Let’s cut the small talk short: you’re selling your products and services digitally, hitting 6 figures (or more) in annual revenue and you have a conversion funnel that used to work… But suddenly it feels like you’ve hit a wall, your channels got clogged, your juicy tactics ain’t flowing no more... and you’re not sure WHY.
Maybe, in an attempt to fix it, you’ve jazzed up your design and copywriting, and have run every possible split test under the sun. Maybe you hired a bunch of traffic and advertising specialists — or quite the opposite — you didn’t, because your audience is more engaged than uncle Darrel during the football finals (or, at least, they used to be. Ouch.).
The bottom line is: all of this either didn’t fix the problem or did so at such a high cost that the solution is not scalable (which, frankly, is the same as not fixing the problem).
If that’s you, you’ve come to the right place. You’re about to find out how to optimize your digital sales funnel in 5 stages to boost ROI, start scaling again and outperform the competition.
Over the next 6 minutes of reading this guide, you will learn:
• How to audit your digital sales funnel to correctly identify the sneakiest holes.
• Where to start your optimization: how to pick the priorities that will make the biggest difference in the shortest amount of time.
• When the devil is in the basics, not in the details.
• Two most important metrics to pay attention to — and why you should do your best to get them into 3:1 ratio (hint: it’s about working smarter, long-term!)
• Why your optimization might not include touching your website or email sequence… and more goodies.
Just for the context: a conversion funnel, aka a digital sales funnel, is the entire journey of your Ideal Persona from the first exposure with your brand all the way to buying from you, preferably multiple times.
It’s about converting strangers into curious visitors, then into leads, then into satisfied customers, and finally into raving fans deploying the word of mouth for you.
This exciting journey includes all different types of digital channels, online marketing experts, and a smorgasbord of intentional, well-executed content. The secret lies in making sense of the chaos — and putting it all together so there’s not a single random element.
Check out our previous article on Digital Funnel 3.0, if we’re not on the same page here (pun intended).
5 stages of conversion funnel optimization
1. Audit the funnel & understand the situation (draw it!)
2. Set the direction of optimization
3. Choose the points of optimization
4. Brainstorm your optimization ideas & pick the winners
5. Implement & measure the changes
Heads up: there is NO one-size-fits-all solution here, and that’s the trickiest part.
But understanding where you stand today will obviously help. It all boils down to an important factor – how the COVID-19 crisis influenced the market demand for your product.
Following the BCG Matrix analogy, you’ll land in one of 4 categories: Cash Cows, Stars, Question Marks, and Dogs (used in relation to the whole market, not just your company’s product portfolio).
If you’re not sure which one is you, have a quick look here and then come back to this article.
Stage 1: Draw it to audit it
Now you know whether you’re a Cash Cow, Dog, Star, or a Question Mark, it’s time for step one: draw the current funnel. Map it out. Here an example of such funnel maps:
There’s a bunch of flowchart software you can use for mapping and diagramming:
- Miro => our recent favorite
Step two: include your general conversion rates to have a big picture of weak spots.
How are your ads performing on average?
How does your lead magnet translate into sales?
If you’re running a subscription, what’s your customer churn? Etc.
Here comes the Funnel Optimization Top Advice no.1
—🥁 drumroll, please 🥁—
the two most important metrics to look at are
Customer Lifetime Value (LTV) and Customer Acquisition Cost (CAC)
Why? That’s a separate, fascinating topic, but if you want to dive deeper into it, I highly recommend the book by John Warrillow “The Automatic Customer: Creating a Subscription Business in Any Industry”.
Once you have both LTV and CAC worked out individually, calculate the ratio between them — just divide LTV by CAC.
If you want to get your ROI back on track & start out-scaling your competition,
your number one sales funnel optimization goal
should be to get the LTV:CAC to 3:1 ratio.
A quick side note here: This only applies if your goal is to reach business profitability as quickly as you can — but NOT necessarily when you are planning an aggressive market domination, generously supported by investors' money.
Stage 2: Use the 3:1 formula to Set the direction of optimization
Now, since you’re reading this guide, it’s safe to assume your LTV:CAC numbers are not quite at the 3:1 ratio yet.
There are 3 possible starting points:
The Very Very Bad Scenario: LTV<CAC
There is some kind of a funnel, but it’s either too expensive, leaky, messy, or just downright broken (for example due to faulty technology, an unskilled team, or a product that no one needs).
Now, here comes the Funnel Optimization Top Advice no.2:
zoom out and go back to the fundamentals.
Speaking from experience — I’ve done it over and over again, especially when working with startups. Look at your product, team, technology, and strategy. Reassess elements like market sophistication, your audience, pricing, etc.
The Bad Scenario: LTV = CAC
A slightly better situation, still, you’re not making money. Just like in the first case, the devil is in the basics, not the details.
Instead of diving into rewriting headlines, hiring top influencers, or creating 8k UltraHD content videos... focus on the big elements of the puzzle.
What’s your USP?
Do your marketing angle and pricing match your Ideal Persona?
Do you have a competent data analyst on your team? Etc.
The Slightly Better Scenario: LTV>CAC, but lower than 3:1
Okay, so you’re doing something right — now try not to ruin it as you optimize the rest.
This is where you can go into details like optimizing your pages, emails, ads, content — and split test the sheet out of them 💩 (a spreadsheet, that is).
Stage 3: Choose the points of optimization
Now you know the direction of optimization, choose the elements that will give you the biggest results in the shortest amount of time.
Don’t change everything at once.
Pick one to three elements to optimize.
To keep it real, I’ll show you what we did with one of our American clients — The Growth Institute — an exclusive e-learning platform for CEOs who want to scale 10x their businesses.
Their starting point was the second scenario (LTV = CAC) where Customer Lifetime Value was the same as Customer Acquisition Cost.
