Conversion Optimization

5 stages of an ecommerce conversion funnel (+ways to improve each step)

Want to boost your conversion rates? It starts with your conversion funnel. Here is a founder focused guide to building an optimized ecommerce conversion funnel.

5 stages of an ecommerce conversion funnel (+ways to improve each step)

Don’t be intimidated by the term ‘conversion funnel’.

If you run a business, you already have a conversion funnel in place. 

And that’s a good thing.

Now, all you need to do is optimize the conversion funnel to make the most out of it.

Don’t know where to start? We’ve got you covered. 

In this post, we cover the basics of a conversion funnel and the different stages involved in an ecommerce funnel.

So, what is a conversion funnel?

In simple terms, a conversion funnel is a journey each customer goes through consisting of different stages on the website that ultimately leads to conversion.

The different stages being homepage, product pages, cart page, and checkout page. There is a significant drop-off of the visitors at each stage and the number becomes smaller as you get closer to conversion. 

As an ecommerce business owner, your job is to discover weak areas and optimize them so there’s a lesser drop of customers at every stage. 

The conversion funnel is divided into three stages: upper funnel, mid-funnel, and lower funnel.

ecommerce conversion funnel stages

Upper Funnel: The upper funnel or top of the funnel is when the users get to know about your brand. They might come to your website to check the products, pricing, and for overall experience, and then could go to a competitor's website to compare. 

Mid-funnel: At this stage, customers actively know about your brand and explore the offerings at a deeper level with a greater likelihood to purchase.

Bottom funnel: This is where magic happens. Leads become customers, which increases your conversion rates.

The 5 stages of an eCommerce conversion funnel  

A standard ecommerce funnel usually has five stages. 

You can use this marketing funnel to understand where your customer is and what can be done to move them to the next step.

AIDA stages of a conversion funnel that every ecommerce founder must know 

1. Awareness

This phase is where you’re working to attract customers who might be interested in buying your product. 

Here, visitors get to know about the brand. They look at the products or the services you offer and decide if they like the brand and what you have in store for them.

This stage requires educational content from you. You need to tell customers why your brand is better than others. 

Take help of inbound and outbound marketing, blogs, webinars, guides, social media, etc. — anything that can make visitors aware of your products and services.

While you can reach out to many users at this stage, make sure that you’re targeting the right audience who is more likely to make it to the next step. Otherwise, you’re spending your time, energy, and thousands of marketing dollars for no real impact. 

As you move forward, keep your target audience in mind who are more likely to give you conversions in the near future — if not immediately.

Tips to improve this stage: 

  • Grow your audience with the look alike strategy

Facebook has a capability that helps businesses reach wider audiences. The Lookalike strategy allows you to target new people similar to your ideal customer. 

While it might sound similar to the Adwords “Similar Audiences”, the major difference is that Facebook's feature is not based on certain defined parameters. Rather it finds people having traits, interests and disinterests similar to profiles suggested by you. This way, you can reach a wide but relevant audience. 

Here’s how you can set up Lookalike Audiences on Facebook:

  • You can either do this during the Ads creation process using Ads manager or go to Audiences
  • Create audience > Lookalike audience
  • Choose the source. This can be from your pixel data or can be a custom audience. 
  • Pick the desired country / region
  • Pick the ideal size. Don’t keep it too wide. Facebook recommends the range of 1000-50,000
  • Click on Create audience
  • It takes up to 24 hrs to create the audience and about 3-7 days to update the target for any active ads
facebook lookalike audience
  • Find negative unsatisfied customers of your competitors online

When a customer is unhappy with a product or a brand, they are usually quite vocal about it. This dissatisfaction is usually expressed through negative reviews on Amazon or the products website. 

As a competitor, this is a pool of high value customers. These people are looking for a better way to solve their problems or satisfy their wants. This is the right time to jump in and capitalize. 

This certainly does involve some grunt work but it will be worth it. Find these reviews on Amazon or the competitors website and go through their public profiles. You might not be able to connect with them immediately but you can study their activity online - what products do they buy, why don’t they like a product, what are their needs etc. 

With this information, you can update your Audiences on Facebook or Google to run more effective ads. 

Another quick hack is to be active on Quora. Try searching for ‘reviews’ and the name of the competitor. You’ll surely find a couple of unhappy customers. You can respond to them with a convincing pitch and draw their attention to your brand. 

