Product analytics have helped companies – big and small to better target and understand their customers. Analytics helps them determine product health, improve their customer experience, test product fitness and ensure they invest correctly, with limited time and resources. In essence, you can accelerate the growth of your business by analyzing products.
In the end-user era, when you purchase customers through product-led growth, it is essential to know what specific actions people take to guide your strategy through product, sales, marketing and client success.
Your first thought could be: ‘My product has so many features. How do I know what I’m supposed to measure?’
Here is the first scary answer: all your events and commitments must be measured. The secret is placing them in a setting that helps you to understand them. That is because not all user actions have the same value even for the user, and certainly not for the company you run.
Why should companies care about product analytics?
Historically, implementing product analytics has been difficult. It takes time and requires the collaboration of multiple stakeholders to develop a working product analytics engine that can be used to propel your business forward.
However, the effort is well worth it because some of the fastest-growing companies use product analytics to expand their operations. So, let’s take a look at the top reasons why businesses use product analytics.
- You will require data to validate your decisions. Product analytics ensures that you are investing your time and effort in the right areas. By connecting with what your customers are doing, you can create better customer experiences and, as a result, improve your core growth metrics.
- Product analytics allows you to examine the growth of your company. Trend analysis can be used to see what happened in the past, how the business is performing today, and make predictions for the future. This is extremely useful when attempting to forecast a course for your business.
- If you want to measure product-market fit, you need to include product analytics in the mix. You can use retention analysis to see if the same group of users returns week after week and derives value from your product.
- Product analytics can help you understand how customers use your product and which features resulted in retention.
Product analytics with Pirate metrics
It is easier to keep track of all your product metrics if you have a framework to contextualize them. McClure’s pirate metrics for startup growth is one framework:
- Acquisition
- Activation
- Retention
- Referral
- Revenue
If you look at the initials of this list, you’ll notice a very nice AARRR, and if you read it with a pirate accent, you’ll know where the name comes from.
Delve into the specific metrics for each step of this framework by knowing about the key mobile metrics to make your app profitable. This framework helps to overlay it with the long-term customer experience of an ideal user who chooses to stick with you. Consider a user persona when making UX decisions and changes, and consider a user persona when determining how their behavior may be reflected in the numbers you’re tracking.
How to get started with product analytics?
Begin with the North Star metric, a guiding output metric that can help drive business and product success. Its goal is to provide clear evidence that your product solves the problem for which it was designed and adds value to your target market.
If your product has a vision statement, the north star metric is how many users you’ve reached that vision with. For instance:
- If you’re building Quora intending to become a source of knowledge on the internet, the number of questions answered is your North Star metric.
- If you are Spotify and want to entertain people by providing the best music, your North Star metric is time spent listening to music.
- If you’re Uber, Lime, or any other ride-sharing app to get people from one place to another, your North Star metric is the number of rides taken in a week in a reasonable amount of time (e.g. between 5 to 10 minutes). In most two-sided markets, the North Star metric is a result of both demand and supply, rather than just user demand. Monitoring the supply side ensures the overall success of the market.
It reflects the results of the entire AARRR framework.
When it comes to the future business outcomes that your team cares about, a good North Star metric is a leading metric. Furthermore, it is supported by all of the metrics (and thus actions) that a user triggers as they gain value from the app, use it, and make it a habit to use the app.
Is this to say that the North Star metric is a single metric on which you should concentrate your efforts? It’s simpler to think of it as an output metric. You can’t zero in on it because it’s too broad, too big, and not actionable enough for your team to take action on.
However, it is a scoreboard that tells you how you are doing in terms of the product vision you have set for yourself. To change the score, look for specific input metrics that will also move the needle on your North Star metric.
As an example, consider Spotify (remember, their North Star metric is time spent listening to music):
The tech stack for product analytics
There are loads of different tools available serving both particular niches and the sector as a whole. Here, we’ll look at a few platforms that serve a variety of different needs.
1. Mixpanel – as the data visualization analytics
Mixpanel is a self-service reporting tool for product analytics. It serves as the data visualization analytics tool in our data scheme, assisting us in making sense of all the data gathered in the product and acquisition campaigns.
It is more specifically:
- Data from Segment and other platforms is interpreted (Branch).
- With the help of Segment, aggregates ALL data received from various sources.
- Allows the Product Strategist or Product Owner to see a complete picture of the results of product tactics, current user engagement, and user cohort behavior, as well as track any other experiments.
2. Segment – as a data warehouse
Segment is a customer data platform that assists you in gathering, cleaning, and controlling your customer data. Singular is an alternative.
Because Segment organizes all data around the user, it acts as a data warehouse, telling you what the user does within the product as well as on the path to purchasing your product.
Segment is used to collect the following information:
- Events and properties resulting from product interaction.
- User traits are used to associate specific characteristics with a user (i.e. product preferences, device properties, personal data).
- Events that are automatically tracked – App Installed or partner-specific events (i.e. Deep Links opened, through other Partners integration).
3. Branch.io – as the marketing attribution tool
Branch offers the leading mobile linking platform, as well as solutions that unify user experience and measurement across various devices, platforms, and channels. Its primary functions are to provide reliable linking and to attribute those links.
The tool is used to do the following:
- Installs, campaigns, and attribution can all be tracked.
- Make trackable links (deep links).
- Determine whether the product already exists or whether it is not installed on the user’s device.
- Attribute and track app installs across multiple channels, then aggregate them in a unified fashion.
- Integrate with Major Advertising Partners (Google Adwords, Facebook Ads, and Apple Search Ads) and Customer Data Platforms.
- DeepViews of the product – provides a preview of the product.
Conclusion
Product analytics is the process of collecting, inspecting, and analyzing data about your product’s interactions with users.
By tracking, recording, and attributing each user’s action, you can create an extremely detailed picture of:
- Who are your customers?
- How they are interacting with your product
- What tasks do they find difficult?
- Points where they come into contact with each other
- Which features are the most popular and which are underutilized?
- How different user groups behave and achieve value, and so on.
Product analytics, in its broadest sense, allows you to assess the impact of the digital experiences you’ve built into your product. At the end of the day, you have no reason not to get product analytics right. It is critical to the long-term success of your product. Need analytics expertise for your application? Reach out to our experts
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