What Is Product Analytics?

Sayani Deb

How do you know if your product is performing well?It’s product analytics.Product analytics tell you what is going on with your product. It conveys the how, when, what, where, and who of your customers’ behavior and product performance. In short, product analytics tells the story about the product and user interaction.But this information isn’t enough. We have a lot more to tell about product analytics – what it is, its importance, benefits, users, and most importantly, how it can help increase conversions.So, let’s get started!

What is Product Analytics?

The product analytics process refers to analyzing the way users engage with a product or service using specific tools. Product analytics enables the tracking of users to obtain crucial information that can help companies to optimize the user experience.Product analytics offers valuable insights about a product or service and its users. For example, who are the product users, how they use the product, what features they use the most, the challenges faced, etc. Such insights help the product teams to improve the product/ service and provide long-term value to customers.

What is the Difference between Product Analytics and Marketing Analytics?

You may often find the terms ‘product analytics’ and ‘marketing analytics’ being used interchangeably. Though both aren’t the same but are closely interlinked. Check out the main differences between product analytics and marketing analytics below:

Product analytics:

  • Focuses on customer engagement;
  • Depends more on the confidential information of existing customers; and
  • Aims at understanding the customer journey- what’s working and what’s not.

Marketing analytics:

  • Focuses on desired customer actions;
  • Aims at understanding the aspects that convert a customer;
  • Mostly depends on public information

Product and marketing analytics work well together. While marketing analytics focuses on converting leads, product analytics engages and retains customers.

Why is Product Analytics Important?

Did you know that 21% of products fail to meet customers’ needs?Product usage analytics help you prevent this disaster. In other words, product analytics show companies the user actions with regards to your product or service.

  • It allows the product teams to dig deeper into customer behavior, their motivations, and friction. This, in turn, helps them better the product/ service.
  • Product analytics also assist in informed decision-making. The insights obtained are used by companies to guide decisions and reduce financial losses.
  • Companies can also improve operational efficiency using product analytics insights. The qualitative data about the product/service can indicate the production roadblocks or delays. Also, product analytics can help forecast operational issues.
  • Companies can improve their risk management system using product analytics. It helps in reducing risks and taking preventive measures. For instance, using product analytics tools product teams can determine the features at the highest risk of abandonment. Hence, the team uses this information to set up a marketing plan or change the set of features.
  • Businesses can use product analytics to tackle friction and limit it after a feature failure. Also, product teams can identify the friction areas and eliminate them.
  • Further, product analytics can tell companies the likes of their customers. Hence, by using the information businesses can provide personalized user experiences.

Time and again, companies have witnessed massive returns using product analytics. As more and more companies are embracing product analytics, the global industry is predicted to reach $13.9 Bn by 2025.

Who Should use Product Analytics?

Product analytics is for anyone who wants to make better-informed decisions. The data obtained is all about user activity, collected from your website. Hence, product analytics can help you respond to inquiries from company stakeholders.Product managers and the product team can use analytics to understand their users’ actions, make data-based decisions, experiment with products, boost conversion, and retention, and create better customer experiences.With product analytics, product managers can find out;

  • Percentage of users engaging with a specific product feature
  • Areas where users get lost during onboarding
  • Features that retain most customers
  • The most engaged customer segment.

Further, product analytics can also help product teams personalize the onboarding process, assist customers, and improve their overall experience. Developers and UX designers can also benefit from product analytics. Using the data, they can improve product design and identify the implementation flaws. Further, designers can find out which features confuse customers and make them more user-friendly. Marketing and sales teams can use product analytics to qualify leads based on user actions. With the rapid adoption of product-led growth, marketing & sales teams now focus on product-qualified leads (PQLs). Hence, using product analytics, they can identify;

  • The channels with the highest activation rate and lowest Customer Acquisition Cost (CAC); and
  • The channels driving the most engaged users

Accordingly, the marketing and sales teams can devise strategies to convert the leads. Marketers can identify trends and use them for upcoming campaigns. Additionally, they can use behavioral data to execute targeted campaigns. Customer success teams can measure customer health scores by leveraging product analytics (by measuring product usage, NPS, etc.). Further, they can identify important metrics like;

  • Accounts most likely to churn
  • The power users for a specific account
  • The reference-able customers

Hence, customer success teams can identify the at-risk accounts and take adequate actions to get them back on track. Growth managers can get a complete picture of user engagement from product analytics data. Thus, they can create and optimize customer retention strategies as per business requirements.