The key to success here is to clearly identify their needs and what was missing in the competitor’s product. Based on this, you can tailor your pitch to drive more conversions. 

reviews on Quora
  • Partner with the right brand for a coalition loyalty campaign

Coalition programs are nothing new but many eCommerce stores stay away from it either due to poor experiences or lack of justifiable ROI. 

The key here is to find the right partner to work with and build a more long term relationship with them. 

While they certainly help in reducing the costs of acquiring new customers, they are a great way to gain access to unique customer insights and behavior. 

When choosing your ideal partner, there are a couple of aspects to consider:  

  • Relevance to your brand (can you pitch an offer together?)
  • Is it a highly dependent relationship - it has to be. Otherwise you risk losing partners in a short period of time.
  • What do they have to offer and what can you give in return? 

Once you’ve the right partner, keep the following tips in mind when creating a loyalty program:

  • Run collaborated surveys to gain maximum insights before drafting the program. 
  • Bundle your products smartly. You can use this opportunity to clear some slow moving stock while getting new customers to your best-selling products.
  • Get more from your customers - social shares, referrals and a comprehensive review of certain products. 
  • Have tier based rewards systems - for instance, if they promote your product, get a valuable referral and are frequently participating in your sales campaigns, they get a high value freebie. For just a social share, they could earn a flat 10% off any product. 
CC Ebook Banner

2. Interest

This is where you want to attract customers to your products or services.

Your website, content, and social media channels are the most powerful medium here. At this stage, you’re looking to create a relationship with your customers. One of the ways to do so is by capturing their email IDs.

  • Send them blog posts, newsletters, in-depth guides, etc. which can tell them what you do and what you can offer to them.
  • Come up with attention-grabbing copy and creatives to get people to turn their attention. 
  • Have a well-executed layout on the website, blogs, product pages, and homepage for the right impression. Formatting can affect what customers think about the brand and therefore, impact the conversion rates.

Tips to improve this stage: 

  • Promote UGC on social media and website (From amazon and your website)

The best sales pitch is one that comes from your happy customers - this is a known fact. 

To peak the interest of your potential customers, send them user generated content like social posts and positive reviews on Amazon or your website. This works better than generic newsletters, blogs or discounts. 

Many customers add images and video reviews to your product listing on Amazon, this is the easiest source of user generated content. No effort marketing collateral. 

video reviews on amazon

Instagram is another easy source of such content. Just a side note, the post on social media does not have to talk explicitly about your product. Sometimes it’s just a product placement - that is great social proof too. 

product placement on social posts

Let’s look at this post. Ignore the caption for a bit. 

There’s a lot going on here - the obvious blow dryer, the clothes, the furniture, the products on the side table, the linen and the picture on the wall. Any of these products can peak the interest of a viewer. 

So, if you’re a new brand, you can easily leverage simple social proof like the above to build consideration towards your brand.

  • Have video based product descriptions (include social proof)

Over a third of the audience prefer to learn about the product through a video. 

Many people, especially visitors from GenZ are more inclined to video and audio based content. So, while it is important to have a creative and compelling written description, having a product video will help convert the younger audience. 

You don’t have to shoot an Ad style, high production video. Something as simple as a presentation style video of around 45 seconds to 1 mins will do. 

Check out how video based product descriptions are uploaded on Amazon.

video based product descriptions on Amazon.
  • Proactively address queries through FAQs

Having an FAQ section on your website has plenty of benefits. It helps attract new visitors to your site through improved SEO. It is a proactive approach to customer support. Finally, it helps re-create a store-like experience. 

In short, it helps improve your performance during the awareness and the interest stages. 

When creating an FAQ, avoid questions to do with the benefits of using the product. That should be covered in the description. 

Here, you’re getting a bit technical as well as covering a few things regarding the customer support, privacy policy and shipping information. 

What to avoid - “How is this product better than what’s out there?”

What to address - “What are the materials used to make the product?” or “If the product fails to work, can I get a replacement?”

To help you create a list of such queries, browse through Quora. Look at what potential customers ask about the product and a competitor brand. 

You can also look at your competitor’s website and address all of those questions. This helps avoid any room for doubt when browsing. 

  • Introduce Live chat bots 

Over 85% of visitors have had a good experience with a chatbot. 

Consumers feel that they are prompt, help address queries immediately and keep them engaged. 

So, at this stage, it really benefits to have a chatbot set up to boost engagement.

