UNDERSTANDING FUNNEL METRICS Let’s say you have a goal of 100 new customers this year. In order to reach those 100 customers, you might need 200 engaged, ready-to-buy leads: after all, not everybody you start a conversation with ends up a paying customer. Working backwards, to generate those 200 sales-qualified leads, you might need to collect the contact details of 400 people, some of whom will have a serious interest in your products, while others will require a bit more time to reach the same place. To generate those 400 leads, you might need 2,000 website visitors. Understanding how this progression through the sales funnel happens allows you to predict the number of visitors and leads you’ll need to actually hit your sales targets, and gives direction to your marketing strategy. You will want to measure the number of prospects going into each stage, and the conversion rate to the next stage. You will also care about the overall conversion rate of prospects from the top of funnel to closed deal, and the average deal size. The shape of your funnel will likely vary for each different lead source, e.g. leads from Facebook ads may not convert well into trials, but those that do convert to trials may have a higher conversion rate to closed deals than normal web traffic, and the deal sizes may be larger. That means you will need to track the funnel metrics separately by lead source. These metrics will show you your funnel blockage points, and help you understand whether your actions to improve funnel flow are working. David Skok, Matrix Partners

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