Funnel Chart: The Ultimate Guide to Using Funnel Charts
Data visualization is ubiquitous. It appears in every part of our lives, assisting us in planning and decision making. From the nutrition facts on the food people eat to the allocation of billions of dollars in company expenses, good data visualization helps us digest information quickly and accurately. For every question we may have about data available to us, there is a type of chart best suited to answer that question. Funnel charts are commonly used in business, but they can be used for any type of pipeline to understand how your process is performing from beginning to end.
What is a funnel chart?
Funnel charts are named for their shape. They resemble a modified horizontal bar chart, where the top bar represents the first step of your process and the bottom bar the last. The length of the bars is reduced for every step in the process, giving the chart the appearance of a funnel. Any number of intermediate steps can be placed in between, though you should limit the quantity based on your method of presentation. If you are sharing the chart in print, limit it to the height or width of a sheet of paper. If you are sharing digitally, limit it to the standard display size of your viewer's device or make your chart responsive. Funnel charts are typically used in sales pipelines for companies or websites, but they can be used to model student retention, manufacturing pipelines, and order fulfillment, among other things.
How to make a funnel chart
To make a funnel chart for your process, you must first be able to identify its stages. Let us use order fulfillment as an example. Your steps may include:
- Purchase of an item
- Receipt of order - You may lose customers at this step if your manufacturing process is not automatically triggered by purchase.
- Order processing/manufacturing - Customers may cancel their orders at this step or any other up until delivery.
- Shipment - An incorrect address may mean your item is delayed or does not make it to the customer at all. Even with the correct address, it is possible that the package is misplaced.
- Delivery - Your item may be damaged in the shipping or delivery process, prompting the customer to return it.
- Retention - The customer may decide that they do not need your item after receiving it.
If you have data visualization software, it may be easiest to start from a bar chart template and modify the inputs. If the funnel shape is a necessity, try substituting an image of an inverted trapezoid for each of the bars. If you are using a bar chart template, each of these steps should be represented as a separate bar. The first step is the longest, with each subsequent step proportionally scaled to the first. There are several options for labeling, and you may use any or all of them depending on the value they add and how much space you have available. In this order fulfillment example, they would be:
- A raw count of orders - If you include other metrics, this measure saves your viewer from doing mental math to determine the number of orders at each stage.
- The absolute percentage of orders that make it to each stage - Similar to the conversion rate from a customer visit to a completed sale, this measure is useful for tracking how changes to your process are impacting your customer interactions.
- The relative percentage of orders that make it to the following stage - If your funnel narrows rapidly at some stages but not others, you are able to more accurately target your retention efforts.
Funnel chart software
While funnel charts are standard in some industries, they are not so common that they are a default option in most data visualization software. If your software does not offer funnel charts out of the box, the first step is to search the internet for a tutorial. Funnel charts do not necessarily adhere to data visualization best practices, but the need for them is frequent enough that someone has likely already solved this problem for you.
Plotting your path forward with MindManager
At MindManager, we want to empower you to make the best decisions you can with your data. Our software is robust enough to cover most use cases on day one, but flexible enough to be molded to your needs, showcased in our template offerings for more niche charts. Download a free trial and get organized today.