“To increase retention, don’t sell to the wrong customers.”Jason M. Lemkin, Serial Entrepreneur

It’s generally a good idea to start to view your sign-up process as a funnel. It can help with benchmarking, and with evaluating progress against those benchmarks.

Tracking each step of the funnel (e.g. landing page visit > sign up > first use) will help you to reveal the friction points.

Some general rules of thumb are:

  • > 1% of qualified traffic should be signing up to use your product;
  • > 5-10% of blog visitors should be visiting your landing pages; and
  • > 20-40% of landing page visitors should be signing up.

Ratios will vary depending on your market, the type of product you have, and how tight your market fit is.

If your site doesn’t attract the right prospects, it’s unlikely that its cold traffic will convert. Even worse, if they do convert, they’ll probably churn and be a drag on your business.

Before attempting to scale, it’s a good idea to try and understand the profiles that your product funnels naturally attract.

You should already have a good idea of who your best fit customers are. Is your product for dentists in Germany, or US-based Software-as-a-Service companies?

How to Analyze Cold Traffic

The moment you can start getting signals from users—be it cold traffic, a site visit, an email, or a sign-up—you can start figuring out what profiles your site attracts.

When you get a site visit, you can:

  • Infer the profile based on the pages they visited. Was the content aimed at engineers, marketers, executives?
  • Look at traffic demographics to start building a profile. Where are visitors from? What’s the dominant age group? Is it business or consumer?
  • If they came in through ads, what ad did they click? What was the message? Who was the target? What can you infer from the ad click?
  • If they came in through organic search, what keywords did they use? Can you infer something from those? You can use the Google Search Console in combination with Google Analytics to see search keywords.
  • If you’re selling to businesses, you can use products like Clearbit Reveal or Leadfeeder to detect visiting companies. Are they in the right market? Can the visits reveal something else?

How to Analyze Email Signups

When you get an email address, you can:

  • Look at the landing page or email capture flow messaging to infer profile. What pitch convinced them? Did they sign up from a content or landing page catered to a certain type of users?
  • Enrich the email to get social and company data. You can use tools like Clearbit Enrichment or TowerData to get more data points like role, location, or even income brackets.

Once you get a full sign-up, you will get all these data points and more—but as you can see, you can begin to learn about traffic quality before users even sign up.

Not all cold traffic is created equal. You should be aiming for at least 30% qualified traffic—traffic from your target market. If you’re not currently getting at least 30%, then improve your acquisition strategy.

You will have a hard time learning from and iterating your funnel if you can’t get enough qualified traffic.

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This post in an excerpt from Solving Product. If you enjoyed the content, you'll love the new book. You can download the first 3 chapters here →.

Categories: Customer Research Technique