Analytics has always been an integral part of marketing or sales. Though it has not always been a norm for the product management teams to use analytics, it needs to be made now. The current competitive business environment necessitates analytics for products as well.
Product analytics, in simplest terms, is the process of collecting and interpreting usage data about a business’s product. This is very useful in gaining an insight into customers’ experiences with your product and thereby finding your products’ strengths and weaknesses.
Why is Product Analytics Useful?
Any product selling business needs to invest resources in product analytics as it has multi-pronged benefits. The competition in the market is gaining more pace with every passing day. If a business wants to survive and thrive in the market, it needs to use all weapons in its arsenal, product analytics being an important one.
- Customers have multiple options – Competition is the most important thing that necessitates product analytics. You cannot be the sole runner in the race. Customers have multiple options to choose from. A good marketing strategy can attract a customer, but only a good product can retain the customer.
- Customers expect more – You might have a perfectly designed product, but you cannot expect customers to stick to it unless you don’t upgrade your product. Customers’ expectations keep on growing with changing times. Product analytics help a business in doing a SWOT analysis for their product.
- You need to understand your customer – When your entire business revolves around your product, you cannot afford to shoot in the dark and expect everything to work fine. Product analytics help understand every aspect of your customers’ behavior concerning your product.
Questions that Product Analytics can Help You Answer
Product analytics, as a tool, helps you find the answer to two major business challenges –
- How can you acquire more customers at a relatively lower cost?
- How to retain the gained customers?
In order to find answers to these challenges, you can target several questions through your product analytics strategy. Answers to all those questions will lead you to the answer to the above-mentioned business challenges. The target questions can be –
- What marketing channels are bringing the best customers for your business?
- From what geographic location are you getting most of your customers?
- How many customers are you getting on a weekly or monthly basis?
- Are potential customers getting stuck at any point in the onboarding funnel?
- What percentage of lead are turning into customers?
- What percentage of the converted customers are coming back or making recurring purchases?
- What feature of your product is bringing recurring revenue?
- What are the attributes of your best customers?
- What are the most and least used features of your product?
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Who uses Product Analytics?
Product analytics is useful for persons involved in product creation processes, persons involved in sales and marketing processes, developers, and UX designers. , It is a process that benefits everybody starting from the product development stage to the end consumer.
Product managers or people involved in product designing get to understand customers’ needs and expectations and thus design a good product that sells.
People involved in sales and marketing are able to design their marketing campaigns very well when they know about customers’ behavior. They can create a more appealing sales pitch.
Designers and developers can easily solve the issues in their design if they know the pain points of customers. They don’t have to rely on the hit and trial method for creating a seamless design.
Customers get products that suit all their needs and fulfill their expectations. Product analytics is much helpful in enhancing customers’ experience with a product.
Google Analytics was practically the first analytics tool. Being a Google product, it automatically had leverage over the other analytics tool. But is it a good tool for product analytics in today’s competitive time? Well, Google Analytics was undoubtedly a good tool when it was launched and when websites were simple and almost static. Today websites are much more complex, and users need much deeper analytics. Simple page metrics and SEO metrics are not enough to stay in the ever-growing competition. However, Google Analytics can be a good tool if you use Google advertising and publishing products.
In a nutshell, you can use Google Analytics when you are just starting, but you cannot rely simply on the free features of Google Analytics when your business grows.
How Product Analytics is different from Market Analytics
Product Analytics and Marketing Analytics are two interlinked but different concepts. Though some people use those terms interchangeably, both have some crucial differences.
- Marketing analytics is concerned more with converting leads, while product analytics is concerned with user experience. According to marketing analytics, business efforts are considered successful as soon as the business gets a customer. Product Analytics starts when a customer starts interacting with the product. It can be concluded that product analytics begins where marketing analytics ends.
- Marketing analytics work to attract customers and make them pay to buy the product. On the other hand, product analytics focuses on retaining the customers for the long term by enhancing their experience with the offered product. So, we can say marketing analytics has a short-term goal, and Product Analytics has a long-term vision.
- Marketing analytics strategies are based widely on information available in the public domain. They are generic in nature. On the other hand, product analytics is based on user-generated information like location, age, gender, and experience of the customer. It is more specific in nature. Marketing analytics data can be similar for businesses in the same industry, but product analytics data are unique to businesses.
Though investing in the product analytics tool is important, but one should not hurry in doing so. Any analytics, including product analytics, depends on the volume of data. If your business page or website is getting zero traffic, no product analytics tool can provide you any important data or analysis. So, first, you need to generate traffic for your business page or website. While you are attracting your first stream of visitors, you can spend time researching a tool that suits your need.
If your website is getting a steady flow of leads, say 100 unique visitors per day, then you should invest in a good product analytics tool as soon as possible. Please note that 100 is not a magic number here; the number will vary from industry to industry. You can also start with the free features of Google analytics and then switch to a better tool when you have some traffic.
Product Analytics Tools come with a long list of features, so it is necessary to understand what tool suits your specific need. The most common features offered by product analytics tools include –19
- Establishing user profiles based on preferred criteria
- Measurement tools
While choosing a product analytics tool for your business, you need to be laser-focused on your end goal. The product analytics tool brings you the answers, so you first need to have the list of questions you need to be answered by your analytics tool. You need to be very clear about the Key Performance Indicators (KPIs) you will be using to interpret your collected data. The best bet is to select a few tools based on their features and your needs and then use free demos to determine which suits you best. The majority of good product analytics tools provide a free demo because they are confident that people will pay for using their product.
Anshi has over 12 years of experience in demand generation, digital marketing, and managing global teams. In her prior role as head of marketing operations for a high growth US healthcare tech organization she transformed marketing from cost to revenue center.
Published September 16, 2021, Updated September 16, 2021