We had hundreds of ideas on how to optimize the funnel, but we decided to focus on two points:
1A/ The earliest stage of the funnel — the broad reach didn’t translate into website entrances. Now the question is: WHY? Why wouldn't the CEOs and executives visit their website after being exposed to their ads?
1B/ The final stage of the funnel — the sales were decent but very expensive as the company was using specially trained sales agents to convert leads into customers via a live (phone or video) call. There was also a webinar which we decided to keep, as 16% of participants would contact an agent, so that’s a satisfying number. The question here was: is there a way to skip the sales agents and maximize the webinar’s potential?
Well, as it turns out — there was a way.
And one that increased the sales by a whopping 200%.
(Yes, that’s a cliffhanger. Keep reading.)
Stage 4: Brainstorm your optimization ideas & pick the winners
Depending on the direction of optimization you will look for ideas in different places. Don’t get fooled by loud and shiny solutions (NO, you don’t need to hire George Clooney to advertise your coffee). Instead, look for low-hanging fruits hidden somewhere between the leaves.
That’s exactly what we did with The Growth Institute — we went back to the humble basics:
The optimization point: the early stage of the funnel
Problem: the CEOs and executives don’t visit the sales page after being exposed to the ads.
Brainstorm: We decided to re-examine persona’s mindset, based on the 5 Levels of Market Awareness scale created by Euegene Schwartz:
- Level 1: Completely unaware. A persona doesn’t know they have a problem, and it’s usually not worth marketing your products to them.
- Level 2: Problem/Pain Aware. A persona identified their problem, but they either don’t know there are solutions out there — or are passive and struggling to make the first step.
- Level 3: Solution Aware. A persona knows there are solutions, but hasn’t chosen one — they are still open to inspiration and suggestions. They don’t know about your product yet.
- Level 4: Product Aware. A persona knows about your product but isn’t 100% sure it solves their problem (or whether it’s worth the money). They follow you on social media and read your newsletter, but they haven’t made that final commitment.
- Level 5: Most aware. A persona that is your big fan, maybe even a returning customer — basically they’re already sold emotionally. If they haven’t actually purchased your product yet, it’s because they’re just waiting for a good opportunity to grab it.
Our research showed that the persona is somewhere at level 3 — aware of their problems and open to suggestions and inspiration, but not fully aware of what the market has to offer.
The winning idea: Once we confirmed their level of awareness, it was pretty obvious that the perfect solution would be introducing high-quality, ungated content to the persona.
Instead of directing them straight to the sales page, we sent them to a series of content videos and blog posts — which gave not only practical tips and insights (applicable right away), but also a sneak peek into our client’s unique methodology and tools. Our key metrics were content performance and engagement.
We would then amplify our remarketing game. And inevitably, later down the road, we would invite them to a webinar which was also packed with valuable content.
Speaking of which — if you’re looking for an inspo for a profitable webinar campaign in 2021, we’re sharing our proven 16-step formula in this blog post.
The optimization point: the final stage of the funnel.
Problem: The cost per sale (through an agent) is too high.
Brainstorm: Once again we’re going back to the basics — understanding the Ideal Persona better. This is where the Myer-Briggs Personality Test came in handy. It turned out that the high-end price of the online courses wasn’t catering to the air of exclusivity the CEOs were craving. It also didn’t tickle their taste buds for rivalry.
The winning idea: To spice things up — and add both the feeling of exclusivity and competition — we introduced an application process. The persona would have to fill out a form introducing themselves, their business, struggles and goals, plus include their Linkedin profile. Only then they would hear back whether they got accepted into the program or not.
We kept the agents as “the last resort” and focused way more on hyping things up from the very beginning (which is why the ungated content turned out to be the star of the show).
The result? Well, look at this...
Stage 5: Implement & measure the changes
We ended up with this (simplified) funnel flow:
Our persona is targeted with the ungated content >>> They like it, they want more, so they opt-in for a lead magnet >>> we retarget them with more content and then with a webinar >>> they watch the webinar and feel inspired enough to apply for the program >>> if they get accepted, they either buy their seat right away or they’re being sold by an agent.
Because we created a lot of value, we managed to engage a way bigger audience than before — and ended up retargeting about 100k people.
We didn’t touch the webinar opt-in page — neither its design nor copy — yet its conversion grew 3x from 12% to 35% simply because the audience was already warmed up by the content.
And finally, the sales.
Previously out of 150 leads who got contacted and invited for a call, the agents would convert 34 of them into customers. After optimizing just these two points of our funnel, it was enough to contact 46 leads to generate 131 sales (!) How come? People would send it to their team members and fellow entrepreneurs and just buy it straight from an email as soon as their application got accepted.
Now, drumroll please: by spending 60% of our budget on content promotion and 40% on remarketing, we increased The Growth Institute’s sales by 200% in just a couple of months.
(And later down the road managed to optimize it even more… but that’s a topic for another blog post.)
Pretty decent, huh?
What’s crucial here is to have a well-trained team of specialists who will skillfully execute your master plan — and who understand what and HOW to measure. Sounds simple enough, but I can’t tell you how many times I’ve seen metrics and KPIs being calculated incorrectly.
My personal advice — as someone running a team of 38 incredible professionals — set up processes for cross-checking. At the end of the day, even the most enthusiastic and competent experts are still humans.
Your cheat sheet when sheet goes wrong
If you need a bit of help or inspiration — and you need them ASAPissimo — we’ve outlined a set of 4 different funnel flows tailored to the following business models:
- Online Education
- Subscription business
If you need slightly more support than just a flowchart template, get in touch.
We’ve already helped hundreds of entrepreneurs from all around the world — from Malaysia to Ireland, to the US — and it would be our pleasure to help you skyrocket your business.