Sales Funnel Metrics You Should Track to Grow Your Business

Post by
Yash Shah
20 min read
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Most businesses need to have a proper understanding of what funnel metrics are. Using important funnel metrics and the correct conversion rate formula to track the client's journey from the initial stage to purchase can help convert leads into clients more quickly. Most business owners feel that sales funnel metrics take a lot of work. But here's some good news – these marketing funnel metrics aren't so complicated. They are relatively easy to calculate and also come with some fantastic benefits for your business.

Here, we've compiled a helpful cheat sheet that guides you on everything you need to know about measuring funnel metrics.

Bonus Read: How to Use Content at Each Stage of a Sales Funnel?

Sales Funnel – The Definition

Let's start with the basics – the sales funnel. A sales funnel is defined as the buying process of a potential client. Put, measuring your client's customer journey is a process. It's how an individual finds out about your services, learns more, and finally decides to buy your services.

Now, measuring success in the sales funnel is about more than just the client. It's about you as well. Only when you understand the entire sales cycle and funnel can you define and optimize the processes for your sales team to identify your potential clients.

For example, any sales funnel will have four stages of sales revenue in the marketing funnel – awareness stage, interest stage, desire stage, and finally, action. Your sales and marketing funnel success depends on how strategically you help your clients through each step until they eventually convert.

What are sales funnel metrics?

Sales funnel metrics are key performance indicators (KPIs) used to track a sales funnel's efficacy. The path a potential customer goes from their initial awareness of a product or service to their actual purchase is known as the sales funnel. These metrics help businesses assess their sales funnels' efficiency with the aid of sales funnel metrics. Additionally, these metrics help agencies identify and address problems with their sales and marketing funnel. As a result, monitoring your marketing funnel metric data is a great tool to determine how to grow your client base.

Understanding the Sales Funnel Metrics

The sales funnel metrics comprise entrances, conversion rate, total sales, and average order value. Below you’ll get an understanding of what are funnel metrics and how to measure them.

    Metric #1: Number Of Visitors


    The number of visitors to a website or landing page is referred to as traffic in sales funnels, a crucial indicator. These visitors represent potential customers and clients in various phases of the purchasing process. Traffic is an essential metric in the early stages of the sales cycle and funnel, even though it does not directly reflect sales.

    Although traffic alone cannot ensure sales, it is a crucial indicator to monitor since it is a starting point for other KPIs later in the marketing and sales efforts funnel. Businesses can boost the possibility that visitors will turn into leads and, eventually, customers by monitoring traffic numbers and consistently upgrading website design, content, and user experience.

    You can calculate your visitors by adding up the number of leads you've reached in multiple ways throughout a given time period. You can also do this at the campaign level (for example, adding the number of clicks from your Facebook or Google ads).

    Metric #2: Leads


    Leads are the beginning of your sales funnel; it is one of the most essential top of funnel metrics you need to measure for the success of sales efforts in your business. A lead can be anyone who signs up for your newsletter, visit your website, directly reach out to you on your email, etc.

    And while the number of qualified leads now entering the funnel is simple to track, it is more important to analyse the quality of those leads. Focus on whether the marketing qualified leads are relevant to your business, whether they need your services, etc. You can calculate the lead value by dividing total sales by the total number of leads.

    One of the widely-used lead qualification techniques is BANT; it helps you qualify your leads based on budget, authority, need, and timing. Check out this video where our CEO talks about using the BANT framework to qualify a lead within 5 minutes of your first call with them.

    Total lead value = Total Revenue ÷ the Total number of leads.

    Metric #3: Conversion Rate

    Conversion Rate

    The conversion funnel metric is the percentage of leads generated that convert into your clients. You need to keep track of your conversion rate as it will help you understand what works and thus optimize your processes to improve sales velocity, efficiency, and conversion rates. Sometimes, a conversion can also mean a resource download, email subscription, event signup, or any other action you have defined.

    "Time to conversion" calculates the typical time for a lead to convert into a paying customer. This statistic is necessary for understanding the time it takes to generate revenue, move leads through the sales funnel, and identify potential bottlenecks for sales teams or areas for development.

    Sales funnel conversion rates are one of the easiest funnel metrics businesses can calculate. To calculate the conversion rate you need to divide your total conversions by the total of sales qualified leads who have entered your funnel and multiply that by 100.

    Long conversion times may indicate that the sales process requires work or that the top of the funnel or lead nurturing procedure needs to be improved. Businesses may reduce the time it takes to turn leads into customers by analysing the time to conversion and identifying the processes in the funnel holding up the process.

    If you wish to avoid this manual task, you can even use a CRM software like Clientjoy to keep track of all your leads and automatically add them as a client when they accept your proposal, through integrations.

