Product Analytics in a Nutshell
A Brief Introduction From Marketing and Business Analytics Perspective
The Analytika is a dekadal newsletter that is delivered directly to your email. It focuses specifically on the topics of data and business analytical techniques for product managers.
Customers are valuable assets for businesses. Even though businesses make decisions, customers indirectly influence those decisions. It’s important for businesses to understand what customers are looking for and how they interact with products and services. Ultimately, their experience what makes businesses win.
Today, the world we live in is full of products and services with the customer at the epicenter. For every new product, it is almost certain there exists a competitor. Therefore, to sustain, businesses must do everything possi1ble to acquire and retain customers. After the internet became the basic utility, a new class of cloud products evolved, making it easier to understand customers using instant analytics. In my previous posts, I talked about data and analytics in a general sense. In this post, let’s get into product analytics, understand what it is and how different it is from a marketing and business analytics perspective.
What is Product Analytics?
In simple words, product analytics is a process of collecting and organizing users’ behavior data while they interact with products and answering questions to get valuable insights that lead product teams to enhance user experience. It also helps product teams to develop empathy towards users and quickly implement improvements to the product.
Data for product analytics is generally collected through the product itself. Typically, a piece of code is inserted into the product at the key locations where users’ actions provide meaningful insights. Every time users navigate through those locations, data is collected and organized in a format that analytical tools can understand and interpret.
Why Product Analytics?
Implementing product analytics enables product teams to develop a quick feedback loop for collecting valuable insights from users. Knowing how they interact with the product, objectives, and journey will help the product teams quickly identify the weak points and enhance user experience. It saves businesses a significant amount of time and money at the early stage.
It makes it easier to identify power users who can provide great insights and stick around for a long time if their needs are served. Some of the big companies whose revenue mainly comes from advertising rely heavily on product analytics. They develop effective user interfaces and experience throughout users’ journey so that they keep coming back.
Product Analytics vs. Marketing Analytics
Before the 90s, product management was considered to be a part of marketing. Therefore, a lot of terms are interchangeably used between these two disciplines. For instance, “market” and “marketing” are not the same. The term market is simply a customer, and marketing refers to the act of reaching out to the customer. In that context, product analytics and marketing analytics are two different concepts based on how they deal with the customer, although they look closely related. Here is how product analytics clearly stands out from marketing analytics.
Product analytics focuses on solving market problems by providing useful customer insights and accordingly improving the products. It is more technical and user-centric. In contrast, marketing analytics focuses on generating revenue for the business with effective messaging and exploring ways to increase conversion rates. It is physiological and sales-centric.
Product analytics ensures a great user experience by providing useful insights to the product teams on how users interact and navigate through various parts of the product. It emphasizes more on the user experience than their actions. On the other hand, marketing analytics focuses more on user actions than experience. It relies more on diagnostic and predictive analytics, measuring key actionable and exploratory metrics.
Performing marketing analytics typically leads to developing effective messaging, positioning, and implementing key market strategies. Whereas product analytics leads to new product requirements, code changes, or sometimes pivots.
While performing product analytics, you may deal with confidential information about the users. As it affects the company’s policies and legal boundaries, the data should be carefully handled. On the other side, marketing analytics stays away from user-specific data and can be accessible to others in the company.
Product Analytics vs. Business Analytics
Business analytics is sometimes referred to as Business Intelligence (BI). Some consider it as a subcategory of BI. This is just another area of business where the power of analytics is applied.
Unlike product and marketing analytics, business analytics:
goes beyond the scope of any particular product. It deals with the organization-level data that is collected from various sources such as market, products, services, finance, and human resources to analyze business trends.
uses predictive analytical techniques such as data mining, modeling, and machine learning to determine the likelihood of future outcomes to help business leaders as they are always on the lookout for threats and opportunities.
provides insights to the business leaders so as to whether a company should develop a new product line or prioritize one project over another.
focuses on the overall function and day-to-day operation of the business.
Tools for Product Analytics
Collecting and analyzing real-time users’ activities requires specialized tools that constantly interact with products. Google Analytics kind of paved the way for many web-based analytical tools currently available in the market. Like Google Analytics, they all provide useful insights through various functionalities. Each one focuses on different areas of product, marketing, and business analytics as their strength.
Here is a list of the 13 top analytics software to evaluate based on your needs. Although most of these tools focus heavily on marketing and business analytics, you can surely customize them to work for product analytics.
1. Google Analytics
Best Known For
all type of cloud-based applications
personal and business websites
businesses of all sizes to track users’ behaviors and customers' interactions
digital marketing
Startups
2. Mixpanel
Best Known For
account level product analytics
landing page optimization
SaaS web apps
temporal analysis of user activities
integrating segmentation
A/B Testing
3. Amplitude
Best Known For
mobile app analytics
for creating different cohorts based on the custom events tracked and the segments of users
using heat maps and funnels
startups (with their great trial version product)
A/B testing
4. Segment
Best Known For
developing Customer Data Platforms to support expandability, data enrichment, and multiple devices
creating chart diagrams, flowcharts for users
custom-built websites
5. Heap Analytics
Best Known For
simplified functionality to track clicks, events, and user journey
generating heat maps
user-level product analytics
segmentation optimization
6. Snowplow
Best Known For
Big Data processing and distribution with integration to Hadoop
business intelligence with capabilities for data modeling and transformation
collecting high-quality event data
product analytics on multiple platforms and channels (including IoT) with our range of first-party trackers
7. Looker
Best Known For
Business Intelligence and data visualization
self-serve user-defined dashboards
quickly and easily integrating data from across data sources into a single view
data modeling and blending
column data filtering
user-friendly interface for reporting
8. Baremetrics
Best Known For
simplified SaaS product analytics
payment, revenue, churn, and cohort analysis
intuitive dashboards
9. Pendo
Best Known For
account and user-level product analytics
click reporting
feature-based user engagement
in-app guides and NPS tracking
10. Adobe Analytics
Best Known For
custom event tracking
session-based analytics for digital marketing
tracking user interactions and conversions
cloud-based solutions
good reporting tools
11. Profitwell
Best Known For
customer success monitoring
SaaS product analytics
business analytics and improving customer retention
customer payments tracking
12. Gainsight PX
Best Known For
simplified integration for both mobile and web apps
better user engagement and improving conversions
multi-language support
integrated surveys and text-bubble walkthroughs
13. Smartlook
Best Known For
replaying sessions
replaying mouse movements and click tracking
ability to create heatmaps with historical data
segmentation
analyzing e-commerce sites
providing insights to the UI/UX designers
collecting data for qualitative analysis
Closing
Thanks for hanging around. That’s the long list of tools. For product analytics, my picks are Mixpanel, Heap, Amplitude, and Pendo. With this post, I hope you got a good foundation on product analytics and available tools to use.
To recap, product analytics exclusively answers questions related to products and user interactions with products. Actions led by product analytics result in improved products and enhanced user experiences. In contrast, marketing and business analytics focus beyond the product, such as user actions, revenue, strategic planning, and day-to-day business operations.
Further Reading
For further reading, I highly recommend visiting the below link to get more information about this topic.
5 Top Analytics Tools That Are Product Managers’ Best Friends - by Donald Fomby
Business Intelligence or Business Analytics - By Tableau
Product Analytics - By ProductPlan
Thanks for reading! I hope you enjoyed this post. Connect with me on Twitter.
-Arjun