart abandonment rate, divide the total number of completed purchases by the total number of shopping carts created during the same period. Subtract your result from one, then multiply the result by 100.

For example, if 300 shoppers created carts on your store, but only 60 completed their purchases, you will have an abandonment rate of 80%

Add to Cart Rate

Your add to cart rate denotes the percentage of shoppers who place one or more items in their cart during a session. By monitoring this metric, you can better understand how many people have reached the midpoint of your sales funnel. You can also gain a picture of the success of your product choices, marketing, and onsite user experience.

By comparing your add to cart rate with your cart abandonment rate, you can also consider where in your sales funnel you are experiencing setbacks.

To devise your add to cart rate, divide your total number of sessions by the number of sessions with at least one cart item present.

Customer Lifetime Value

Customer lifetime value, or LTV, refers to the total revenue a company makes from a single user. In short, it is the total benefit that each customer will bring to your brand throughout its predicted lifespan. By exploring this metric, you can identify the most valuable customer segments and dedicate more time and resources to these.

You can also keep an eye on your LTV to ensure that your retainment efforts are working. The higher your LTV, the more customers are becoming loyal to your brand. If this figure makes a sudden leap, it may indicate that a loyalty rewards program or mailing list is yielding results.

To work out your LTV, calculate your average purchase value. Then multiply that figure by the average purchase frequency rate to determine your customer value. Then, calculate your average customer lifespan—that is, the length of time a customer brings value to your brand—and multiply the two figures together.

Average Order Value

Your average order value is the mean amount spent each time a customer makes a purchase. Increasing AOV is a common long-term goal for companies, and can be achieved by guiding customers toward more expensive items or more items in total per order.

The ideal customer is one with high AOV. This makes the metric useful in understanding whether you’re bringing the right kinds of customers to your site with targeted advertising.

To work out your AOV, simply divide your total revenue by the total number of orders.

Retention Rate

Your retention rate is the frequency with which repeat customers return to your store and make further purchases. This is an important metric for analyzing LTV and customer loyalty, and could help you work out the best ways to improve retention—from a wider range of products to a better loyalty program.

To work out your retention rate, divide the number of users who have made multiple purchases by the number of users who have made a single purchase.

Repurchase Rate

This measures how many people who return to your online store within a certain time frame. For example, a month after their initial purpose. You can also define this rate by the number of customers who rebuy the same item.

This is a great metric for understanding whether your retention strategies are successful. Especially if you are selling a consumable product that needs to be periodically repurchased. In this case, a high repurchase rate shows that your customers have tried your product, and are now choosing it over other brands.

Returns

While a high conversion rate may be a boost to your confidence, make sure you take your rate of returns into account as well. Track the number of return rates within a certain period and multiply them by your expected sales volume over the coming year to gain an impression of how many products are being sent back.

Ecommerce Acquisition Funnel Strategies

One question remains: How can you optimize your sales funnel flow and determine a good conversion rate for your business? Start by using the structure of your funnel to determine which areas of your strategy are doing well, and which could do with some work. 

For example, if you’re losing a lot of customers in the awareness and consideration stages, take a look at your digital marketing efforts. If there’s a lot of drop-off lower down in the funnel, consider how your content marketing or check-out process can be optimized.

Below are some key ways in which you can keep consumers moving through the funnel, all the way to your goal.

Acquisition Channels

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Use Social Media Ads

With 2.91 billion global users, Facebook is still king when it comes to creating awareness. With a business platform that can customize ads to your goals, it offers brands of all sizes—from local boutiques to Amazon—a way to boost their retail social media marketing.

Facebook ads can be heavily targeted, based on age, gender, locality, and interests, to ensure that your ideal customers are seeing your message. You can even create lookalike audiences to help find potential customers amongst Facebook’s user base who are almost identical in profile to your existing customer base. 

Case studies show that this strategy can boost your reach without compromising your focus. It will bring more quality shoppers into the top of the funnel, giving you more opportunities to make that sale.

Make sure your Facebook Ads are eye-catching yet clear in their value proposition. You want users to understand at a glance how your brand is relevant to them and different to competitors.

Create High Quality Content

Not all consumers come to your site ready to make a purchase. Some are simply testing the waters, and some are looking for advice or inspiration. Through relevant content marketing you can boost your SEO ranking and organically build trusting relationships with your audience.

Pose your brand as an expert voice, and site visitors will start to see extra merit in your products or services. According to the concept of reciprocity, shoppers are more likely to purchase if they’ve been given something for free, and what better gift than information?

Consider different kinds of content marketing, from how-to videos to webinars, and don’t underestimate the power of user-generated content. This creates a sense of community by amplifying the voices of happy customers and showing off your product in the real world. 

