We’re not peddling, but there are good reasons why they say data is powerful. The demand for it has grown so much for the last two decades that some think it will eventually outrank fossil fuel in terms of value—if it hasn’t already. And as we continue to live in a digital-first era, some industries are more affected by data than others.
Think about B2B, consumer tech, ecommerce, media, and the banking industry—these industries rely so much on data because it helps them master their customer profiles and improve their products, services, and other offerings accordingly. And to harness data, companies and firms in these industries use product analytics to gather insights that eventually move their clients along the customer journey.
In this article, we’ll talk about product analytics and walk you through a point-by-point discussion of why it’s important. Let’s get started.
What is Product Analytics
To put it simply, product analytics is a process. It involves collecting and analyzing data from product users to generate valuable insights. Specifically, the data we’re talking about here refers to the customer’s behaviors and engagement while using or interacting with a specific product.
Depending on your unique needs and business goals, this data could be a bunch of things. For example, product analytics can give you a birdseye view of the time spent with a product each day, the actions users typically take, or the features used the most. And these data could be collected in various periods: daily, weekly, yearly, or any period that best suits your goals.
To be clear, data and insight are different.
Data is a unit of raw materials, like numbers or answers to a survey. Collectively, data is information that makes sense; on the other hand, insight results from analyzing data and information. It helps draw conclusions that you can use to make decisions for your business.
With product analytics, you get access to valuable information. But it’s not the end-all-be-all. What makes a difference in your business trajectory is the insight you get from it.
Now that you know what product analytics is, let’s dive into its benefits.
Calibrated Decision Making
We do not collect data for data’s sake. As we’ve mentioned before, it’s not the end-all-be-all. The meat is in the insights, and it’s because the insight helps fine-tune and streamline decision-making within an organization.
With product analytics, you become more confident in your decisions because you have information and an understanding of the current benchmarks that you work with. Instead of relying on superstitions, gut feeling, or intuition, you can lead the business toward desirable outcomes with facts, logic, and results.
You also become more proactive. With enough of the right type and quantity of data, you can get insights into business opportunities or threats. This helps you formulate plans or initiatives to get ahead, like joining markets with less competition or avoiding ventures that can harm the business.
Insights are the foundation of data-driven decisions such as:
- Adjusting your marketing message, like how Coca-cola made and served the right ads to the right audience;
- Improving management through better quality managers by looking into their values and formulating an effective program accordingly, as Google did with people analytics;
- Identifying trends and capitalizing on them the way Uber did by analyzing the number of ride requests according to time and place;
- Ceasing production because it was causing more losses than gains, like when Google discontinued Google Glass in 2015.
In other words, the valuable insights you get from product analytics don’t only help move the organization towards positive action where they make or create, but also towards the negative counterpart where they stop or desist. Calibrated decision-making is really just a fancy term for better decisions that constantly adapt to your particular business needs and goals.
Personalized Products and Services
According to a consumer review by Deloitte, at least 1 out of 5 customers will pay 20% more for personalized products. And many reasons play into this purchasing decision. For example, some people like to buy or invest in something unique or special to distinguish themselves among the masses. The decisive factor could also be as simple as preferences or planned behavior. And not only are some people more inclined to pay for personalized products or services, but they are also more likely to wait for them.
Here are some of the ways product analytics helps you create the right products and services for the right consumer:
- Adopt a customer-centric mindset;
- Conduct behavior analysis and;
- Predict customer insights (e.g., their needs and wants).
A customer-centric mindset helps you know who your customers are and what makes them tick. You can conduct surveys, make direct calls, or invest in a product analytics tool like Trymata. This mindset helps you tailor your offerings to your ideal clients. Such a tool can also help you conduct behavior analysis, enabling you to understand how your customers decide on a product or service. And through that analysis, you gain valuable customer insights. You get to predict what sticks and what doesn’t.
Personalizing your offerings help you stand out from the competition and save on inventory costs. It also helps increase customer loyalty and improve your brand. Ultimately, personalizing your offerings generate more sales and grow your profit margins.
Risk is more devastating to some industries than others. That’s why businesses in tech and finance pay special attention to protecting themselves from internal and external threats. Fortunately for these organizations, product analytics does a great job of protecting physical, financial, and intellectual assets. It can help:
- Provide real-time and historical alerts
- Prevent and deter fraud
- Improve organizational security
- Predict risks
- Provide rapid risk detection
- Formulate quick and comprehensive responses
- Comply with government and industry regulations
Overall, investing in product analytics means benefitting from a combination of proactive and passive lines of defense. And if you miss out, you can fall into situations similar to some of the most significant cyber attacks in history. So remind yourself of what happened to Yahoo in 2014 after it lost at least 500 million accounts or the exposure of over 885 million credit card applications with The First American Corporation.
So perhaps power is not in the data at all, but instead, it’s in the insights you can get from product analytics. This process is crucial because it can help you succeed by harnessing data to make better decisions, cater to your ideal clients, and protect your business. And this is why product analytics may very well be the great equalizer in our data-first world.