Funnel analytics give businesses insights into important user behavior metrics that help optimize the customer journey and improve conversions.
While traditional funnel analytics do provide granular targeting and precise optimizations, as we will discuss in this article, they aren’t always in accordance with privacy and compliance standards.
While many tracking tools are labeled privacy-friendly, they still process personal data — falling short of true privacy and ethical standards.
Funnel analytics is a process of mapping and tracking the steps the users/leads take, from the point where they enter the funnel, to successful conversion or drop-off.
Businesses use funnel analysis to visualize and track the user journey through a predefined conversion path. They can identify weak points in the conversion funnel and bottlenecks where users drop off.
Identifying weak points, testing, and optimizing allow businesses to improve the ROI (Return on Investment) of their marketing and sales efforts and increase conversion rates. That is especially important for large websites and eCommerce stores, where even the slightest change in the number of users going through each funnel step can result in significant revenue changes.
Unfortunately, most granular analytics tools rely on tracking methods that raise privacy concerns.
Most traditional funnel analytics software relies on tracking methods such as third-party cookies and precise user profiling.
Cookies are small pieces of code quietly stored on web browsers after a user visits a web page for the first time. Cookies not only track user behavior on that website, they remain active in the background and keep tracking across websites.
While this tracking may seem justified in the context of marketing strategies—leads usually don’t convert after the first visit—the amount of gathered information about user preferences and behavior is a cause of privacy concerns.
Moreover, traditional cookie-based analytics tools like Google Analytics indirectly offer that data to advertisers via Google Ads. Personal data is one of the main reasons such services are free.
Even though advertisers don’t get access to personally identifiable information such as names, social security numbers, and similar, data about user preferences, purchasing habits, and detailed behavioral breakdowns can be combined to create user profiles. Based on that information, platforms offer advertisers ways to target the end user with precise ads.
Cookies and user profiling contribute to concerns regarding persistent, targeted advertising. However, even without intrusive ads, the sheer volume of information collected about individuals presents privacy risks. We had some notorious cases of major brands misusing private information solely based on purchasing habits.
Due to the rising number of concerns, regulators realized they needed to intervene, as the existing legal framework proved insufficient to protect user privacy online.
While legislators addressed the issue through regulations like the ePrivacy directive, another EU law reshaped the privacy sector globally.
The General Data Protection Regulation (GDPR) was (and still is) the groundbreaking framework that changed how businesses collect and process personal data, especially in the digital sphere.
After the GDPR, explicit user consent is required before cookies are stored on web browsers. As a result, if businesses wanted to use cookie-based funnel analytics, they needed to present users with cookie consent banners.
The GDPR applies even to non-EU companies as long as they process the personal data of EU citizens. The EU is a major market, which is why many companies complied with the GDPR to maintain access to it.
But, the GDPR is also effective due to its fines. Failing to comply with the GDPR standards can lead to fines of as much as 4% of the company’s global annual turnover in the previous year.
It’s important to note that the GDPR applies globally — not just within the EU — and fines are based on total turnover, not net profit. Authorities have already issued penalties reaching hundreds of millions, even exceeding a billion euros.
The GDPR influenced not only global companies but also legislators. Even though the US doesn’t have a federal data protection regulation, more states are regulating the field.
The most significant example is the California Consumer Privacy Act (CCPA), as California is a large tech market home to many big companies residing in Silicon Valley.
The legislators weren’t the only ones to address the privacy concerns raised, nor were they the first. Due to whistleblowers like Edward Snowden, people started taking better care of their (online) privacy.
As a result, besides rejecting unnecessary cookies, privacy-aware users are relying on tools such as ad and cookie blockers, DoNotTrack settings, VPNs, private browsers, and incognito modes to cloak their traffic. That has two main effects:
So not only is using cookie-based funnel analytics less accurate than it used to be, but it also raises privacy concerns amongst users who don’t want their personal data processed for marketing purposes, affecting brand reputation and ethical standards.
