LevelUp – Understanding Business Models – Industry Average Funnel Performance

As mentioned in an earlier module, the sales funnel is important so you can measure how well you are converting customers at different stages of the funnel.  However the first question you have to ask yourself is:

Is my Product a Considered Purchase?

A considered purchase is one that either requires consideration time by the purchaser, or approval from another party before purchase.  This is often a price-point consideration – buying a $40 basketball jersey is usually not a considered purchase, you’ll make a decision on the spot.  That being said, buying a $2000 autographed Michael Jordan jersey is definitely a considered purchase.

If your product can be bought on the spot, you have an E-commerce Business.  If it is a considered purchase, you have a Lead Generation business.  

The table below provides conversion rates for different types of businesses.  E-commerce businesses are separate from Legal, B2B and Finance as described above since e-commerce sites are not a  considered purchase while the other types are lead generation sites because someone is not going to make a purchase decision on the spot.


E-commerce Businesses

Let’s take a further look at E-commerce vs Lead Generation businesses.
Conversion rates for sales which come as a result of a pay-per-click advertising campaign, can range from 2% to 25% according to a study by Wordstream.  The rate depends on your industry and how well the page is optimized for conversions.  Finance and business web sites usually have the highest median conversion percentage (5.01% and 2.23% respectively), followed by legal (2.07%) and e-commerce (1.84%) sites.  Most websites will convert between 2 and 11% of leads with 5.3% being the median for the top 25% of sites.

Lead-Generation Businesses

While the critical conversion metric within the funnel is sales, most customers do not go directly from unqualified lead to customer.  Prospects need to get comfortable with your offering and reputation and this can be done through the sales funnel via email signups, webinar attendance, informational posts, etc.

Getting a prospect to sign up for your email list varies based on how you are enticing the prospect.

While we are not going into how to optimize your conversions at this point (we’ll get to that in future modules), we do want to focus on how to estimate the conversion percentage for your competitors so you can have a sense of how you might fair in your own business as this will help determine your profitability.

Before getting to the video, we need to consider visitor value since it ties strongly to converting sales on your site.  Visitor value is how much each person visiting your site is worth.  The calculation is straight-forward:

Total Sales/Website Visitors

As an example, if I am selling a $100 product and I sell 20 of them in a month, then my total sales are $2000.  If I know 1500 visitors came to my site then I can calculate visitor value:

$2000/1500 = $1.33

Note that this is a generic visitor value.  What we really want to do is segment your visitors, and know the VVs per segment.  So if Facebook sent you 500 visitors, and only represented $100 in sales, the visitor value would be $0.20.

Keep this equation in mind as we are going to use it in other modules.

View the video below to see how to estimate conversions.


For each competitor, estimate a conversion rate.

Do this by using the conversion paths and steps from the module on the First Time Customer Sales Funnel.


Note that Column B is the % of people that have completed the previous step that complete this step, while column C is the overall % of people that start the path that complete this step.  So 40% of people that had viewed a product, then saved it, then viewed their list, actually enter their email address.


Success Criteria

  • You have entered the conversion paths and steps for each path from the First Time Customer Sales Funnel module for each competitor
  • You have entered the estimated conversion percentage for each step for each competitor
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