Analytics for software companies are similar to those used by e-commerce sites and other merchants, but they aren’t identical. The vast majority of developers and software companies don’t monetize their apps via paid purchases. Instead, they use advertising or in-app purchases to monetize their software.

In this case, in-app purchases or advertising conversions are the ultimate goal of a conversion funnel. This can be a bit more complicated and dicey: you want users to stay engaged with your program as much as possible, but you also want them to convert on advertisements.

Understanding the Conversion Funnel

The conversion funnel is the model that online marketers use to describe the sales or purchase funnel. That is, this model describes the customer’s typical journey towards making a purchase.

Typically, the funnel is modeled as a four- or five-stage process. Customers – or, in this case, app users – transition from not knowing anything about your product to downloading the product, engaging with the product, and converting on offers.

  • Awareness – This is the initial stage, where users first find out about your app.
  • Interest – The user becomes interested in the target app.
  • Desire – The user wants to download the app.
  • Action – The user downloads (and engages with) the app.

Now, this model is the typical purchase funnel used in e-commerce and retail situations – though, in this case, it is slightly adapted for the developer. It describes the users’ overall journey as they become prospects, then leads, and then make purchases.

But how well does this model work for software companies?

We won’t delve any further into marketing theory, but, as we can see, it presents a small problem. This model presupposes a single purchase at the end of the funnel, whereas a developer or software company needs to do its best to understand the user’s needs and the user’s app experience.

The closest that we can come to understanding the user experience is by using analytics to track user engagement. What this means is that we need to utilize analytics that begin where the conversion funnel ends.

But before we can track user engagement, we need to actually bring them to the Action stage.

Tracking Points: Inside, Outside, and Everything In Between

Here are analytics that software companies should be using in order to monitor their conversion funnel from end to end:

Awareness – The outermost portion of the funnel typically consists of display advertising. One of the most telling metrics for this portion of the funnel is click-through rates. Advanced analytics tools may be able to provide you with hover rates or view rates.

Interest – Social media often enters the scene at this stage, so paid social media advertising and other social media metrics should be tracked at this point in the conversion funnel.

Desire – During this stage, customers develop an intent to purchase. Several other types of advertising can play a role in pushing customers forward towards the Action stage, including email marketing and other paid advertising.

Action – The biggest influencers for the final decision to make a download are typically the final point of contact, including contact points such as organic search, website visits, other paid advertising, app store listings, software directory listings, and so forth.

Since the customer journey does not end with the app download, software companies have to monitor other metrics that begin at that stage. These may include:

The Installation Funnel – The installation funnel, used for pay-per-install software monetization programs, can track everything from the initial download to the abandonment rate. This funnel monitors the effectiveness of the installer ads and ends after the download has completed.

In-App Engagement – Any proprietary analytics or other analytics that are incorporated into the app itself should be included in any conversion funnel metrics. Typical time metrics, click volumes, and so forth should all be measured.

In-App Ads and Purchases – Ad conversions or in-app purchase analytics, when used in combination with engagement metrics, can give useful analytics for software companies. Together, these are among the most vital statistics for measuring the effectiveness of a monetization strategy.

Uninstalls – Finally, tracking uninstalls is another ideal way to know what works and what doesn’t. The combination of all in-app analytics, along with user feedback, can give a holistic picture of how to fix the very final stage of the conversion funnel.

In a sense, the app itself is like the website or the shopping cart for an e-commerce site. Users need to stay engaged until they convert.


While some marketers debate the efficacy of the conversion funnel, it does have its uses. It provides a simple framework that allows us to set marketing goals, track them, and refine our strategies. For developers and software companies, analytics that track user engagement provide a means for improving app design as well as monetization strategies.