Lesson objectives
- Calculate step conversion rates
- Understand unit economics of a funnel
Step conversion rate
For each step: people who took the action ÷ people who reached the step. This is how you find the leak. If 1,000 people see your opt-in page and 250 subscribe, that step converts at 25%.
Cost per lead and cost per acquisition
Cost per lead (CPL) = ad spend ÷ leads. Cost per acquisition (CPA) = ad spend ÷ customers. These tell you whether paid traffic is profitable.
Average order value and lifetime value
Average order value (AOV) is revenue ÷ orders. Customer lifetime value (LTV) is the total revenue a customer brings over time. A funnel is sustainable when you can acquire customers for meaningfully less than their value.
Action steps
- Set up conversion tracking for each funnel step
- Record this week's numbers as your baseline
Checklist
- I know my step conversion rates
- I know my CPL or CPA
- I've recorded a baseline