Sales Funnel KPI, Key Performance Indicators For Success

What are your sales funnel KPI, key performance indicators?

It’s a question every marketer must know, but what is a sales funnel KPI? Put simply, they are metrics that measure the health of a sales funnel in terms of the business bottom line.

They answer the question: How much money do you spend on bringing people into your sales funnel vs. how much money you get out of a sales funnel?

The money you spend bringing people into your sales funnel typically includes just your expenses for ad traffic.

The gross profit you generate from a sales funnel typically includes profit from both the front-end and the back-end.

Front-end profits come from direct sales in the funnel itself, including all up-sells and down-sells within that sales funnel.

Back-end profits come from sales outside of the initial customer acquisition funnel. This includes other promotions and repeat or recurring sales, including the lifetime value of the buyers from your initial customer acquisition funnel.

Your Sales Funnel KPI Dashboard

Just like you can’t fly a plane without looking at the gauges you need a sales funnel dashboard to keep you from crashing your profits into the ground.

But, what sales funnel KPI should you be tracking? Understanding the basic sales funnel KPI numbers will get you started quickly.

The key metrics for a simple funnel dashboard include:

Conversion Rate (CR)
Average Order Value (AOV)
Return On Ad Spend (ROAS)

Let’s look at each one…

What’s Your Sales Funnel Conversion Rate?

Conversion Rate is calculated as:

CR = Total number of sales / Total number of visitors x 100

This is your basic conversion rate calculation. It’s expressed as a percentage, which is why you multiply it by 100.

You have a conversion rate for each page and offer in your funnel.

For example your front-end offer may convert at 0.85% for cold traffic. And your first up-sell may have a conversion rate of 7.0%. Each up-sell in the funnel will have it’s own conversion rate. It’s important to know the conversion rate for each step.

This metric is important because it tells you trends over time, and also sets the pulse of your funnel. When you want to know how well you’re selling this is the one metric you’ll look at.

What’s Your Sales Funnel Average Order Value?

Average Order Value is calculated as:

AOV = Total revenue generated from the entire funnel / Total number of orders from the front end of the funnel

This metric is important because it lets you know how well you’re monetizing new customers from your sales funnel.

The higher the average order value of the funnel, the more money you’re making out of each new buyer.

What’s Your Sales Funnel Return On Ad Spend?

Return On Ad Spend is calculated as:

ROAS = Total revenue generated from the entire funnel / Total dollars spent on advertising traffic x 100

Return on ad spend is basically the amount of revenue you get for every dollar spend on advertising.

This metric is important because it measures how well your advertising is working. The higher your return, the more effective the ad source.

If you spent $1,000 on traffic to your sales funnel in one month, and during the same month your sales funnel generated $300 of revenue, then your ROAS would be:

300/1000 = 0.3 x 100 = 30%

So, for every dollar spent on advertising, you get $0.30 in revenue.

Your Sales Funnel Dashboard KPI

You can’t steer the plane if you don’t have gauges.

Your Sales Funnel Key Performance Indicators are measurable values that quickly show how effectively your sales funnel is achieving the business objectives.

Without knowing your numbers you can’t scale or even know if you’re wasting too much money.

Even if you don’t go deeper than the basics, these three metrics (conversion rate, average order value, return on ad spend) will guide your business decisions and lead to growth.