A funnel is a marketing model that visualizes the staged process from initial awareness to a final action such as a purchase or sign-up. Because users drop off at each stage, the number of people decreases as you move down, forming a funnel shape.
A typical marketing funnel consists of four stages: Awareness, Interest, Consideration, and Action. For an e-commerce site, this translates into concrete steps: site visit, product view, add to cart, and purchase completion.
The core of funnel analysis is identifying which stage loses the most users. If only 30% of users who add items to their cart complete a purchase, the checkout flow likely has a problem. According to the Baymard Institute, the average cart abandonment rate across e-commerce sites is roughly 70%.
Short URLs play a role at every funnel stage. At the awareness stage, short links in social posts and ads measure click volume. At the interest stage, short links in newsletters track post-open click rates. At the consideration stage, short links to comparison pages analyze browsing behavior. Assigning different UTM parameters to each stage's short URL lets you visualize the entire funnel end to end.
Google Analytics 4 offers a Funnel Report feature where you define custom steps and run funnel analysis. A notable capability is switching between an open funnel (including users who enter mid-funnel) and a closed funnel (only users who start at step one). Related books are available on Amazon.