What is product analytics?

Product analytics is needed and used in almost every business setting. It will give your efforts a direction, whether you’re selling products or services.

It’s the process of analyzing how customers or users engage with a service or product. Product managers and teams can use product analytics to better understand target audiences, user engagement, and customer behaviors. This knowledge enables them to make improvements that optimize their offerings and methods of attracting new business.

In this article, we’ll take a closer look at what product analytics can do for your operations, marketing, sales, and bottom-line results.

Product analytics offers many benefits to the product management teams and companies that use it. Studying data and behavior is important, no matter your industry or business segment.

Product analytics should be a part of your business model because it can help you:

Lean into the digital-first era

The days of guessing your way to product viability and customer engagement are long gone. Today’s companies, large and small, are leaning into the digital-first era of operations. This means that every decision can be made more intelligently, driven by the metrics and proof obtained from data. Adopting product analytics is a key pillar that supports this digital-first approach.

Set business and product strategy

Product analytics allows for more informed business processes and strategies. For example, knowing how customers behave can dictate how you market your offerings and develop customer services.

Uncover customer behavior insights

Adaptability is another reason why product analytics plays such an important role in the successful businesses of today.

Customer behaviors and preferences change all the time, but the analytics will tell you when your target audience is shifting. Being able to surface immediate insights ensures that companies can remain dynamic in adjusting their approach to product engagement.

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Product analytics can benefit nearly any business model with any core offering in any industry. The reason for this is partly because product analytics can track so many different metrics.

Explore the data-driven insights below to decide which could be most valuable to your business model.

Engagement

Product analytics can help you track user engagement. For example, you can curate and analyze data about how people find and use your product or service.

Retention

Track customer retention with product analytics to study existing client behavior and decision-making. Don’t just land new customers. Instead, use product analytics to help you retain your best customers.

Customer LTV

Customer lifetime value (LTV) is a critical metric. It allows you to assign a monetary value to each new customer and get a snapshot of your return on investment (ROI).

Using these metrics to determine customer acquisition strategies and budgets can also be extremely valuable.

Trends analysis

Product analytics will assign data to each unique behavior in your dataset. Product managers can compare metrics over time to spot emerging trends in buying habits and customer preferences.

Journey analysis

Improve your sales funnels and lead-generation strategies with product analytics. Learn about the buyer’s journey, from awareness to conversion, using the unique data and analysis from each campaign and your overall strategy.

Attribution analysis

You’ll appreciate attribution analysis and product analytics results if you’re in an ecommerce setting. Find out which channels and campaigns are driving the most revenue and assess the effectiveness of each effort and engagement at any given point in your operational timeline.

Cohort analysis

With cohort analysis, you can identify customers or users who share similar characteristics and group them together. Product analytics helps you spot these similarities and further informs your decisions to improve engagement, reduce churn, and boost revenue.

Applying product analytics to your organizational process will allow you to do more than just collect and analyze data. You can customize product analytics to suit your business and the data it requires.

Here’s what you can do with product analytics

Promote cross-functional collaboration

With product analytics driving company decisions, you can collaborate with different departments and teams more easily. Everyone in the company can use product analytics to make consistent decisions and improvements.

Prioritize data management

Product analytics will allow your company to prioritize data management. Your analysis will only be as effective as the data you’re collecting, so this is a good opportunity to prioritize and improve your data management methods.

Plan your product analytics instrumentation

The steps you take in product analytics will depend on your company and goal. You can plan your instrumentation and choose the right platforms, processes, timelines, and review methods.

Implement effective data governance

Routinely collecting and analyzing data on your product and your customers’ behavior enables you to develop governance and guidance for product managers and product analysts. Through this, you can enforce consistency in your processes. Decide roles and responsibilities along with rules and deadlines.

Connect multiple products through integrations

Product analytics and a well-established method with staff and software will provide additional benefits, including the ability to connect multiple products through integrations. Use data to connect different offerings instead of siloing and segmenting them.

Learn from success stories

Besides identifying areas for improvement, product analytics can also help highlight your company’s success stories.

You can learn from data that showcases all the things you did right with your product when improving your marketing or launching additional products.

Any business with an online presence can tap into product analytics. Here are some examples of the industries, roles, and products that rely heavily on these insights:

• Industries: E-commerce, fintech, mass media, consumer technology, and B2B industries all use product analytics as a primary step in their operations.

• Roles: Your company might already have the skilled staff needed to adopt product analytics. There are usually product analysts who are responsible for collecting and analyzing the data. Product managers can oversee the analysts and translate those findings into actionable steps and relevant information for company leaders to use in decision-making.

• Products: Product analytics can be useful for any product or service offering, from physical and tangible products to software solutions and services. It can present useful engagement data and customer behavior metrics.

Product analytics platforms have different offerings and features. However, most are designed to serve as data ecosystems of technology. They will retrieve, combine, and perform tasks, often within user-friendly dashboards, for product managers to use.

The short answer is today. Ideally, your company should start using product analytics as soon as possible.

Product analytics is an essential pillar in today’s data-driven business operations. Not using it will only leave you guessing about product viability, customer behavior, and market trends. Why guess and waste resources when you can use product analytics and data to drive smarter decisions and investments?

Product analytics can help software companies identify and eliminate unused features in their products or service lines.

Another example is using product analytics to identify and troubleshoot conversion issues in a company’s sales funnel.

Product analytics serves as a data-collecting and decision-empowering series of processes that allow product managers to make immediate and informed decisions to improve or elevate their offerings. 

Product analysis is the study of how well a product is doing its job. In DT, product analytics drive better designs and techniques.

Google Analytics can provide rankings, data, and timeline metrics regarding online engagement and activity. By studying these metrics as part of your product analytics processes, you can seek to improve online engagements accordingly.

A product analytics manager will be a master at understanding and using big data to improve company results. A skilled product analytics manager will be well-versed in collecting data, sifting through the metrics, and presenting findings to company leaders.

Not all product analytics tools are created equal. When choosing the most suitable tools for your business, consider those that help you collect the right metrics. Also, look for user-friendly dashboards, easy onboarding, and options for disseminating data.