Conversion funnel mapping is a powerful tool for identifying weak spots in your user journey. But many product managers overlook the potential of expanding this tool beyond its basic definition, missing out on its full benefits.
In this article, we’ll go over the essentials of conversion funnel mapping and provide an example of how to use it to unearth more detailed and valuable insights about your users’ behavior.
Let’s get started.
Table of contents
- What is a conversion funnel?
- Uncovering insights through conversion funnel mapping: An example
What is a conversion funnel?
Put simply, a conversion funnel is a pathway that a user takes from beginning to end, viewed from a business perspective.
While a customer journey map looks at the experience from the user’s point of view, a conversion funnel provides a broader view of the process, focusing on the most critical business metrics.
The most common type of funnel is based on the AARRR framework, which stands for:
1. Acquisition: The starting line
Acquisition is the first step. It’s all about how many users you bring to your product in the beginning.
These users can come from various sources, including:
- Paid ads
2. Activation: Getting users engaged
Activation is about how many of your new users start interacting with your product. The exact definition of activation can vary depending on the product.
One popular way to define activation is to identify engagement thresholds or aha moments that indicate a user is likely to stick around.
For example, if you were a product manager at Duolingo, you might find that users who interact with the learning material at least once a day for three consecutive days are three times more likely to stick around than other users. In this case, your definition of activation could be “a user who interacts with the learning material every day for their first seven days.”
3. Retention: Keeping users around
Retention is straightforward. It’s about whether users continue to use your product.
You might measure retention after one month, one day, or even one year, depending on your product and the goals of your funnel mapping exercise.
4. Referral: Users bringing in more users
If your product relies on users referring other users for growth — a viral growth model — you’ll want to measure referrals.
There are a few ways to measure referral rates, including:
- Percentage of users who invite at least one person
- Percentage of users who successfully invite at least one person
- Average number of invites sent by each user
- Average number of successful invites sent by each user
You might find other useful ways to look at referrals, too. The key is to examine the funnel from different perspectives to maximize the insights generated.
5. Revenue: The bottom line
Ultimately, the goal is to generate revenue.
While there are many components to the revenue equation, when it comes to conversion funnel mapping, we usually focus on the percentage of users that become paying customers.
Uncovering insights through conversion funnel mapping: An example
Now that we’ve covered the basics, let’s look at how funnel mapping works in practice.
Let’s say we’re building a product with a freemium business model. The process for mapping the conversion funnel might look like this:
1. Map the funnel
First, map the basic funnel. In our example, it would look like this:
We acquire users, activate them, and hopefully, retain them. But I’ve split referral and revenue because the funnel isn’t always a linear process.
For our freemium model, we might have free users who refer others and paid users who don’t. So a referral-to-revenue sequence wouldn’t reflect how users actually behave.
I’ve also added a measure of revenue retention after one month. Since we have two types of users (free and paying), one retention measure would mix different types of insights.
2. Add data
Once you have a clear picture of your funnel, add data to understand its performance. You can use absolute numbers or percentages. In our example, I’ll use percentages, with each percentage based on the initial number of acquired users.
3. Segment the funnel
Our current funnel gives us high-level, averaged data on funnel performance. To get more insights and make the funnel more actionable, we should segment it.
In our example, let’s say we acquire users from three sources:
- Paid marketing campaigns
- Organic traffic
Segmenting the funnel by acquisition source could reveal interesting insights, such as:
- Referred users tend to stick around the longest
- Even though paid marketing campaigns have the lowest activation rate, the users who do get activated and stick around are likely to become paying customers
- Users who find us through SEO stick around but often don’t become paying customers
4. Expand the funnel
Once we’ve uncovered initial insights, it’s time to dig deeper. Since most of our users come from SEO and they stick around, we want to understand why they don’t become paying customers.
We can do this by breaking down the “revenue” step of our conversion funnel into smaller stages of the user journey.
5. Conduct additional research
Now that we know the main problem — users coming from SEO don’t activate during the free trial — we need to understand why. To get to the bottom of this, we could expand the funnel even more, or conduct qualitative research such as user interviews and surveys.
Mapping the conversion funnel of your product can help you uncover valuable insights about your users.
While the main steps are acquisition, activation, retention, referral, and revenue, you should adjust the funnel to reflect your product’s specifics.
In our example, we decided to treat referral and revenue flows separately and split retention into free and paid user retention. We also segmented the funnel by acquisition source. By doing this, we identified several issues with our conversion flow. We prioritized investigating why users who find us through SEO don’t become paying customers.
Splitting the “revenue” step into smaller sub-steps helped us discover that while users are sticking around, they’re not activating during the free trial period. Moving forward, we can look into why this is the case and work toward finding a solution. This could involve expanding the funnel even further or doing more qualitative research like user interviews and surveys.
Conversion funnel mapping is a highly effective method for identifying the strengths and weaknesses of your product. But to truly unleash its potential, remember to keep adjusting and diving deeper into your funnel based on the specific needs of your product and the insights you uncover along the way.
LogRocket generates product insights that lead to meaningful action
LogRocket identifies friction points in the user experience so you can make informed decisions about product and design changes that must happen to hit your goals.
With LogRocket, you can understand the scope of the issues affecting your product and prioritize the changes that need to be made. LogRocket simplifies workflows by allowing Engineering, Product, UX, and Design teams to work from the same data as you, eliminating any confusion about what needs to be done.
Get your teams on the same page — try LogRocket today.