A conversion funnel is a process that potential customers go through on their journey towards buying a product or service. The funnel metaphor illustrates the gradual decline of the number of potential customers as they are guided through the conversion path. The conversion funnel is often divided into “upper funnel”, “middle funnel”, and “lower funnel”, which helps to determine the right marketing tactics to increase conversions. The funnel is typically broken down into four levels: “awareness”, “interest”, “desire”, and “action” . The purpose of building a conversion funnel is to have more people traveling through each stage and ultimately completing the last step or taking the desired action.

Each step in the funnel further reduces the number of visitors, typically by 30%–80% per page. Adding the product to the shopping cart, registering or filling in contact details and payment all further reduce the numbers step-by-step cumulatively along the funnel. The more steps, the fewer visitors get through to becoming paying customers. For this reason, sites with similar pricing and products can have hugely different conversion rates of visitors to customers and therefore greatly differing profits.

Conversion funnel optimization means streamlining, improving, or otherwise boosting your conversion funnel for better conversion at each stage. It is an ongoing, interactive process that you must refine over time.