The conversion funnel is a concept used in e-commerce to describe the journey a consumer takes through an internet advertising or search system, browsing an e-commerce website, and eventually converting to a sale. The metaphor of a funnel is used to describe the decrease in numbers that occurs at each step of the process.
Funnels in the conversion process
Typically, a large number of customers search for a product/service or register as a page viewed on a referring page that is related to the ecommerce site by a banner, an advertisement, or a conventional link. Only a small proportion of those who see the ad or link have clicked on the link. The metric used to describe this relationship is click-through rate (CTR) and represents the top level of the funnel.
Click-through rates are very sensitive to small changes, such as text links, link size, link position, and many others, and these effects interact cumulatively. The process of understanding that creative material brings the highest click-through rate is known as ad optimization.
Once the link is clicked and the referrer page visitor enters the site itself, only a small proportion of visitors typically proceed to the product pages, further creating the metaphorical constriction of the funnel. Each step the visitor takes further reduces the number of visits, usually by 30%-80% per page.
When the product is added to the shopping cart, registration or filling in the contact details and the payment of everything, the step-by-step numbers are further reduced cumulatively along the funnel. The more steps, the smaller the number of visitors who manage to become paying customers. For this reason, sites with similar prices and products can have different rates of conversion from visitors to customers and, therefore, to a large extent different benefits.