So, for the quick review, the registration funnel is basically the set of steps a potential customer traverses on their way to becoming an actual customer (converted) and typically starts with a site hit and ends with an active user account. What these steps consist of varies with the nature of each business and might include things like a shipping address or a credit check along with the basics such as username and password.
The problem every web business faces is that the registration funnel is essentially a very lossy process. For example; of every 100 site visitors, 50 will start the registration process, of that 50 25 will complete the process, and of that 25 10 might go on to place their first order. Even with the best husbandry many web businesses have single digit conversion rates. With marketing on the web becoming more sophisticated and SEO/semantics driving smarter access to content getting the numbers in the top of the funnel usually isn't the problem and - just like any other lossy process - there can be a big impact on the bottom line by improving the rate by just a couple of points.
So how can you juice this up?
The very first thing you need is data. Just like everything else you need to understand the flow and then you need to instrument the heck out of it before you should be fiddling with it. If you haven't already got this in place then stop reading now and get on with it - the rest of this is useless without insight.
Separate your registration process out in your head; this will help you understand and instrument it. Think through all the steps in your funnel make it as granular as possible - this gives you much more insight into where potential customers drop out and much more flexibility in how you modify the process in response. Crudely; if you're thinking visitor -> credentials -> personal details -> checkout then you should be thinking visitor -> credentials -> name and email address -> shipping address -> checkout. This doesn't necessarily mean more pages or more data for customers to enter (in fact the goal is the opposite) but it does mean than you can count these things individually to see exactly what bit of information your potential customers get reluctant about handing over and it allows you to stage things a little more (see below).
The general principle is to put the fewest barriers between your potential customers and your product as possible. This means looking at what information you're asking for, when you're asking for it, and how it's captured. In some businesses there can be constraints which have to be acknowledged; with a product which is regulated or controlled in some way there may be some external rules which can reduce your options - such as the requirement for identity verification or credit checking - but the keyword here is reduce. The registration pipeline in these types of business is often poorly managed for this reason but it doesn't always need to be; take the time to understand the details of your governance and you will usually find that you have more flexibility than you assumed. For example you might need to verify your customers identity somehow before allowing them to make a withdrawal but does that have to stop you from granting them access to the rest of your product entirely?
Nice segue into staging. One of my favorite techniques in businesses with more complex registration requirements is to focus on capturing the absolute bare minimum during an initial signup (usernames, email addresses, passwords, etc) and capturing the rest 'just in time' in line with access to features. For example; why not delay asking for a physical address until the first time a user reaches the checkout? Why not ask for payment information just before their first purchase? You don't need that data until those events and having to enter it all up front can be prohibitive especially when potential customers might not be 100% sure that you're the service they want. Also think carefully about when you want to trigger the 1st step of the registration process - there can be benefit to letting potential customers play with a little bit more of your product before hitting them up for some credentials (but you have to balance this with less complete early contact information and the risk of taking it too far and having fewer accounts because the majority of the value is available anonymously).
Usability is an important aspect here. Considering the number of screens in your signup process, the number of fields, and even the phraseology of the questions can improve your conversion rates.
Also consider the order that you're capturing information in; if you start with email addresses and you're automatically storing fields as they're completed - a highly recommended Ajax trick - then you have some actionable data to go with your telemetry. You might want to use it for a follow-up contact to see if you can claw a customer back from the edge of registration oblivion.
Another consideration when you're designing your forms is to keep in mind the sort of information users are likely to have close at hand when signing up for your site. The more esoteric (in day-to-day terms) the information you ask for is the higher the chances that a potential customer will need to go elsewhere to retrieve it during the signup process. Data always shows that anytime a customer leaves the page(s) for any reason the changes that they'll return and complete them drop through the floor. What might you not even need users to enter at all? You can pick up things like language and locale from the browser and tools like geo-IP; adjusting a probably-correct field from a list of common choices is far preferable to data entry.
While we're on forms; short and sweet is the way to go. Whenever you have to go 'below the fold' then you're better off splitting the form into multiple pages (otherwise it appears too daunting) and, when you're going across multiple pages, then label the progress. A simple 'page X of Y' can work wonders setting expectations.
And finally, if there is a relevant infrastructure for your line of business (meaning that you can trust it and that a portion of your users are likely to be members) you can consider using an identity service, such as OpenID, to implement a kind of 1-click signup and then just capture the additional information you need to operate the account.
Change it and see what happens - after all you're collecting all the data you need, right? If you're crafty enough then you can do some A/B testing with alternate pages or different text. As long as you're measuring the process you will really quickly find out what's better and what's worse.