Conversion Funnel 2.0

  |  April 6, 2006   |  Comments

The standard e-commerce conversion funnel? Throw it out. It's dead.

The standard e-commerce conversion funnel is flawed. Throw it out. It's dead.

The Web has changed our lives in many ways, yet until now we've been too narrow with analyzing customer behavior using a linear model.

Before I give Bryan Eisenberg and the Web Analytics Association board members heart attacks, let me explain what I mean. The Conversion Funnel 2.0 is an emerging model that's less about a step-by-step linear shopping process and more in line with customers' dynamic nature. It encompasses the multiple conversion points (purchase and non-purchase conversion) that exist on many leading online retail and consumer brand sites.

Customer Behavior Isn't Linear

If analysis has taught us in the online marketing, where a 10 percent visit-to-purchase conversion rate is still considered extraordinary, it's that customers don't behave in a linear fashion. Customers' goals don't always align with our direct online revenue goals. Customers change their minds. They get distracted. They lose interest. They save carts, abandon carts, add items to carts, remove items from carts, and sometimes all the above -- and in no particular order. Sometimes they navigate for products, sometimes they search for products. Sometimes they do both in the same visit.

So long as customers are people, customer behavior will be dynamic and at times irrational, random, and unexplainable.

So why are we trying to fit the dynamic nature of online customer behavior into a linear model? I've heard this question discussed recently in online retailing circles. It will gain momentum as a better model for analyzing customer behavior for e-commerce organizations.

Are you still breathing? Good. Read on.

Conversion Funnel 2.0: The Hub-and-Spoke Model

In merchandising, the product is king. Thus, in e-commerce, the product page is central to a successful customer visit. In the old conversion funnel, the product page might have been defined as step three of a seven-step visit-to-purchase conversion process, assuming visitors first came to the home page, then to the product category page, before reaching the product detail page.

The online marketing world has more complexity than a single, linear funnel can capture. There are several drivers to product-level interest, and there are multiple customer conversion goals. Purchasing the product isn't the only goal. Really.

The hub-and-spoke model places the product page at the hub, with multiple inbound spokes to products and outbound spokes to desired conversion paths and points. When you shift to this model, you get a more sophisticated view of your customers' interaction with your online business.

Inbound spokes include:

  • Organic search (visits to products originating from external search engines)

  • Paid search campaigns (visits to products from pay-per-click search campaigns)

  • On-site search (visits from search within site)

  • Navigation traffic (visits to products through site navigation)

  • E-mail promotions (visits to products via email campaigns to customer lists)

  • Home page promotions (visits to featured products from home page callout)

  • Campaign landing pages (direct inbound traffic to campaign landing page)

  • Referred traffic (visits originating from passalongs, partner links, and influencers)

  • Offline campaigns (inbound traffic to friendly URLs leading to product interest)

Outbound spokes include:

  • Buy now (add to cart, purchase conversion)

  • Learn more (initiate other content, research conversion)

  • Try it on (use virtual dressing room, purchase intent conversion)

  • Customize it (use design configurator, personalization conversion)

  • Read reviews (initiate consumer-driven content, validation conversion)

  • Ask an expert (dialogue within social network, validation conversion)

  • Review this product (create consumer-driven content, feedback conversion)

  • Recommend to a friend (passalong email application, viral conversion)

  • View movie (interact with branded content, brand experience conversion)

Specific spokes will vary based on each company's and its customers' goals. That aspect of conversion analysis doesn't change. What does change is the model's shape and the recognition that there are several paths to your products and that your customers have different goals based on where they are in the buying cycle.

Don't limit your analysis to a step-by-step linear model. It only tells a fraction of the story.

What's Your Opinion?

I realize this goes against some of the fundamentals being taught on how to measure online conversion rates. It may be viewed as a controversial. That's OK. I welcome healthy debate. Let me know if you agree, disagree, or just think I'm crazy. I want to hear it all.

E-mail me and let me know your insights on how to effectively measure online conversion.

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Shane Atchison

In 1998, Shane co-founded ZAAZ to advocate a different approach to Web services — one that respects and delivers on the power of the individual and the promise of Web technologies. As CEO, Shane leads the company's long-term strategic vision of working with leading financial service organizations, consumer brands, startups, non-profits, and community-based organizations, helping each realize the potential of the Internet and its meaningful impact on their business.

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