If you work on a SaaS growth team, you know funnel analysis is one of those things everyone talks about, but few actually use well. You want to spot where users drop off, figure out what’s working, and maybe—just maybe—catch an insight before your next stand-up. But most tools make this harder than it should be. Good news: PostHog makes funnel analysis way less painful, and you can actually automate the stuff that matters.
This guide is for people who want results, not more dashboards. I’ll walk you through setting up automated funnel analysis in PostHog, including what’s worth tracking, what to skip, and how to make PostHog do the heavy lifting for you.
Why Funnel Analysis? (And Why Automate It?)
Here’s the deal: SaaS funnels are leaky. Users sign up, poke around, and then ghost you before they ever pay or hit your “aha” moment. Tracking funnels lets you see where people bail out, so you can fix the right things.
But staring at funnel reports every Monday isn’t scalable. Automating the analysis means you’re not chained to dashboards, and you actually get notified when something’s off—or surprisingly good.
What automation actually helps with: - Alerts when conversion rates drop (or spike) - Regular reports to your inbox or Slack - Less busywork for you, more time for real experiments
What to ignore: - Overly granular funnels (tracking every single button click) - Vanity metrics nobody cares about (like “dashboard viewed” if it’s not tied to revenue)
Step 1: Map Your Key SaaS Funnels
Before you open PostHog, get clear on what actually matters for your growth. Funnels only work if you’re tracking the right steps.
Typical SaaS funnel stages to consider:
- Sign up → Onboarding complete: Do users finish setup?
- Onboarding complete → First key action: Do they reach value (e.g., create a project, invite a teammate)?
- Key action → Subscription started: Do they pay or hit a paywall?
Don’t overcomplicate it. Start with 2-3 funnels: - One for activation (getting to first value) - One for retention or upgrade (free to paid) - Maybe one for a critical feature (if you have a hero feature)
Pro tip: If you can’t explain your funnel steps to a non-technical teammate in under 30 seconds, it’s too complicated.
Step 2: Make Sure You’re Tracking the Right Events
Automated analysis is only as good as your event tracking. Garbage in, garbage out.
In PostHog, you’ll want to:
- Track core product events (e.g., “signed up”, “completed onboarding”, “invited teammate”, “started trial”)
- Use clear, human-readable event names (skip the cryptic “evt_1298c” stuff)
- Add relevant properties (plan type, user role, source) only if you’ll actually use them for analysis
What not to worry about (yet): - Tracking every click or page view - Custom properties for everything under the sun
Double-check your events:
- Open PostHog’s “Events” page and confirm your key flows are being tracked
- Use their “Live events” view to trigger events yourself and see if they show up
- If you’re missing something, fix your tracking before moving on—automation can’t fix this later
Step 3: Build Your Funnels in PostHog
Now for the fun part. PostHog lets you build funnel reports with a few clicks.
Here’s how:
- Go to Funnels: In PostHog, find the “Funnels” tab in the left sidebar.
- Create a new funnel: Click “New funnel”. Give it a name you’ll recognize next week.
- Add steps: Add your key events in sequence. For example:
- Step 1:
signed_up - Step 2:
completed_onboarding - Step 3:
created_project - (Add more only if they’re critical)
- Step 1:
- Set filters: You can filter by properties like plan, platform, or user type—useful if you want to compare segments.
- Save it: Hit save. Don’t forget to favorite it if you want it handy.
Don’t get cute with extra steps. The more steps you add, the lower your conversion rate will look (just math), and the less actionable your funnel becomes.
Pro tip: If you’re not sure which steps to include, start simple. You can always add more detail later.
Step 4: Automate Reporting and Alerts
This is where PostHog starts earning its keep. You don’t want to babysit the dashboard—let’s make PostHog do the work.
Set up recurring reports:
- In your funnel report, click the “Subscribe” button.
- Choose how often you want the report: daily, weekly, or monthly.
- Select where it goes: email, Slack, or both.
Slack integration is a lifesaver. You’ll get conversion drops or wins piped right into your team’s channel, so you can act fast.
Set funnel alerts:
- Go to the funnel you want to monitor.
- Click “Create insight alert.”
- Set a threshold (e.g., “conversion rate drops below 20%”).
- Choose how you want to be notified (Slack, email).
Be realistic with your alert thresholds. If you set them too tight, you’ll get alert fatigue and start ignoring them.
What’s worth automating: - Drops in key funnel steps (activation, upgrade, or whatever brings in revenue) - Sudden spikes (sometimes a bug, sometimes a growth hack that worked)
What to ignore: - Micro-metrics (like “clicked X button”) unless it’s genuinely business-critical
Step 5: Make Funnels Actionable
Automation is useless if nobody acts on the data. Here’s how to make sure your funnels drive real decisions.
- Share findings in your growth meetings: Don’t just forward reports—explain what changed and what you’re trying next.
- Segment your funnels: Slice by user type, acquisition channel, or plan to spot what’s actually holding people back.
- Set up “exploration” funnels: Use PostHog’s comparison features to test new onboarding flows or pricing changes.
- Tie funnels to experiments: If you’re running A/B tests, use funnel reports to see which variant actually moves the needle.
Don’t obsess over perfect data. Funnels are directional. Look for big, obvious drop-offs first—small tweaks can come later.
What Works (and What Doesn’t)
What works: - Keeping funnels simple and focused on outcomes - Automating alerts for real changes, not vanity metrics - Regularly revisiting your funnel steps as your product evolves
What doesn’t: - Overcomplicating funnels with every possible event - Ignoring alerts (if you never act on them, why bother?) - Tracking things you don’t understand or care about
Most common mistake: Setting up a fancy funnel, subscribing to alerts, and then never looking at them again. If you’re not using the insights, automate less, not more.
Pro Tips for SaaS Growth Teams
- Set a calendar reminder to review funnels monthly. Don’t let them go stale.
- Combine funnel data with user interviews. Numbers tell you where, not always why.
- Document your events and funnel logic. Future you (or the next PM) will thank you.
- Don’t be afraid to delete funnels that aren’t useful. Clutter kills action.
Keep It Simple and Iterate
Automating funnel analysis in PostHog shouldn’t be a full-time job. Start with the basics, set up automation that actually helps you react faster, and don’t drown in data you don’t use. Funnels are a tool, not a destination—keep them simple, review them regularly, and tweak as you learn. If you’re not getting value from an alert or report, kill it. Your future self (and your users) will thank you.