Funnels are one of the best tools to measure your business. If something is happening on a regular basis, chances are that it can be broken down into a series of steps, made into a funnel, measured and optimized.

Why are we writing this? Because we find that not enough people really understand the key concepts on how to use funnels.

Pick a goal that matters

The most important thing in any funnel is what is at the end of the funnel — it’s the goal that makes the funnel. For a good funnel you need a goal that is worth achieving. So when you start designing your funnel, forget about all the sticky details for the process of getting to some goals and just start with an in-depth look at what you’re trying to achieve. When you start at the back, you won’t waste your time on a plan to get to a destination that doesn’t matter.

An example of a quick funnel is the pirate metrics funnel. The pirate metrics final goal is revenue: a clear goal for most businesses. Ultimately every business needs to make money to keep their doors open, and if nobody is willing to fork out a few dollars to help you keep the engine running, your company is probably in trouble.

 

The Pirate Metrics Funnel
The Pirate Metrics Funnel

 

Get a trickle through first

Once you’ve picked an end goal, you then need to spend your energy on the first step of the funnel. This is the premise of the lean startup — just get something moving. For a web app, the simplest way to get traction on your first step is to put together a simple landing page that explains your website and see if you can get anyone to visit and sign up.

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Don’t waste your time building your product until you have some proof that you’re solving something worthwhile, nevermind building the other pieces like a billing system, a referral program or automated email marketing right out of the gate. Those things will help things deeper down the funnel, but until you have people even visiting your website, you’re not going to benefit from doing any of that work.

It’s okay to have a funnel that looks like this, just don’t stop there.
It’s okay to have a funnel that looks like this, just don’t stop there.

Once you start seeing traction of your first step, you can immediately start moving on to the next step, and then don’t stop until you get at least one person all the way through your funnel.

You’re doing better -- just don’t stop until you get to the end
You’re doing better — just don’t stop until you get to the end

The end must not be zero!

A common mistake that we hear from startups is “we’re not really worried about revenue right now” or “we’ve got a lot of website visitors”. We’ve written about this before; we like to call it having a case of the “tubers”.

When people start getting success in one area, they get addicted to the taste of it, and forget to work on the next steps of their funnel. Once they have a hundred website visitors, then they want a thousand and then a million.

Those are great aspirations, and I welcome people to chase them, but they need to make sure they’re doing what matters before they open the door wide open. Otherwise, they might just not have anyone stick around.

There’s a joke about a bar opening in San Francisco. Thousands of people show up to the opening event. Nobody buys a drink. It’s called a raging success. Sorry, but if your goal is revenue, you’re not a success.

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Stage3DropOff

Once you’ve set up you funnel, you need to be driving through to the end as soon as possible. If you come from an agile project management background, this concept is pretty well understood for your development funnel, you just need to apply this to how you measure your company’s success.

In scrum there is a concept of a “spike” — a feature that touches all levels of the technology stack (from database, to security, to UI). The purpose of the spike is to prove that something can be done before too much effort is spent designing or building any one part of it. People say that a spike should be done in throw-away code. The spike isn’t about building the perfect solution, it’s all about getting a proof of concept as fast as possible. When you’re optimizing your funnel, you want to take the same approach. Try to get someone all the way through the funnel before you spend too much time perfecting any one step of the funnel.

So, if you managed to get 100 people to visit your site and 10 people to sign up for your product, you should start driving for the next step — getting them to use it daily. One paying customer is worth so much more when it comes to validating your business than a bunch of website visitors.

Optimization for the end goal

Here are two examples of funnels. One has a lot of subscribers, and the other has a lot of website visitors. When you’re optimizing your funnel, remember why you built the funnel in the first place: optimize for the end goal that you designed it for. It’s easy to forget about the purpose of the funnel. Once you start seeing success, don’t get distracted by shiny objects, keep optimizing for the end goal.

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This isn’t a bad funnel to have. Sure you have a low Alexa rank, but you’re delivering real value that people are willing to pay for.
This isn’t a bad funnel to have. Sure you have a low Alexa rank, but you’re delivering real value that people are willing to pay for.
This funnel is worse -- congrats on all the website visitors, but where is your revenue?
This funnel is worse — congrats on all the website visitors, but where is your revenue?

Remember that the goal of the funnel is get things out the other side. If your progress is stopping part way through the funnel, then something is wrong. It could be fixed by making your user experience easier, but if you consistently find yourself blocked at one level of the funnel, then you might want to try something completely different.

Everything is a funnel

We just showed you how to do your pirate metrics funnel, but the lessons here work for all your funnels. Want more subscribers to your blog? Set that as the end of your funnel, pick some steps to get there, and start optimizing your funnel in the same way we just did for this article: focus on getting one subscriber, and then focus on lifting your other conversion rates.

Almost anything can be turned into a funnel. We use funnels for measuring the steps in our personal task management (to do, doing, done), our sales process (leads, opportunities, done deals) and project management (backlog, planning, building, testing, deploying, done). They’re a handy tool, and if they’re used right, they’ll keep your company focused on doing what matters most.

In short:

  1. Pick a goal
  2. Put together the steps to get there
  3. Start at the beginning
  4. Get a trickle through to your goal
  5. Turn it up, and remember your goal