Funnels
Follow leads to customers, stage by stage.
In your head, jot if needed · no calculator why?
Opens at level 10. You're level 1. You can read and practice here now.
the idea
A funnel follows people from one stage to the next: leads to meetings to customers. Each stage's conversion rate is the share of the stage before it that moves on.
Because each rate is a share of the stage before, rates multiply through a funnel; they never add. If half of leads book a meeting and one fifth of meetings buy, then 0.5 × 0.2 = 0.1, so 10% of leads become customers, not 70%.
A funnel gives an expected count, not a promise.
techniques
Multiply stage by stage
- Write each rate as a decimal: a quarter is 0.25, 40% is 0.4.
- Multiply the leads by the first rate to get the next stage.
- Multiply that by the second rate. For an overall rate, multiply the two rates.
worked example
A design studio has 800 leads. Assume 25% book a meeting and 20% of meetings become customers. How many customers does that funnel give?
- 800 × 0.25 = 200 meetings.
- 200 × 0.2 = 40 customers.
Answer: 40
Divide backward, round up
- Find the overall rate: multiply the stage rates.
- Divide the target by the overall rate.
- Round up to whole leads. Rounding down falls short.
worked example
Assume 40% of leads book a demo and 40% of demos become customers. How many leads do you need for 10 new customers? (Round up to whole leads.)
- 0.4 × 0.4 = 0.16.
- 10 ÷ 0.16 = 62.5.
- Round up: 63 leads.
Answer: 63
Later stage over earlier stage
- Put the later stage on top and the earlier stage underneath.
- Divide, then multiply by 100 for a percent.
worked example
320 visitors produced 40 sign-ups. What is the visitor-to-sign-up conversion rate, as a percent?
- 40 ÷ 320 = 0.125.
- 0.125 = 12.5%.
Answer: 12.5%
watch out for
- Adding the stage rates. Half, then one fifth, is 10% of leads, not 70%.
- Taking the second rate of the original leads instead of the stage right before it.
- Rounding the leads needed down. You can't have part of a lead, and fewer leads fall short.
- Dividing the earlier stage by the later one. A conversion rate is never above 100%.
practice
Customers from a funnel
worked example
You have 600 leads. Assume 20% book a meeting and 10% of meetings become customers. How many customers does that funnel give?
Answer: 12
- Each stage uses the stage before it as its base.
- 600 × 0.2 = 120 meetings; 120 × 0.1 = 12 customers.
Overall conversion rate
worked example
Assume 75% of leads book a meeting and one fifth of meetings become customers. What percentage of leads become customers?
Answer: 15%
- Multiply the stage rates: 0.75 × 0.2 = 0.15 = 15%.
Leads needed for a target
worked example
Assume 25% of leads book a demo and 50% of demos become customers. How many leads do you need for 60 new customers? (Round up to whole leads.)
Answer: 480
- Overall rate = 0.25 × 0.5 = 0.125.
- Leads = 60 ÷ 0.125 = 480.
Stage conversion rate
worked example
270 free trials produced 54 paid customers. What is the trial-to-paid conversion rate, as a percent?
Answer: 20%
- 54 ÷ 270 = 0.2 = 20%.