What is Product Analytics?
What is Product Analytics?
Product analytics is a robust set of tools that allow product managers and product teams to assess the performance of the digital experiences they build. Product analytics provides critical information to optimize performance, diagnose problems, and correlate customer activity with long-term value.
Product analytics software is a robust set of tools that allow product managers and product teams to see exactly what is happening in their products.
Assess users’ digital experiences
Optimize performance of product usage
Diagnose problems in the customer experience
Correlate customer activity with LTV
Who is using your product…and how…and where…and when?
Which features do they use—or ignore?
Where do users experience friction?
How can you best reduce churn?
Where can you personalize interaction for users?
Why are Product Analytics important?
Products are complex! There are a million decisions when building them. Of all the ‘correct’ choices, which one is BEST? Over 100 years ago, John Wanamaker said “Half of my ad budget is wasted—the problem is I don’t know which half.” Yet companies today still measure the effectiveness of their software with speculation and guesswork.
With respect to instinct and experience, data science gives us a smarter, more accurate path to decision-making rather than relying on guesses or customer interviews. For product teams, analytics is a godsend. Analytics give your product a superpower!
See in real time how well you’re meeting user needs.
Measure the exact success of individual features.
Base product decisions on metrics that support business goals.
Transform your ability to develop ideas and design user experiences.
Now you’re making solid supportable decisions. Learn more about Product-Market Fit in our complete guide.
Who uses Product Analytics?
Anyone who needs to make better decisions! Analytics can answer inquiries from stakeholders everywhere in your company.
Understand what your users do
Make data-driven decisions
Measure and run experiments
Increase activation, conversion, and retention
Craft captivating digital experiences.
See which programs bring in the most visitors
Identify the users most likely to convert
Discover factors for long-term retention
Direct your efforts to improve product development.
Dev team leaders
Resolve friction in the user journey
Avoid deploying additional engineering effort
Learn in detail how people navigate feature sets
See what’s popular and what’s confusing
Pinpoint key moments of abandonment
Get a complete view of user engagement
Define retention strategies
Optimize them according to business needs
Business Intelligence Analysts
Create faster and more accurate processes
Consolidate disparate insights into cohesive plans
Turn insights into stories that inspire action
Answer questions in minutes, not months
Customer Success Teams
Track the health of their different accounts
See in real-time what customers are doing
Know which features users favor—and how often they use them
Make onboarding easier and more intuitive
Of course, your customers benefit the most with products that are intuitive, easy, and a pleasure to use! Learn more about Conversion Rate Optimization. Once you have all the information you need, what questions would you like to ask?
What can you do with Product Analytics?
Acquisition: Knowing where your customers come from. Which channels do they favor? Which users are the best prospects? What are optimal costs for converting each user?
Activation: The product experiences on the journey to becoming a paying customer. Each breadcrumb along this trail is a “micro-conversion”. The point at which users fully connect and realize value is their “Aha! moment”. Product analytics can help you optimize these steps.
Retention: Are customers staying or leaving? This is perhaps THE most important metric to understand. Figure out who’s satisfied (as well as who isn’t) and know WHY. Product analytics gives clues on how to win them over and make them happier
Referral: The only thing better than a satisfied customer….is a whole bunch of them! Are your purchasers talking up your product? Do they post on social media, or do they drop off? Product analytics lets you measure your customer loyalty by tracking their actions.
Revenue: Ultimately, it’s all about making more money with your product. Streamline your sales funnel. Reduce acquisition costs. Increase the value of the customers you retain
Over time, retaining customers matters more than acquisition.
How do you use a Product Analytics Platform?
In general, a good analytics tool will give you the following capabilities:
Tracking can be automatically applied to user actions across your sites and apps
Segmentation teaches you who users are, where they came from, and when
Profiles let you establish user categories around criteria of your choice
Notifications permit you to alert product teams and communicate with users A/B Testing compares versions of messaging and features for effectiveness
Dashboards allow you to visualize data in useful and revealing ways
Funnels can be set up to explore different paths to conversions
Measurement tools allow you to evaluate each feature’s user engagement
What are some great Product Analytics Tools? Find out in our complete guide!
How do Product Analytics platforms work?
By tracking the actions users take on your site—all of the clicks, pageviews, formfills, swipes, and other activities involved in navigating a digital product. In our opinion, there are three requirements for a truly great product analytics platform.
 Automatic Data Capture is critical!
Ingesting and processing every bit of user data is key
Manual tracking requires advance planning and uses valuable engineering time.
You don't want to be playing catch-up with your data!
Without automatic capture, your dataset will never be fully complete.
 A data science layer brings your analytics efforts to the next level
Predictively indicates hotspots, logjams, and red flags in the user flow.
Steers your teams towards insightful questions
Show you the invisible steps between the steps users take
Surfaces insights even where you are NOT looking
Encourages effective decisions with real information for maximum gains
 Integrated Session Replays let you see exactly what customers see.
Identify and reproduce any situation where users encounter friction.
Know whether users are finding your highest-value features easily
See where people are getting stuck, and understand why.
Fully integrated means no wasting time going back and forth between different tools
Add rich visual context to traditional product analytics metrics
Now your quantitative data and qualitative data support each other
Answer any questions you have—even ones you haven’t thought of yet!
Any good product analytics tool will also have the following features:
Endless flexibility with the data you’ve autocaptured
Different teams can assign multiple labels to the same interactions
Put events into any context that’s important
Answer any question you need, even retroactively
Prove and disprove multiple hypotheses without having to rewrite code
Your dataset stays clean yet accessible
See how many users are returning within specific time periods.
Behavioral analysis helps you understand how your customers react to your product,
Determine how and when to reach them to cultivate the greatest rates of retention.