If you have a store on Shopify, here’s how you can set this up:

  • Customize Theme > Customize Button.
  • Footer Option on the Left Side Panel.
  • Click Theme Actions > Edit Code.
  • From, you would need to copy and paste the code snippet of your preferred chatbot app. 

3. Desire 

Once you’ve got customers interested in your brand, the next step is to make their desire stronger towards your products/service. 

At this stage, customers are looking at the problem you can solve and how your solutions are different (and better) than what other companies are offering.

Once you have customer’s attention, talk to them about the benefits of the products, not features — to build their interest.

Use higher-level attention-grabbing methods to get them really close to the product purchase. This would mean including high-resolution images, product description, and a product video to entice customers to place an order. 

Make sure you gain some customer reviews after making a sale. This will give visitors an unbiased opinion of your products, and also provide other necessary information they need about the brand.

Tips to improve this stage: 

  • Highlight security certificates and payment modes

Now that visitors are sold on your product, you need to let them know that your website and brand is trustworthy. 

In fact, about 15% of the visitors abandon their cart owing to concerns about security. 

SSL certificates, multiple payment and trust badges help get rid of these worries. 

The key here is to place them in the right place on your website. On the product page, place them right under the CTA button or the product title to grab their attention. If you run your store on Shopify, this is taken care of for you.

Here’s a quick example.

trust badges
  • Exit intents should have more than just discounts

You can save at least 10-15% of your visitors with a well crafted exit intent popup. However, you need first understand what a good exit intent popup looks like in today’s dynamic.

What it’s not - Just another boring sales pitch with a discount offer.

Instead, change up the messaging to something a little more subtle. 

Here’s an example - rather than saying “hey, how about a flat 50 off?”, you can allow visitors to save the product to come back to it later. 

The image below is a clear example of this. 

exit intent to save items

As you can see, it’s not pushy with its messaging. It allows visitors to just save their items of interest to later come back and purchase them. This way, you get some action from them without completely driving them away. 

  • Make it easy to compare options

It is pretty evident in the image above that visitors don’t buy something without doing enough research. About 17% of visitors state this as a reason for leaving a site. 

The research is basically a comparison between what you offer and what else is out there, in order to find the best value for their money. 

At this stage when you have their attention, you certainly don’t want to risk losing them to a competitor. The solution? - Bring the research to your own site.

Create a comprehensive product comparison chart for your own products and also include your competitors. 

Add in details that make you look better than the rest. If your price is higher, wow them with the features. Let them know that they only pay for good value. 

Don’t forget to add in reviews, ratings and product specs. You can also add best-seller tags and a “Who generally buys this product?” section. 

Here’s a look at a well structured product comparison chart. 

product comparison chart

By the way, if you can’t name your competitors, just compile the information under “Other products/brands”. This way, you save yourself from a potential lawsuit without missing out on a sales opportunity. 

4. Action

It’s time to get those Benjamins rolling in. This is the stage when you want your prospective customers to add products to their shopping cart, type in the payment information, and finalize the transaction. This is also the stage where most dropouts happen. 

Focus on your product pages and remove any kind of friction that can lead a customer to drop off. Examine your checkout page and make sure you have only included relevant fields to make the process quick and simple. Just making these small tweaks can make a significant difference in your conversion rates.

Tips to improve this stage: 

  • Offer guest checkout option on the checkout page

Nearly 40% of visitors who abandon an online store do so because of having to create an account. 

When they’ve made up their mind to buy a product, you have very little time and very less room for error. 

Instead of having them sign up, offer a guest checkout option to make things faster. Here’s how you enable it if you own a store on Shopify: Shopify admin > Settings > Checkouts > Under the customer accounts section choose “Accounts are optional” > Save to confirm

 Here’s how it’ll look on your site:

An alternative to this is to enable “Login using Google or Facebook” during checkout. This allows you to gather all the information you need and connect with them post purchase without having a long process. 

  • Reduce the number of form fields 

Marketo ran an experiment to test the effectiveness of 5 field, 7 field and 9 field forms in converting visitors to a site. 

As evident in the image, the shorter the form, the lower the cost per lead and the higher the conversion (by almost 35%). 

And considering that almost 30% leave without buying because of a long checkout process, it is very crucial to optimize this part of the buyer's journey. 

Restrict the details to just the email address, delivery location and full name. Following the 5 field rule, you can split the location into 2 fields and also add in a field for their contact information. 

  • Customers expect full disclosure (pricing and policies)

When customers are ready to checkout and purchase a product, they are convinced that it is worth a certain amount of money. 

