How to Use Funnel Analysis & Test User Onboarding Efficiency

How to Use Funnel Analysis & Test User Onboarding Efficiency

There’s lot of discussion about funnels these days.

Everyone’s talking about how they get leaks, how they can be optimized, analyzed and strategized for you to make more money.

The modern “marketing funnel” makes for some decent buzzwords. But not quite as many people know how to effectively use them to identify gaps in an onboarding flow.

If you’re feeling a little confused about funnel analysis and how to find these pesky holes that cost you cash each month, read on.

What is a funnel, anyway?

A funnel is a series of steps or actions taken by your visitors, leads or customers that are connected together in a particular order or “flow”. These steps should be chosen because they lead towards your customer’s success.

For example, let’s consider an e-commerce item purchase funnel.

A new user might start by finding the site, browse your catalog, add an item to a shopping cart and then resolve the purchase.

If you’re in e-commerce, this process is important to you because it’s what brings you money. And it’s important for your customer because it’s how they receive the value you promised them in your marketing.

The funnel might look like this:

New visitor > Products Browsed > Added to shopping cart > Sale complete

It’s a simple example, but you get the idea. The reason it’s called a funnel is because the numbers at the beginning are typically large (new visitors) while the numbers at the end of the funnel are typically smaller (sales made).

Perhaps if we all had 100% conversion rates, it would be called a “pipe” instead. But as things stand, it looks something like this:


Let’s quickly look at another funnel for a landing page offer. It might look something this:

Landing page hit via advertising > Email form filled > Sales page read > Purchase complete

Okay, so that’s a couple of example funnels. What does the typical SaaS funnel look like? Here it is.

Website visited > Trial signed up > Product used > Customer subscription

Somewhere during the “product used” step is your user onboarding flow, and we’ll look at that a more detailed example later on.

When you measure onboarding efficiency with funnel analysis, there are two primary metrics to be concerned with:

  • Conversion rates
    The percentage of people who enter the funnel and successfully come out the other end (resulting in an onboarded user and new subscription)
  • Drop-off points
    The percentage of people who enter the funnel and then leave before the final predetermined action is taken (whether it’s a shopping cart sale or new sub’)

The causes for drop-off points are referred to as “bottlenecks”. If we were to imagine our SaaS product funnel with a bottleneck at the trial signup stage, it might look something like this.


Common reasons bottlenecks can happen include:

  • Email confirmations required before continuing
  • Areas where there’s no obvious way to continue (for example through a poorly designed or hard-to-spot CTA)
  • Too much information requested on signup forms (i.e. too much information to fill in for the user)

Let’s look at how to set your funnel up to analyze its performance.

Preparing to analyze your funnels

As with so many things, its best to figure out your goals before you start.

And in the case of the SaaS owner, an onboarding funnel is all about your “Aha!” moment. In fact, 99% of the time, getting your users to this point should be your top priority.

That’s what onboarding is all about.

If you don’t know how to find your “Aha!” moment, bookmark this page, check out this article on how to find it and then come back to learn how to boost results with funnel analysis.

Setting up a funnel means tracking your user’s actions to learn how they’re behaving on your website and where the leaks or bottlenecks are that are costing you money.

Different SaaS products will have different actions to measure. But if you start with your “Aha!” moment as the goal, you’ll know what events or steps must be taken by a user working towards it.

How to set up your funnel

When you know what you want to track, it’s time to find a tool for the job. There are many out there, but MixPanel is one option that we’ve discussed before and generally love because it’s so super awesome.

It lets you track individual events in your onboarding flow, not to mention lets you send fully customized emails to users on an event-driven basis. But that last point’s best left for another article.

MixPanel lets you label events or actions taken by your user inside your user interface (UI). For example, you can label actions A, B, C and then put the events together to create the funnel.

As you can see below, a Ph.D. in quantum theory won’t be necessary.


As an example, let’s say you have a music streaming product and you’ve identified that your “Aha!” moment happens when the user creates a custom playlist and adds a friend to share it with.

What does your onboarding funnel look like?

Homepage hit > Email entered for a free trial > Interface page landed on for the 1st time > Find friends feature used > Friends added > Friend’s playlists shared with user and played

In MixPanel, each of these events can be created and then used to build funnels. Glorious.

You’re measuring uniques, not visits

Funnels are calculated using unique visitors rather than pageviews made multiple times by the same user. That way, you get more accurate information about how many people complete your funnel or drop off at a bottleneck.

Also worth knowing is that the calculations are done in “loose order”. That means users can hop around to different parts of the UI, as long they complete your flow after looking elsewhere.

Otherwise every user would have to complete the exact same steps in the exact same order without any deviation, and that’s highly unlikely at best.

Loose order calculations make things more realistic.

Analyzing the funnel (examples of leaks)

With your “Aha!” moment determined and a proper tracking tool set up at each stage of your funnel, it’s time to identify these leaks you’ve heard so much about.

Let’s go back to our music streaming service for some examples leaks that result in hard cash sloshing around the floor:

  • Lack of emails entered on free trial
    Clearly, your free trial is not enticing enough. Whether a CTA button is the same color as the rest of your homepage (making it hard to spot) or copy isn’t benefit-driven is something that a little A/B testing will have to determine.
    The important thing is that the analysis done on your funnel has identified the leak… Now you can fix it.
  • Playlists created, but no new songs added
    Another likely UI issue here. You could tweak things to make it more obvious how users add songs. For example, a guided tip overlay with explanatory copy and a directional arrow pointing unambiguously towards the “adds song” button would be awesome.
  • Not adding friends after playlist is created
    There are plenty of tools these days to integrate friends lists and sharing features with your product. Whether it’s via Facebook integration or email is up to you. You could do what Twitter does and include following/adding people as part of the onboarding process. They do so because the team identified that it’s how users achieve the “Aha!” moment in Twitter.

Analyzing the funnel a little deeper

One of the best tactics to identify why people are dropping out of a funnel is to speak with them.

If someone’s gone through an email sign up, sending them a personalized email or in-app message can go a long way. And let’s face it, if your drop-off rate is high, it should be easy to gather a decent sample set on which to base decisions.

Examples of questions to ask include:

  • Was a particular feature hard to find or use?
  • Did the users who converted or dropped off have any attributes in common?
  • Are the people paying for your product the same people you’re trying to sell to? (e.g advertising efforts in the wrong place producing the wrong type people.)

Once you start yielding results, funnel analysis can get pretty addictive…


So let’s do just a little more.

How to use micro funnels

Another great way to identify issues is to use “micro funnels”. Here’s an example of a micro funnel created to analyze a problematic signup form.

Sign up page viewed > Entered type of business > Entered phone number > Entered first & last name > Entered password > Entered website > Pressed sign up button

Whereas the signup form is an individual stage of its own in our music streaming service example, here it’s been broken down into separate stages of its own.

And remember, you can use this technique with any stage of the onboarding process that proves problematic. Not just sign up forms.

Breaking a step down into its component parts like this lets you see which part specifically might be causing a problem. It allows you to zero in on the problematic stage in your onboarding flow.


Funnel analysis seems pretty dense at first, but it’s actually super fun once you get going. Not to mention highly lucrative…

As we always say here on the myTips blog, whenever you feel a little overwhelmed or suffering from information overload, start simple.

You could even create an onboarding flow with an excellent code-free guided tips tutorial tool. Then use the built-in analytics tool in the back end to track the progress of your tutorials with funnels.

Hey! We’ve got just the thing. Click here for a two-week free trial.

You’re very welcome, dear reader.