Especially useful for determining your product-market fit!
Keep your information safe, clean and organized.
Easily categorize events, segments, reports, personal sandboxes, and staging environments
Role-based project access and default user roles give you total control over who views and modifies your dataset.
Give customers more of what they respond to—and less of what they don’t.
Offers much greater refinement than demographic segmentation
Lets you sort users according to the actions they take in your site.
See who your best customers are and what they like to do.
Allow you to enrich your dataset to answer more complex questions.
Connecting to external sources and run analysis on their information.
For example, your CRM, email marketing, testing, accounting, and payment systems.
The more integrations your product analytics can accommodate, the better.
This is important! It’s the ease with which you can set up and maintain data access.
Many systems require engineering time and resources to create this pipeline
Heap Connect gives you an easy connection to your data warehouse - All data entering or leaving our infrastructure is securely encrypted with TLS/HTTPS. - This is especially valuable for enterprise companies with lots of data and scarce engineering resources.
Security and compliance
These procedures are critical to handling your sensitive information.
Each account’s data must be logically separated
Access is protected by authentication and authorization controls
All cloud databases are encrypted at rest
Create experiences that are most enjoyable for users—and most profitable for you.
Is Google Analytics a good tool for Product Analytics?
Google Analytics was one of the first analytics tools, and best of all it was free. But it was never built for the depth and sophistication of a modern customer journey. GA4 brings major changes: event-based models, more views, new engagement metrics, more detail across the board, and “codeless tracking” that doesn’t require engineers to set up.
However, you’ll still have to decide what events you want to track in advance. So you still end up with an incomplete, biased dataset. And the other limitations are significant:
No way to surface things you’re not already tracking.
There’s no way to see user behavior as it actually happens.
No retroactive data capability.
You’re limited to collecting data on events from the moment you decide to track them.
Limited integrations and customizations. This is a big problem when trying to do more things to make your data useful.
Middleware is mandatory. While a free sample of BigQuery is included, you still have to pay for the data.
“AI and predictive metrics” are basically alerts.
You still have to manually define conditions you deem important or critical.
No way to analyze hidden behaviors. Automated results may save some time, but they don’t qualify as true insights.
You need the deepest insights and actionable information about your users. You can only fix non-performing features and optimize the effective ones by understanding in detail how users interact with what you build, and what users like best.
Engage them longer
Upsell them more
Keep them happily coming back again and again.
When should my company invest in Product Analytics?
Anytime you wish to affect and improve user experience! You’re curious about the experiences users have on your site. You’re concerned with making interactions smoother. You want to build a product people like. Or better yet, love! Product-market fit is the ultimate measure of success for companies of every size. Remember! Tools that are difficult to use...don’t get used.
Discover their product-market fit
Conduct user and market tests
Develop the MVP into an optimal offering
Develop a data value chain
Increase retention and conversion rates
Lower customer churn
Perfect their data storytelling
Ensure they continue to evolve with the market
Beat the competition who also uses product analytics
Not get disrupted by the hungry young companies out to eat their lunch!
How do I choose the right Product Analytics for my situation?
To get maximum insights, start with the end in mind, then develop thorough processes within your org. The more ways you flex your data, the more insights you will get.
Be laser-focused on the outcome.
What are your business goals?
Set your KPIs.
What are important milestones?
or your problem has been solved?
Product analytics can even help you figure out where to aim.
See what’s performing well and what isn’t.
Have objectives for your objectives. You can’t be too granular when tracking data
As performance increases, make sure you know what it means.
Be open to exploring. Keeping spreadsheets of all the events and properties you want to track is tedious
You can ask any question you want, at any point in the process.
How should I approach implementation?
Don’t set your strategy in stone. Keep implementation a fluid process. Evolve with every new milestone:
Changes to the product
New ideas produced by experimentation.
Make sure you review your plan regularly to update goals, metrics, and reports. This is easiest with a product analytics system that has the most flexibility around events and tracking, in order to fast track your implementation and avoid delaying the time to value. Choose the product analytics solution that does the engineering for you!
What are the major platforms in Product Analytics?
There are many providers in the product analytics space. Among the most popular are Amplitude, Mixpanel, Pendo, and Heap. See our guides to learn about great alternatives to Google, Amplitude, and Mixpanel.
What makes Heap’s Product Analytics stand out?
Heap approaches product analytics differently, beginning with our philosophy of exploration. We believe that product-market fit is the ultimate measure of success for companies of every size. Why stumble into this balance with guesswork, when you can map the territory? With Heap, you can create any hypothesis you want to test, at any point in the dev process, and the data will be there for you. By accommodating both rigorous planning and serendipitous surprise, Heap frees you to be both an artist and a scientist with your data.
Why is Heap the ideal Product Analytics solution?
Heap frees you to be both an artist and a scientist with your data. Heap offers the most complete and systematic way to test, measure, and improve product-market fit. And it’s super easy to implement!
A single snippet autocaptures every click, swipe, tap, pageview, and fill, offering complete access to your historical data
Powerful data science highlights events you never thought to track, to surface insights you didn't even know you were looking for!
Fully integrated session replays let you step directly into the shoes of any and every customer you choose.
No manual tracking, advance planning, or engineer time is required.
You can also:
Add new behaviors for Web, iOS, and Android without engineering.
Enrich data with sources like A/B testing, CRM systems, and email providers.
Audit, verify, and modify behaviors and events.
Relax knowing PII privacy is protected
Your data is a vast world to explore. Heap gives you a treasure map. You have lots of choice when it comes to choosing product analytics, but just having the tools is not enough. You need to use them wisely, with support from a first-class team.
Interested in a demo of Heap’s Product Analytics platform? We’d love to chat with you!