    Conversion rate = number of conversions ÷ number of total leads x 100

    Metric #4: Total Sales

    Total Sales

    Of course, conversions need to get your business revenue ultimately, and that’s when this conversion funnel metric comes into play. You need to track the total sales or revenue generated in a specific period. It helps evaluate sales and marketing efforts and determine how much revenue you get from the sales funnel. To calculate your total sales, multiply the number of sales over a given time period by the unit price or by simply adding up the revenue generated for a specific period. Calculating the total sales helps to track growth and measure the sales funnel effectiveness.

    Total Sales = Number of orders x Price per unit

    Metric #5: Customer Lifetime Value (CLV)

    Customer Lifetime Value

    Customer Lifetime Value (CLV) is a metric that assesses the overall value a customer contributes to a company throughout their relationship. This comprises every transaction the client makes with the company, including cross-sells, up-sells, and referrals. Because it can assist firms in comprehending the long-term value of acquiring new customers and can guide their own marketing strategies, campaigns, and sales activities, CLV is a crucial sales funnel indicator.

    By calculating CLV, businesses can calculate how much they should spend on marketing efforts to attract new consumers and how much they can afford to spend on keeping their current clientele. The most lucrative customer groupings can be found using this measure, and the marketing budget and sales strategies can be adjusted accordingly.

    Customer lifetime value is typically calculated as Customer lifetime value = customer value x average customer lifespan. Customer value is defined as the average purchase cost and frequency of purchases, whereas average customer lifespan is defined as the average number of years a customer stays active divided by the total number of customers.

    This indicator is essential for marketing strategy, as it allows you to assess your company's long-term profitability. Your firm is more profitable the greater your Customer Lifetime Value (CLV) is.

    Customer Lifetime Value = customer value x average customer lifespan. 

    Customer value = average purchase cost x average frequency of their purchases

    Average customer lifespan = average number of years a customer stays active ÷ number of total customers

    Metric #6: Average Order Value

    Average Order Value

    This metric is the conclusion of the sales funnel and is a very easy metric you can calculate. It refers to the average revenue that is generated by a particular purchase. You can measure it by tracking the average amount that is spent every time someone places an order. To calculate the average order value, divide your total revenue by the number of orders.  

    Average Order Value = Total revenue generated in a given time period ÷ Total orders

    Metric #7: Churn Rate

    Churn Rate

    The percentage of consumers who discontinue their subscriptions in a specific time frame is known as the churn rate. To calculate the churn rate you simply have to divide the number of consumers who canceled their membership by the number of customers you have.

    This indicator of your customer acquisition cost is crucial since it enables you to assess the health of your clientele. A high churn rate may indicate issues with the good or service, such as subpar quality, exorbitant cost, or bad value. It might also allude to problems with customer support or service problems, such as delayed response times or insufficient resources.

    Agencies can identify opportunities for improvement in the post-purchase stages of the funnel by monitoring churn rate as a sales funnel measure. For instance, it may be a symptom that the onboarding procedure for prospective customers needs to be clarified or that customer value for the product falls short of their expectations if a substantial percentage of clients cancel their subscriptions soon after signing up. Businesses may raise customer satisfaction and decrease churn by solving these problems, ultimately increasing revenue and profitability.

    Churn rate = Lost Customers ÷ Total Customers at the Start of Time Period x 100


    These sales funnel metrics will help you measure your performance and improve your processes. Using the above metrics, you can identify your opportunities and find ways to work around your strategies. Another essential point to keep in mind is to take a look at your sales funnel in total rather than looking at just a few metrics. Only when you analyse the entire funnel will you be able to determine where you stand when measuring the success of your marketing and sales team's funnel.

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    About Author

    Yash Shah
    Co-founder & Chief Executive
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    Yash did Mechanical Engineering and worked as an Investment Banker before founding a Tech Agency that grew to 55 people team offering SaaS, FinTech and E-Commerce Web & Mobile app Development. He currently serves as Chief Executive at Clientjoy - a platform that helps 13K+ Agencies & Freelancers in 90+ Countries acquire and retain happier clients.

    About the Editor & Reviewer

    Mansi Shah
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    Mansi works as a Content Manager at Clientjoy, a Sales CRM & Growth Engine for freelancers & agencies. When she's not busy working, she keeps herself busy learning or binge-watching her latest sitcom obsession or writing about it.

    Tanmay Parekh
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    Tanmay pursued his undergraduate studies in Information Technology but marketing piqued his interest & he finished his postgraduate in Marketing & Finance from Macquarie University, Sydney. With diverse experience across different domains like Ed-Tech, Digital & SaaS. He currently serves as a Growth Head at Clientjoy - a platform that helps 13K+ Agencies & Freelancers in 90+ Countries acquire & retain happier clients.

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