Product analytics involves tracking and examining user data periodically to understand how customers use a product. This includes keeping a record of actions such as clicks, page views, and interactions within the product. By analysing this data, businesses can gain valuable insights into user behaviour, preferences, and trends. These insights can guide firms in making data-driven decisions focused on enhancing the product's performance, optimising user experiences, and driving business growth.
Choosing the right product analytics tool is crucial because it enables businesses to effectively extract information from the vast amount of user-generated data. As a product manager, it becomes challenging to identify what are the best ways to choose a product analytics tool. Getting certifications for a product manager can help you enter into the specifics of how to choose the right product analytics tool. We have listed down tips on how to choose the best product analytics tools for your business.
How to Choose the Right Analytics Tool?
Choosing the right product analytics tool can be essential for your company’s growth. The right tools will give you different metrics - both on your team’s performance, the consumer mindset and on how the product is performing. Hence, it’s important to choose the right features when you are selecting a product analytics tool. Make sure the analytics tool you choose has the following features discussed below:
Tracking: Users interact with your brand through different channels. To understand their journeys, which can be long and varied, you need a tool that can track and recognize customers across different devices and touchpoints.
Event management and analysis: Your product analytics tool should have the capability to handle events or create triggered events. These events can then be used to generate automated and personalised interactions with users.
KPI Dashboards: Dashboards compile important metrics and reports in one place. It's beneficial when your tool allows customization and sharing, simplifying communication of vital information within your organisation.
User segmentation: With comprehensive cohort data provided by your tool, you can create customised experiences and effectively connect with your audience.
Integrations: The product analytics tool you choose should facilitate seamless data exchange, preventing data silos. It should enable both upstream and downstream data integration.
Funnels: Product analytics funnel reports reveal how users move through your product. They highlight where users drop off, helping you identify areas for improvement and testing.
How Does Product Analytics Metrics Help Your Team?
Product analytics tools help you get a lot of metrics that your team can work with. However, not all of the metrics can be useful in every department. Certain metrics may be useful for the marketing department while some metrics are more inclined to maximise customer success. While these metrics can be used simultaneously for two different functions, it is best to decide on the right product analytics tool based on your specific requirements.
Let’s look at the different metrics and how they can help out different areas of a company:
For Customer Success:
Customer success is very important for any brand. It helps them gain new customers or retain older customers. Brand loyalty can also result in customers promoting the brand on their own, thereby reducing marketing costs.
Here are some metrics for customer success:
- Net Promoter Score (NPS) - NPS is a metric that shows how likely a client or customer is going to recommend or promote your brand to another party.
- Churn Rate - The churn rate refers to the number of customers who have discontinued subscription of any service.
- Recurring revenue - This is the predicted revenue that you will get per month or year.
- Monthly Average User - The MAU is the user base on a short term period - a month.
- Daily Active User - Determines whether the number of users are growing per day.
- Retention Rate - This determines the number of customers that keep using the product or service for a given time period.
Among these metrics, churn rate and the retention rate is very important and helps understand the customer lifetime value (CLV).
For Marketing or the Sales Team:
The department that requires very strong numbers to rate their performance is definitely the sales and marketing team. While a lot of the work they do is qualitative, the numbers dictate whether they are on the right path. These metrics make or break the sales department of a company:
- Acquisition rate- This helps to identify how effective the sales team might be. The metric determines at what pace the team acquires new customers.
- Customer acquisition cost - The customer acquisition cost refers to the average cost the company spends to acquire customers - for example, cost of targeted advertising.
- Trial to paid conversion rate - Many services are provided on a free trial basis first. This metric tries to identify how many customers using the trial version get converted to the full paid services.
For Product Development Team:
Quality products are finally what defines the brand to a customer. So, it’s important to keep measuring the performance of a product and improving on it.
Here are some metrics that are essential for the product development team to keep an oversight on the product they deliver:
- Engagement Rate - Identifying which product feature or utility function gets the most engagement among users.
- Usage funnels - On which step of interaction users drop off before making the final purchase or subscription of a product.
- Error rates - Where do users enter an error and then decide to discontinue using a product or service.
Key Takeaway
In 2024, the product analytics field is evolving, with various emerging trends taking over the market. These trends reflect the increasing complexity of these tools, the varied requirements, and the shifting strategies of businesses in product development and user interaction. When using different product analytics tools, companies can benefit by getting deeper insights into user behaviour, enabling more informed decision-making, enhancing product performance, and ultimately driving business growth.
With Imarticus's professional certification course in product management, you'll gain invaluable insights, practical experience to propel your career forward in this dynamic field. Enrol today if you intend to get certifications for product manager and take the first step towards mastering the skills and knowledge essential for a successful career in product management. Hurry! Don't miss out on this opportunity.
