Funnel Optimisation – The Most Powerful Tool for Chasing Growth

In my more 3 years of working as a Product Manager in early stage startup focussed on growth, optimising funnel has been one of the most crucial aspect of my role.

Generally, onboarding funnel is a make or break for most of the startups, and it was huge trouble ta Fitso. We worked extensively using rigorous analytics and high-performance testing to increases the successful onboarding percentage by 50%. This was one of the key drivers of the engagement on Fitso app.

On day to day basis, you need to answer – which funnel step is working best, which funnel step needs to be optimised, and do I need to drive more traffic to the funnel.

Pirate Metric – AARRR!

This metric was popularised by David Mcclure, founding partner of 500 Startups. He considers 5 important steps of the funnel:

  • Acquisition: How do users find us? Which channel is working? (Get users)
  • Activation:  How many users had successful onboarding experience? If users are hating the app, they will just ditch the app and never take next steps or pay. (Get users to do action)
  • Retention: How many users stayed with the app? (Bring the user back)
  • Revenue: How much money are we making? (Get the user to pay)
  • Referral: How many users are willing to refer and talk about us? (Get the user to talk about you)

Broadly, product team is responsible for driving AARRR! There should be clearly defined metrics and funnel to improve this metric. In this article, we will talk about optimising funnel to drive AARRR.

How to create funnel?

As per Kissmetrics, you should follow 3-step approach to creating funnel:

  • Build Acquisition Funnel: It’s the most important part, so start here.

Here is our user acquisition funnel at Sqrrl for one of our toughest channel of acquisition:

Example of Acquisition Funnel ( Some sensitive data has been blurred)
  • Identify problem area:

Main acquisition funnel can be used to identify the main problem areas. For this case, the first step (User Setup) is the most critical.

  • Build Micro-funnels:

To figure out the exact problem track more events leading to first step in order to do an extensive analysis.

You can check out 17 excellent sales funnels here.

Strategies to optimise funnel

Fixing the leaky funnel is one of the daily jobs of growth marketer. Right from onboarding to sales, the funnel approach will be extremely critical for you to drive results. Here few pointers to keep in mind:

  • Always consider the current conversion in the funnel as a baseline. Funnels conversion percentage varies between industry and businesses. Just take the case of Play Store optimisation. While in fitness 35-40% conversion is common 20-30% conversion is good enough for typical fintech app. Therefore, whatever be the current conversion, work on improving the conversion on an incremental basis.
  • Identify and remove the bottleneck. There could be some redundant steps or some step might be complex for users. In these cases make use of micro-funnels to drill down even further and thus fix the bottleneck.
  • Do take into account the fact that conversion in funnel depends on the quality of traffic you drive. Multiple times, I have struggled with bringing the funnel to save conversion percentage from some channel, as traffic from same channel (Adwords, Facebook, or Blog) differ over time in quality.

Channels to improve funnel conversion

There is a lot of effort that goes into moving you from one step to the next step. For example, at Sqrrl, in moving users from acquisition to activation, we have deployed following strategies:

  • Email: We send emails at different times – immediately, after 24hr, and then after 48hr.
  • Notification: We send notifications at different point highlighting what users are missing and why they should take the next step. We try to create urgency using the notifications.
  • Retargeting Advertisement: We run a banner advertisement and facebook advertisement again highlighting what users are missing and why they should take the next step. Amazon does this step amazingly (sometimes even frustrates me).

Just when you land at websites, you have reached the top of funnels. Marketers will try to take your emails to send targeted emails, which are rigorously tested and designed for every stage of the customer lifecycle. Even if you just close the website (and you are not using the incognito mode), you started seeing the banner ads and Facebook advertisements everywhere you go on the interested for days and even weeks.


About the author

Product Manager at Google | Kellogg MBA '20 | IIT Delhi Graduate

I am passionate about product management, startup, and fitness not in any particular order.

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