Do you have an online business or sell a majority of your stock through online sales? Then you'll want to understand the conversion funnel. In one sentence, the conversion funnel is the process by which people find your site, navigate it and make a purchase.


There are several stages to the conversion funnel. The first is Discovery. This happens as people make their way to your e-commerce site through social media, blogs, organic searches or online reviews. It would be very beneficial for online retailers to understand how most of their website visitors discover their site so that they can take advantage of this medium and increase exposure through this targeted means. This can be achieved through web analytics tracking via services such as Google Analytics.

Realization of Need

The second stage is Need Realization. It is often the case that online retailers don't promote themselves solely as a seller of goods and services. Sometimes, as part of their marketing strategy, online retailers will be recognized for their expertise in a given domain. Site visitors will be drawn to a site to read an interesting article on a topic that is important or relevant to their needs. Having spent some time of the site, a portion of these visitors may also realize that the website offers a suite of products that will satisfy their needs.

Smaller online retailers and service providers tend to use this strategy because it is easier to lure potential customers to their site via free services (such as expert articles, interesting blogs, e-books, etc.) instead of directly trying to compete with larger, more reputed companies. Since trust online is still an ongoing issue and customers are still wary about giving their private information to unproven, small companies, it is key that potential customers gain trust and confidence in your e-commerce website from the moment they first click on your link.


The third stage is Consideration. In this phase, a potential customer has discovered your products and services and has identified that their needs would be met if they made a purchase. Behavior noticed in this phase is placing an item in a shopping cart. It is estimated that for the average e-commerce website, only 1 in 10 customers who place an item in a shopping cart actually go through with making the purchase.

Internet marketers and front end web developers have been collaborating to create the most seamless interfaces possible to guide customers through the shopping phase. The later they realize that they are making a purchase, the less time they have to ponder why they shouldn't make the purchase. Additionally, the easier your website is to navigate in general, the more likely visitors are going to spend more time on your site browsing products or content. In this stage it is important that the product's features or benefits are shown clearly on the screen to serve as a constant reminder of why they desire the product.


The fourth stage is Conversion. Congratulations! If you've made site visitors go through your website and purchase something then your conversion funnel is working. Making potential customers desire your product is one thing, but leading them into taking action is another level entirely. By purchasing your product they will begin interacting with your brand on a very personal level and may even decide to make future purchases.

Amazon is a great example of a company that innovated around the conversion process through its one click check out option. This e-commerce rapid checkout-style for returning customers greatly reduced the amount of time that customers spend with purchasing and delivery instructions and made the overall shopping experience better. Many companies have adopted similar strategies by giving customers the option of having their credit card information saved to speed up the process of future purchases.


The fifth stage is called Retention. A portion of customers who decide to make a purchase from your website will decide that they like your product and will make future purchases. This is of course the ideal situation for e-commerce merchants. It is far easier and less expensive to sell to an existing customer than to attract a new one. Not only are happy customers great for future revenue, but a portion will also play a role as brand ambassadors on social media, blogs and customer reviews which are critical for attracting new site visitors and potential customers. And so the perpetual cycle continues.