Product analytics and its importance to the customer experience
Product analytics is one of the best tools a business can own. Organisations that used the analytics dashboard saw a 60% increase in profits because they became more customer-centric. The better understanding of how customers work allows organisations, both profit and non-profit, to work smarter and more efficiently even in a competitive environment. In this blog post, I am going to explain what we mean by product analytics, its benefit to the product experience and how it eventually improves profitability.
What do we mean by product analytics?
Product analytics collects and interprets customer data to better understand the customer journey. Analytics helps businesses understand how customers interact with their product and make smarter decisions that, in turn, improves overall, customer’s experience. The improvement happens because analytics can analyse how customers interact with product features to predict areas of friction, i.e. areas that make the experience uncomfortable for customers causing them to leave. The information can then be used as feedback to improve the customer experience.
What are the benefits of analytics?
Product analytics brings several benefits that are not seen with other analytics platforms.
Analytics can improve the customer journey significantly, which is important because the customer experience is one of the most important factors that determine sales for an organisation. McKinsey states that over 70% of buying experiences are based on how customers feel they are treated. By 2020, customer experience will overtake price and product as the key brand differentiator. Hence, companies need to invest in a tool that can help them build a better customer journey that will then foster greater loyalty and eventually improve sales.
Product analytics makes the most out of data. Customers are generating petabytes of structured and unstructured data on a daily basis. This vast volume of data is a treasure trove for organisations provided they have the means to use it properly. Product analytics allows the organisation to analyse the various dimensions connected to customer service, ranging from social media interaction to calls with customer service agents.
Analytics can analyse the customer journey through different funnels. Customers have different experiences, and most importantly, have different expectations of each channel. Analytics will analyse how customers interact with the brand and provide valuable insight into these interactions, which can be used to eliminate points of frustration that hinder the customer’s journey. It can even predict how customers will respond, allowing organisations to experiment with new ideas without posing too many risks.
How to use product analytics?
The first step in improving product analytics is to collect data and then set the appropriate metrics to measure it. There are several ways to collect information that will feed into your analytics platform, one option is to use a product experience software. The software can track the customer’s journey based on different metrics without much coding – data generated from the product experience software can feed into revenue levels, active users, retention levels and other metrics connected to marketing.
Once data is collected, organisations can use a variety of reports like journey analysis, cohort retention analysis, funnels analysis and feature performance. These reports will give the varied, multi-dimensional analysis organisations need to make the most out of their analytics.
Finally, it is important to set business metrics. Metrics are crucial because they allow organisations to measure progress and get a sense of the true value analytics brings to the table. It allows organisations to set actionable targets and goals to work towards. Examples of suitable business metrics include, but are not limited to, key drivers of business growth, metrics for problems, metrics for progress and metrics measuring knock-out problem areas.
Product analytics for a more profitable business
Product analytics is not a luxury for organisations, it is a necessity that allows businesses to thrive in a competitive environment. In fact, companies lose more than $62 billion due to poor customer service. Therefore, organisations must take steps and use analytics to get a better understanding of their customers.
The past few years have seen a significant shift in customer priorities, while the price is still important, it is by no means the sole determining factor for sales because customers put more emphasis on the experience than before. In fact, 86% of customers are willing to pay up to 25% more for better customer service.
Hence, if organisations can optimise the product journey using product analytics they can boost their revenues by a substantial amount. The use of analytics not only benefits companies but consumers as well because their interaction with organisations will, naturally, be much smoother.