With the rise of privacy concerns and compliance headaches surrounding them, some businesses began seeking alternatives to cookie-based analytics.
As a result, many privacy-friendly analytics platforms started emerging on the market, promising compliance by not relying on third-party cookies for data collection.
Third-party cookies, on their own, are just a method for collecting personal data. Although cross-site tracking and data brokering are intrusive, removing them is a step in the right direction, but only doing that isn’t enough.
Therefore, removing cookies but tracking personal data differently, even when the same purpose can be achieved without personal data tracking, opposes one of the key privacy principles highlighted in the GDPR—data minimization.
So, even though privacy-friendly analytics tools don’t rely on third-party cookies, they still process personal data in other ways.
Instead of cookies, privacy-friendly analytics tools implement several different methods to gather data.
One example is IP hashing—a method of encoding an IP address for privacy. Even though the result is privacy-friendly, the act of hashing is still personal data processing, as the IP address is considered personal data.
Therefore, personal data processing still requires consent even if no cookies are used. Regardless of the claims of privacy-friendly cookieless tracking solutions, you will still be required to show consent banners.
The same goes for user profiling, session storage, local storage, and different types of fingerprinting. Even if the website visitor tracking software doesn’t rely on raw personally identifiable information, the combined data they use can be traced back to individual users, which makes it personal data processing.
A truly cookieless and GDPR-compliant funnel analytics solution should be private by design. Only privacy-first software that processes no personal data will not require consent banners while still being GDPR-compliant.
Here’s how mandera, a private-by-design analytics platform, gives you actionable website traffic insights without infringing privacy:
mandera doesn’t process any personal data. So, if no personal data is collected, no consent is required.
IP addresses are removed from every request, and no user profiling exists. We only rely on aggregated data that can’t be traced back to individual users:
Combined, that data is sufficient to identify a unique visit, allowing us to show accurate metrics without infringing privacy.
mandera will show you automatic visitor flow analytics based on aggregated data. You will see predictions of how users move from one page to another after they enter your website without tracking individual behavior.
You can also create custom user flow predictions to help determine whether visitors are moving in the desired direction.
That will allow you to make funnel improvements while remaining GDPR & CCPA compliant.
Because mandera doesn’t process personal data, analytics won’t be affected by VPNs, ad blockers, private browsers, and incognito modes.
You will get accurate website traffic data you can actually understand and use, displayed in a clean and intuitive dashboard.
Because personal data is not processed, visitors can focus on your content without having their UX interrupted by consent banners.
Moreover, the fact that you care about visitor privacy by implementing privacy-first solutions will strengthen your brand reputation, as privacy-aware visitors respect businesses that maintain high ethical standards.
While privacy-first analytics give you an accurate website tracking overview without tracking individual visitors, that level of privacy doesn’t come without limitations.
If you want granular tracking that will let you, for instance, accurately A/B test several funnel scenarios, you will still need to rely on cookie-based conversion funnel analysis. Those tools will give you detailed insights about each step users take through your funnel, allowing you to make pinpoint optimizations.
While granular funnel analysis helps with precise targeting, it is still a growing privacy and compliance concern. If you want to use it, do so with explicit user consent and in a minimal way necessary to achieve your marketing goals.
While traditional funnel analytics often include granular user tracking and enable detailed campaign optimization, they frequently compromise privacy.
Privacy-friendly tools don’t have the same targeting capabilities, but they do a better job privacy-wise, as they eliminate cookies and direct profiling. However, they still process personal data, requiring consent screens.
Since privacy-first tools don’t allow granular tracking, they offer accurate and fully compliant metrics. Because no personal data is processed, no consent banners are required to keep the user experience clean and improve brand reputation among privacy-aware users.
Do you want a simpler way to do funnel analytics – without personal data? Try mandera analytics today – a privacy-first, 100% cookieless & fully GDPR-compliant website tracking solution.
