Product Management Funnel: 7 Funnels PMs Should Track
What is a product management funnel? What are the different funnels that PMs should track? And why do they matter?
If you’re after the answers to these questions, you’re in luck, because that’s exactly what we explore in our article. We also look at how you can harness the power of analytics tools to optimize your funnels.
Ready to dive in?
- The product management funnel, also known as the conversion funnel, is a powerful tool for tracking and optimizing user journeys.
- It allows teams to better understand user needs to make data-driven product decisions and identify friction that results in users dropping off from the customer journeys.
- The sign-up funnel consists of the steps necessary for users to access the product, starting from account creation.
- The user activation funnel is made up of the actions users need to complete to realize product value.
- The new feature adoption funnel is about driving new feature discovery and engagement.
- The steps necessary to upgrade to a paid or higher plan make up the upgrade funnel.
- Retention funnel analysis focuses on the users who drop off at different stages of the journey.
- The churn funnel, also known as the cancellation funnel, tracks the steps before the users leave the product for good.
- The reactivation funnel consists of the steps needed to re-activate users. For example, sending them limited-time promotional offers.
- To optimize your funnels, track the behavior of power users to identify happy paths. Then, track how other users progress and look for bottlenecks.
- Identify friction with session recordings or heatmaps, and help users overcome obstacles with in-app guidance.
- To see how you can optimize product management funnels with Userpilot, book the demo!
What is a product management funnel?
Product management funnel is a term that is used in two ways.
More frequently, the term is used in reference to conversion funnels.
Conversion funnels illustrate the stages of different customer journeys that users take, starting from awareness and finishing with a specific action. For example, if their goal is signing up for the product, it’s all the steps the user needs to complete to achieve it.
In this article, we’re focusing on the various conversion funnels that product managers should track.
Why should product managers track conversion funnels?
There are a number of reasons why tracking conversion funnels is an essential part of a product manager’s job.
Firstly, funnel tracking helps product managers understand user needs and pain points. By monitoring and analyzing how users interact with the product at different stages of the journey, it’s easier to make informed product development and prioritization decisions.
Secondly, tracking conversion funnels enables PMs to identify friction and drop-off points in the user journey. By addressing them, they can optimize the journey and customer experience. This could translate into higher activation, adoption, or trial/freemium-to-premium conversion rates.
Finally, a product manager can use conversion funnel analysis to track the overall performance of the product and make forecasts. For example, if they know the current conversion rates, they are able to predict future revenue based on the number of new sign-ups.
7 Conversion funnels PMs should monitor
Now that we know what conversion funnels are, let’s look at 7 examples that might be of interest to product managers and product owners.
For each of them, we start by mentioning its overall goals and then, dissecting its individual stages.
1. Sign-up funnel
The goal of the sign-up funnel is to get potential customers into the product as quickly as possible. That’s because the sooner they start experiencing its value, the more likely they’re to remain your users and convert into paying customers later down the line.
To achieve this, you need to remove all the unnecessary steps from the process because they create friction.
Let’s look at how Wordtune Read has built a frictionless sign-up flow.
First, a new user needs to create an account. Wordtune offers the single sign-on (SSO) option so that users can log in using their existing Google, Apple, or Facebook accounts. The option to register with an email is there too but that requires extra effort.
Next, Wordtune asks users about their general goals. Do they need it for work, studies, or pleasure? This is to personalize their user experience.
The next question is even more specific. It asks for the kind of text the user wants to summarize. This is to further customize the product to their needs.
Finally, users get to submit the doc they want to summarize. There are 3 ways to do it, and users can choose the one that fits their workflow best (Wordtune does the rest).
2. Minimal viable onboarding: User activation funnel
The aim of minimum viable onboarding is to activate users and make them realize the product value in less time. It focuses on the most basic functionality that users need at the early stages of their journey.
Here’s SkedSocial’s onboarding funnel.
The process starts with a modal that prompts users to add their first social media account – that’s kind of essential for a social media management tool.
