The Law of Funnels

🌈 Abstract

The article discusses the "Law of Funnels" - the principle that the more steps a person has to go through to complete a task, the less likely they are to actually complete it. The author explains how this law applies across various domains, from product development to customer acquisition, and provides three rules to combat the negative effects of the Law of Funnels:

• Reduce all user flows to the fewest number of possible actions
• Have low friction steps occur before high friction steps
• Optimize funnels for the most valuable cohort of users, not just the ones most likely to convert

🙋 Q&A

[01] The Law of Funnels

1. What is the Law of Funnels?

• The Law of Funnels states that the more steps a person has to go through to do something, the less likely they are to complete it.
• This principle applies across various domains, from consumer software to physical stores.

2. How is the Law of Funnels similar to the Second Law of Thermodynamics?

• The author draws a parallel between the Law of Funnels and the Second Law of Thermodynamics in physics.
• Just as physical phenomena suffer from energy loss, user interactions in a product also result in "lost users" that cannot be regained.

3. How does the Law of Funnels impact customer acquisition cost?

• The steepness of a product's funnel is inversely correlated to customer acquisition cost.
• If only 50% of users complete a signup flow, the cost to acquire new registrants is twice as much as if the friction in the flow was reduced.

[02] Combating the Law of Funnels

1. What is the first rule for combating the Law of Funnels?

• Reduce all user flows to the fewest number of possible actions, but no less than that.
• Splitting information collection into multiple screens can increase the number of actions required, leading to higher churn.

2. What is the second rule for combating the Law of Funnels?

• Low friction steps should occur before high friction steps.
• This is because users become more attached to their "sunk cost" as they progress further down the funnel.

3. What is the third rule for combating the Law of Funnels?

• Optimize funnels for the most valuable cohort of users, not just the ones most likely to convert.
• The cohort of users most likely to convert may not be representative of the highest value users.