Funnel Reports are a good way to gain traction while competitors spin their wheels in muddy data.

Most web analytics programs give you the option to run a funnel report; a powerful tool, particularly for e-commerce sites, that shows where people are exiting the site’s sales process.

By analyzing the exit rate data in a funnel report, you can focus on optimizing the pages that need it most. First, look for areas with high exit rates. Then, once you have test pages selected, target specific elements to find improvements.

Ideally, your tests will boost conversion. But what if they fail?

If at first you don’t succeed, test, test again…

Here’s an analogy: If a visitor moves through your house (page-to-page) and reaches a locked door (a conversion barrier) for which they don’t have a key, they have no choice but to exit. You can test making changes to the door, but if you haven’t given them the key, your exit rate will remain high.

What’s the key? Confidence. If you haven’t given the visitor the information they need, you haven’t given them the confidence to move forward with the transaction. When the exit rate is high for a given page or step, chances are that you haven’t told the visitor something they were hoping to find out earlier in the buying process. So, it looks like they’re taking a step forward only to take a step back, when really they just didn’t have enough information to feel comfortable moving forward.

Elastic Path Software shows some examples of how funnel reports can be used effectively. Here are two more:

• The funnel report shows that the payment page, which follows a “Shipping Information” step in the checkout process, has a high exit rate. We test showing the visitor when they’ll receive the product before they hit the payment page. This lowers the exit rate for the payment page and boosts conversion.
• A funnel report shows that the shopping cart page has a high exit rate. We look at the previous step and find the product page isn’t telling customers whether their item is out of stock. Since visitors have to “add to cart” to get this information, we now have reason to believe that showing items as “in stock” or “out of stock” on the product page will lower exit rate, so we test it.

Since each site has its own unique characteristics, it’s best to think of our web analytics reports in terms of how they can help us empathize with visitors. What’s holding them back from converting? A funnel report can help you create a hypothesis and test to see what your visitors prefer. That’s how to optimize.Remember, it’s important to look beyond the page with the high exit rate. See what’s happening in previous steps. And if you’re still stumped, get an outside-the-funnel perspective.

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• Webinar: Getting Results with Google Website Optimizer