Use Social Proof

On the subject of user-generated content, social proof is worth its weight in gold. Central to the concept is the human assumption that other people’s actions and opinions hold weight in a given situation. You can lean on this assumption to convince visitors of your quality and credibility.

Start with customer testimonials—either an individual page or as reviews on each product page. Make these bold and eye-catching, including photos of the happy customers in question. This gives your testimonials personality and allows new potential customers to see themselves reflected in the sorts of people who value your brand.

You can also use these testimonials as the basis for social campaigns, email marketing, and paid ads. Using customers’ quotes and images rather than your own copy suggests that your product is so strong that your customers are happy to do your advertising for you.

Social Proof

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Revamp Product Pages

The middle stages of the sales funnel are all about impressing customers with onsite content. Your product pages become key here. These pages need to answer customers’ questions, but also win their hearts with attention-grabbing images and emotive product descriptions.

Take stock of your customers’ common questions, and align your copy to answer these straight up. You can also benefit from doing some SEO and keyword research via Google Analytics, and ensuring that customers’ most common search terms are used across your copy. This will demonstrate how well your products answer their requirements.

Consider including shipping and return information on your product pages, rather than hidden in a different section of the site. Unexpected costs can be a dealbreaker, causing 60% of customers to abandon their carts. Gain trust by including this information upfront and helping your customers plan their purchases.

Promote Products With Email Marketing

If your potential customers have made it to the consideration stage, they are primed to hear more about what your brand can offer. Consider an opt-in email campaign that offers interested shoppers targeted suggestions as well as tips and a link to a relevant piece of content.

Don’t forget to include terms like “best sellers” or “customer favorites”. This adds an element of social proof to your subject lines, making customers curious to click through to your landing page.

Email marketing is an ideal platform for upselling as well. Follow up a customer’s purchase with a targeted list of add-on items which will improve their experience of the initial product.

This can be a slow-burn conversion tactic, as it doesn’t rely on consumers making an immediate purchase. However, well-written monthly or weekly emails can build a deeper relationship than a single sale, leading to repeat custom and recommendations.

Decisions Stage

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Boost On-Site Messages

The decision stage can feel like it’s out of your hands: You’ve provided consumers with all the information you can, and now it’s down to their personal choice. However, there’s still more you can do. A gentle nudge in the right direction is sometimes all that’s needed.

Engage your shoppers with on-site messages at the final stages of their buying journey. These could take the form of limited-time discount codes, a prompt to sign up for an email list, or even a live chatbot or agent to answer any last-minute questions.

A little touch like this can prove to customers that your brand is willing to go the extra mile, helping them make a value-driven decision. Even if the consumer in question still chooses not to make an immediate purchase, you can gain their contact details and keep their attention through well-placed email marketing.

Market Loyalty Program

Once a client makes a purchase, your goal shifts from a single conversion to long-term loyalty. Start early with a well-written thank you page that not only includes important information about your customer’s purchase, but keeps them connected with your brand.

A thank you page captures customers’ excitement about the product they just ordered and feeds it back into the funnel. This could involve a quick satisfaction survey, signup for email updates, a request for referrals, or information about a loyalty program. 

The latter is a powerful way to increase LTV by incentivizing customers to come back for more. Ensure that it feels exclusive and intimate by using terms like “join the family” or “our gift to you”. Starting new customers off with a respectable number of points, which can be redeemed during future checkouts, will put your brand at the top of their list next time they have a similar need.

This is also an ideal time to reseed awareness by encouraging customers to spread the word: Incorporate a referral or affiliate program into your brand by offering a unique code that new customers can share with friends and followers. These new leads will be hand-picked by people who know your products are relevant to them, boosting the quality of your site traffic.

Market Loyalty Program

Takeaways

Just as every brand is different, so is every customer. Not every strategy will work for every company or every consumer. However, by exploring the strategies detailed above, you can begin to create a unique buyer’s journey, tapping into knowledge about your target audience and your own brand voice.

Review your ecommerce sales funnel regularly to keep optimizing each stage, and ensure that you’re still meeting your target buyers’ needs. Remember, the goal with your funnel is not to get it right the first time, but to improve gradually over time, using A/B testing at each stage to inform the next funnel optimization.

Over time, the funnel will help you to boost awareness, guide the customer toward conversion, expand your partnerships, and increase the lifetime value of customers.

Visualizing these stages in the form of a funnel can help you remember the flow of the user journey, avoiding any jarring changes in tone and approach between awareness and consideration, for example. The funnel will help you to create a seamless buying experience that inspires consumers not just to make that initial conversion, but to return again and again.

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