But when they are about to make the payment, if they are met with a new, hiked up price with little to no explanation, it is close to impossible to close the loop. 

That’s why you need to provide a clear explanation of the total cost including tax information and packaging fee. 

Apart from this, on the same page, mention the terms and conditions of your refund and return policy. Keep it crisp and straightforward to avoid any misinterpretation. 

Learn from Amazon when it comes to this step. 

5. Bonus stage: Re-engage

Most standard conversion funnels miss out on this stage but it’s extremely important for your business.

Your goal is not only to get one-time traffic but make these people come to you again. 

Retaining customers is the crucial aspect of growing a business and this step enables you to do that.

Invite these customers to sign up for newsletters and social media channels that will encourage repeat purchases. Send them a coupon code or discounts via email. Include personalized notes in the packaging to make a lasting impression in their mind. 

Make sure you’re not bombarding them with newsletters and promotional campaigns. That can negatively affect your brand’s image and can lead customers astray.

Tips to improve this stage: 

  • Order confirmation emails - it's ONLY about the order

These types of emails are the first communication after the purchase and see 6X more open rates than other emails. 

So, it is crucial to ensure that you get these right. 

In all honesty, avoid pitching other products in these emails. This isn’t the place for that. It can make customers doubt the legitimacy of your brand. 

Instead, focus more on providing every detail your customers need to know:

  • The order summary
  • When they ordered it
  • When they receive/expect to receive the order
  • The mode of payment used and the payment status
  • The break down of the cost, including taxes and shopping breakdowns
  • Refund and return policy (just the important details)
  • Contact information of the customer support team

Here’s a good example of the format of  transactional emails by fitbit.

  • Welcome them creatively

Since the goal here is to drive them back to your website to buy more, your welcome emails need to do more than just saying “welcome to the clan”.

And welcome emails are the best place to be creative as they perform better than your typical transactional emails by 300%

There are 4 important aspects to focus on when drafting a winning welcome email : strong subject line and headline, crisp and sticky copy, smart placement of the CTA and a compelling incentive. 

Let’s look at a few examples of good welcome emails and break them down. 

DogVacay’s part of the pack email

In the above email, the purpose is much more than saying welcome. They present a quiz to the customer to keep them engaged and gather more data for further campaigns and emails.

The headline “You’re part of the pack” is crisp and eye-catching. 

As you read the email, you’ll notice that they don’t offer a typical incentive. Instead, they tap into their fun side and use “cute puppy pics” to draw in customers. Overall, the copy, creative and incentive are very reminiscent of their brand’s voice. 

Casper’s hello dreamer

There’s a lot going on in the above email but it’s all with purpose. To begin with, there is a clear social proof presented while welcoming the reader - “community over 1000,000”. This immediately gives confidence to the customer that they are in good hands. 

The email continues to assure customers by re-visiting the benefits of the products with their “Here’s what you’ll get” section. 

Finally, it provides a simple tip and non-pushy sales pitch to drive them to the website. 

So, Social proof + Content marketing + Sales pitch = Here’s my money!

Welcome to Lush

With the above email, the main area of focus is the copy. Overall this welcome email does what any email does. But the copy is non-intrusive yet compelling. 

Statements such as “We’re happy to have you” and “a place at our table” makes the reader feel exclusive. 

The CTA doesn’t sell a product but the brand with “Get to know us”. 

To top it all off, the headline “if you’re wondering what to try first” is a subtle way to draw the reader’s attention to their products.

  • Exclusive early access to products

Exclusivity surely drives interest from customers. We all know this.

So, during this stage of the funnel, it is easy to drive that sense of exclusivity within your customers. 

However, you need to build a segment of your audience to pitch to, based on behavior and their interaction with your brand. 

This includes, purchases from your store, searches on your site, page visits etc. 

The more focused the group, it is easier to create that feeling of exclusivity. 

Based on this, your campaigns need to be subtle and give out very less. Draw them to the website or landing page to reveal the product. 

Here’s an example of an exclusive product launch email.  

example of an exclusive product launch email.  

Wrapping up

Creating a conversion funnel can be challenging, but it becomes easier to patch the holes and bring in more sales with insights and data. Remember the four fundamentals of a conversion funnel — awareness, interest, desire, and action, and move up from there. 

Take your time learning about your audience and what they need to convert and then optimize your funnel depending on the results.

Customer’s journey is not linear — but the more you know about their behavior and history, it becomes more predictable and recurring.

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