Metrics to Track Using Product Analytics

When it comes to measuring product success, you have all the available options. You simply need to identify which metrics will be the most useful for the team.

Business Metrics

Track the following business and marketing metrics to understand how the business attracts, converts, and retains customers.

  • Churn rate – Percentage of customers lost during a period.
  • CAC – Average cost of getting a new customer
  • Customer lifetime value (LTV) – Average revenue earned over the life of the customer relationship
  • Conversion rate – Rate at which users sign-up for free trials (conversion to trial account). Conversion to paid account shows the rate of users converting from a trial to a paid account.

Product Usage Metrics

Here are the most commonly tracked metrics to help you find out product health and engagement.

  • Active users – Number of customers using the product daily or monthly.
  • Feature usage – Percentage of customers using a specific feature(s).
  • Session per user – Number of sessions per customer within a period
  • Session length – Time spent by a customer on the product in a single session.

Customer satisfaction metrics

Achieving long-term success requires a business to track how customers feel about their products. Here are the metrics that indicate customer satisfaction.

  • Customer satisfaction score (CSAT) – Rating satisfaction on a scale of 1-5 (customer feedback survey)
  • Net promoter score (NPS) – Shows how likely your customers are to recommend your products
  • Retention – Rate at which customers maintain and renew their existing accounts

Benefits of Using Product Analytics

Regardless of how many times you ask customers about their likes and dislikes, they may turn around anytime and take unexpected actions.

  • Using product analytics, one can track real-time user behavior and anticipate actions based on the collected data.
  • Further, product teams can get directions on product design and development. They can improve the features based on customer data.
  • Effective tracking of product usage analytics data can also help companies to identify risks, mitigate them, and prevent them from recurring.
  • Using product analytics data, companies can deliver the right products to customers. They can personalize processes, create appropriate sales strategies, and optimize their overall experience with the product/service.

5 Must-Have Features in a Product Analytics Tool

The product analytics tools track user actions on websites – the clicks and swipes, time spent on the website, page views, form fill-ups, and other actions involved in exploring SaaS products.

Automated data capture

To derive maximum benefits out of a product analytics tool, automatic data capture is a necessary feature. Unlike manual tracking, it saves time and ensures complete and ready-to-use datasets.

Data governance

This feature enables keeping the data clean, safe, and organized. With data governance, businesses can categorize data to improve its quality, make informed decisions, and create better business plans.


Businesses can divide their target audiences based on demographics, behavior, and more to offer deeper insights. For instance, behavioral segmentation shows the best customers and what they like doing. Thus, businesses can reach them out with more of the content they respond to, enhancing the overall experience.

Cohort analysis

This feature shows the number of users returning within a specific period. In short, it provides the essential retention data for long-term success.


The integration feature is important to build a quality dataset that answers complex queries. Integrating product analytics tools with warehouse systems or third-party platforms allow running an analysis on the recorded information.

How Does Product Analytics Help the Sales Teams to Increase Conversions?

With the ideal product analytics tool, sales teams can focus on qualified leads to take steps to convert them.

  • It allows the sales team to send personalized messages based on feature usage data
  • Offers insights on free-trial users that are not available in the CRM.
  • Enables configuration of workflows to merge customer and product usage data
  • Sends real-time alerts to sales teams allowing them to reach out at the right time.

Get Started with Product Analytics!

Access to product analytics is the most effective and reliable way to collect valuable data, define user segments, establish customer journey maps, etc.Using the right tools can help you create that perfect digital experience for customers that you envision.So, find out the product analytics tool that your business needs and get started with uncovering opportunities.

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