Users can do it themselves or with the help of one of their customer success managers.
Adding the account triggers a checklist, which is a powerful way to onboard users. It consists of 4 steps, including creating the account, which they’ve already done.
The next funnel stage involves creating their first social media post.
The flow finishes with a congratulatory message which rewards users for getting across the finish line.
3. New feature launch adoption funnel
The aim of this adoption funnel is to help users discover the new feature and start using it to reach their goals.
When you launch a new feature, make sure that users find out about it.
When Userpilot launched its newly overhauled survey functionality, the team made an in-app announcement via the modal below.
It briefly introduced the feature and highlighted its key benefits. Most importantly, it included a CTA prompting users to try it out.
Clicking on the CTA button takes users to the Surveys dashboard where a sequence of tooltips takes them through the process of creating surveys, step-by-step.
This reduces the time users would otherwise need to figure out how to use the functionality by themselves.
4. Upgrade conversion funnel
Ever heard of cross-sells or up-sells?
They’re both used in the context of the upgrade conversion funnel.
The goal of this funnel is account expansion by converting from free to paying customers or to a higher plan. This helps SaaS companies maximize their revenue by increasing customer lifetime value (CLV).
Let’s see how Canva drives up-sells.
The product offers both free and premium designs. Clicking on a premium design triggers a contextual modal prompting the user to upgrade their pricing plan.
Even though Canva offers a 30-day trial, it still wants you to commit to the purchase, so they first ask you if you want to pay monthly or annually.
At the next funnel stage, you need to provide your payment details. Only when they do that, they can start enjoying the premium features.
5. Retention funnel
The retention funnel tracks users as they drop off from the customer journey.
So if your customer journey consists of five steps, the funnel analysis will reveal how many users from each cohort completed each step, and how long it took them. More importantly, it will show you how many users never progressed and churned.
Places with the biggest drop-off are where you need to look for bottlenecks and friction points to optimize the journey.
6. Churn funnel
If the retention funnel is about churn, what is the churn funnel about?
The churn funnel is, in other words, the cancellation funnel. It describes the steps users take when they decide to cancel their subscriptions.
To reduce churn, companies don’t make it easy for users to cancel. This is because it’s the last chance to engage users before they’re gone for good.
That’s why it’s a common feature to trigger a churn survey which gives you insights into why they decided to leave. That’s what Zoom does.
It’s normally followed by the final bid to retain the user, for example by offering them a more attractive pricing plan.
7. Reactivation funnel
Reactivation funnels are the opposite of churn or cancellation funnels. It describes the steps your users take when they re-subscribe.
We normally use it in the context of reengaging inactive or churned users.
Let’s imagine you cancel your LinkedIn Premium subscription.
An email arrives in your mailbox acknowledging the cancellation.
After which another email is sent that contains a limited-time offer just in case you’re ready to reconsider.
How to use product analytics to optimize funnel conversion?
Let’s check out how you can use a product analytics tool to optimize your funnel. The steps below will work regardless of whether you’re trying to optimize the free trial conversion rate or retention rate.
Step 1: Identify the ideal happy path for each funnel
Start by identifying the happy path – this is the optimal path through your funnel.
How can you do it?
Step 2: Set paths and events for tracking those funnels
To analyze how other users progress along the paths, create funnels for each of them. You can also create custom events to track important milestones in each of the funnels.
Step 3: Analyze data to identify friction and drop-offs
Next, it’s time to analyze the funnel. It’s natural that users will drop off at different stages.
However, if an unusual number of users drop off, you need to identify and remove friction. To identify specific issues, use heatmaps and session recordings to analyze user interactions in more detail.
Step 4: Optimize funnel stages with in-app messages
Once you find the issues, eliminate them.
Depends on the product and the funnel you’re optimizing.
Funnel analysis is an important tool in every product manager’s toolkit. It allows them to better understand user needs, optimize user journeys, and improve conversion rates.
If you want to see how to conduct funnel analysis in Userpilot, book the demo!