You already know that not all customers and leads bring the same value to your company. Some convert faster, some spend more, and some better appreciate your product. Finding those customers, and getting more of them, is a key factor of the success of any company.
Analyzing customer behavior is one of the best ways to discover and profile who those customers are. You could guess and make assumptions, but analyzing the data you have about your customers can tell you with certainty who brings you the most value.
Finding your best customers starts with Funnel analysis. If you were to visually map out every step in your conversion process, you could see how many people make it to each step and how many people drop off at each step. This is what funnel analysis does.
Let’s use an online meeting service as an example. They have 3 steps in their funnel:
- Sign up for free trial
- Add credit card
- Convert to paying customer
Their basic funnel would look something like this.
From the top portion of the funnel above, we can see that 79.7% of people made it from step 1 to step 2 and 33.6% of people made it from step 1 to step 3. We can also see the percentage of people who made it between steps. For example, we see that 42.2% of people made it from step 2 to step 3.
Best Converting Customers
The numbers we just looked at reflect the average of all the users during that time period. However, there is often a large difference in how different segments behave. Factors like a user’s country, company size, or industry can affect how well they convert.
To find out which segments convert the best, we can compare them side by side. To do this in Woopra, just select the category you would like to compare, like in the example below where we are selecting “Countries”.
Comparing how users from different countries move through our Funnel, we can clearly see that users from Canada convert the best, at 65.2%, while users from Spain convert the worst, at 7.1%.
We could also compare by company size, as we’ve done in the screenshot below. This helps us understand what kind of companies we should be targeting. Here, we can see that users from companies with 1-10 employees convert the best, while users from companies with 501-1000 employees convert the worst.
We may also want to understand which referrer types send us the best converting traffic. This is extremely important for marketers to understand in order to maximize ROI. In the screenshot below, we see that users from search convert the best, while users from email and social convert the worst.
Highest Value Customers
Now we know which customers convert the best. But imagine that these customers who convert best end up on the online meeting company’s lowest priced package. The online meeting company may be interested in finding out which customers convert best to their highest paid account.
To analyze this, we would adjust the final goal in our Funnel.
Rather than “convert to paying customer”, our final goal will be ”convert to Platinum package”. Now our report will look like this.
We can see from the top portion of the report that only 4.5% of people convert to the Platinum package.
But where it gets interesting is when we compare the segments to see which groups of users convert best to our Platinum package. In the screenshot above, we’ve compared referrer types.
Remember that when we looked at the referrer type comparison for all conversions, users coming from search performed best. But now that we are only looking at our conversions to the Platinum package, we see that users coming from back links have actually performed slightly better.
Not every conversion is equal. A $500/year conversion is very different from a $5,000/year conversion. If we are trying to find more of our best customers, we need to know not only which ones convert the best, but which ones deliver the most value.
Putting It Into Practice
The insight we’ve uncovered is a great starting point for us. But it also brings up two big questions: Do we focus on customers who convert better or those who bring the most value? And how do we market to each of them?
What approach would you take? How would you apply this to your overall strategy?
Measure your own Funnels by following these step-by-step instructions.