What is a product funnel?

A product funnel is a visual representation of the steps a customer takes to become a paying customer. It is used to better understand and communicate how customers are interacting with different sections of the journey.

Understanding through an example

Let's understand this better through the example of a product like Zomato.

The funnel is typically divided into stages, such as:

• Awareness: Potential customers become aware of Zomato through online and offline marketing campaigns, such as search engine optimization (SEO), social media marketing, and paid advertising

• Interest: Of the people who are aware of the product, some may visit the Zomato website or app to browse restaurants, read reviews, compare menus, etc

• Desire: When these customers need to order online, Zomato might be top of mind for some of them and they might consider ordering on the platform

• Action: In this stage, the customers use the platform for ordering food

Tracking the funnel through metrics

Each of these actions can then be tracked as metrics to track the progress of customers through the journey. These metrics can help you to identify which stages of the funnel are performing well, and which stages need improvement.

(If you're not completely sure what metrics are, you can refer to https://usethesource.hashnode.dev/data-driven-decisions-and-metrics)

You can define different metrics based on the product and goal. Some common examples include:

• Conversion rate: This is the percentage of people who take a desired action, such as signing up for a free trial or making a purchase

• Bounce rate: This is the percentage of people who leave your website/app after viewing only one page

• Average time on page: This is the average amount of time that people spend on a particular page on your website

• Churn rate: This is the percentage of customers who stop using your product or service within a certain period

By tracking funnel metrics and making improvements based on the data, you can optimize your product funnel and improve your business results.

For example, hypothetically if Zomato notices:

1. 1000 customers are visiting their app

2. 950 of those customers are spending a lot of time on the app

3. But only 50 of those are ultimately ordering

They can concentrate their efforts on understanding why only 50 of those 950 are ordering. They can even look at more granular metrics like

1. Number of people adding items to the cart

2. Number of people reaching the payment page

Through structurally analyzing these metrics, they can get a good idea about where to look and consequently what user problems to concentrate on.

This is essentially what growth PMs do.