What is User Analytics and Why Is It Important for Your Product?

SaaS Product Management
Sep 24, 2023
What is User Analytics and Why Is It Important for Your Product?

Did you know that in the 1980s, American Airlines saved $40,000 per year by introducing just one change in their operations? They found out that no one ate olives in their in-flight dinner salad. They removed just one olive per person, saving the company a fortune over the years. The way they did that was simple: measuring the user experience.

User analytics is the same thing but for your product. By measuring how users interact with your product, you can learn more about them. The findings can impact your future roadmap, the integrations you build, how you market and sell your product, and more.

Today, we’re going to show you what user analytics is, why it matters, and how you can get started with it.

What is user analytics?

User analytics is the process where product, engineering, marketing, customer experience and other experts track how users are interacting with a product. Through the use of user analytics tools, they collect qualitative and quantitative data about user engagement and experience.

The main purpose of user analytics is to find out where users drop off, what they find valuable, to establish and confirm hypotheses about their use of the app and most importantly, to create a better product that someone wants to use and pay for.

Why is user analytics important?

Tracking user behavior is crucial for your product and overall business, as any product manager, marketer or executive can tell you. But here are some specific benefits to tracking user analytics.

Understanding user behavior

User analytics help you determine the way your customers interact with your product. Which functionality they are (not) using, which features are not useful to them and which aspects of your product may be broken.

By better understanding the way users behave, you can refine your product, its UX and UI, come up with new features and integrations and guide your roadmap.

Helping marketing departments

The role of marketers is to create demand, but they cannot do that if they’re focusing on the wrong things. For example, you may have a restaurant app and you’re promoting ease of use as your biggest advantage. On the other hand, your customers may find the on-premise restaurant POS devices much more useful.

User analytics help you uncover the strengths of your product. When you know what your user base finds valuable, you can apply that knowledge to your marketing. This can not only help with the retention of your existing customers but also with new customer acquisition.

Removing friction and reducing churn

By taking a look at real-time user data, you can find out if a certain aspect of your app is causing users to churn. Visualizations such as heatmaps can show you if someone is rage-clicking in your product or simply leaving it after unsuccessfully trying to do something.

how to reduce customer churn

Armed with these insights on customer experience, your engineers can remove bugs and friction points for your customers. As a result, you get better UX and UI, higher retention, and more profit.

Helping sales teams sell the right aspect of your product

With the help of user analytics, you can create cohorts and segments in your user base. This can lead to amazing analytics data. For example, you find out that enterprise users of your products are big on using your API and white label features.

You can then relay this information to sales. In their future calls with the enterprise demographic, they won’t bother showing your interface or integrations - they can move straight to pitching API and white label as your biggest selling points.

Getting feedback without asking for it

Behavior analytics help you find out what users think of your product without actually asking them. While surveys and questionnaires are extremely useful, they require action from your customers. And for many of them, taking a few minutes to answer questions about their product usage is too much of an effort.

User analytics captures feedback for product teams directly in the product. This means two things. One, your customers give you qualitative data just by interacting with your product. Two, the feedback is contextual as it happens right as they are using the product - not days later when they are doing a survey about it.

User analytics vs end-user analytics

The main difference between user analytics and end-user analytics is that the latter is built for your customers. Let’s explain.

For example, you have an app for tracking deliveries as they are shipped out through the country. You sell the app to couriers who deliver those packages. Within your app, you - as a SaaS vendor - would have user analytics to track how couriers are using it and which problems they are running into, so you can improve your product and make it easier to use for couriers.

Within your app, you can add end-user analytics, for the couriers. For example, if a courier wants to check the most optimal routes for delivering packages, or compare the time to deliver packages during different times of day to plan their deliveries more efficiently. Visualization is a huge part of end-user analytics, as it helps your data become easier to understand and facilitates decision-making.

End-user analytics is crucial if you want to provide more value and attract new users who want more value out of your SaaS product or apps.

An example of an end-user dashboard for CurieuzeNeuzen

For more examples of how end-user analytics work in practice, make sure to check out our case studies. And to get started today, you can build your first analytics dashboard in Luzmo, for free!

How to get started with user analytics

Thanks to a variety of tools and systems, getting started with user analytics is actually pretty easy. Here is how to get started.

Find the user goals

What does the user want to do once they sign up for your app? What is the ultimate goal in their user journey?

For example, if you have an invoicing app, there could be multiple use cases, but it boils down to one goal: creating and sending invoices and getting those invoices paid.

By finding out what the users have set out as their goals, you can use different metrics and KPIs to find out if they are achieving them or not.

Determine the metrics you want to track

There is a multitude of metrics that you can track for user analytics, depending on the user goal from step one.

For example, if you want to measure website analytics, you could use metrics such as: session length, bounce rate, traffic source, conversion rate from visitor to free trial, conversion rate from free trial to paid user, completed goals in Google Analytics and many web analytics KPIs.

You can also use survey metrics, as surveys are an excellent way to get quantitative insights. Examples include NPS, CSAT and CES scores.

Perhaps the most important for the customer journey are the product metrics. Examples include feature usage, active users, product activation rate, product adoption and others.

Grab a user analytics tool

Once you find out which metrics are the most important for your users and their goals, you need to decide on an analytics platform to measure them.

For example, if you’re primarily concerned with web analytics, something as simple as Google Analytics can be just enough to measure them.

If you want to collect data from within the product, you can use a specialized tool such as Userpilot. It’s specifically designed for product analytics and can help you capture valuable data for your SaaS.

And if you want to get qualitative and quantitative insights from surveys, there are plenty of options that can be integrated with your SaaS app. Examples include Survicate, Typeform, SurveyMonkey and many others.

Analyze your results

You can’t optimize your existing product experience without taking a good look at your existing state of affairs. Aggregate your quantitative and qualitative insights in one place (ideally, a dashboard), so you can analyze the behavior data with ease.

Remember that qualitative insights will take longer to summarize and it’s hard to assign numerical values to them.

During the analysis, pay special attention to user barriers, common complaints and pain points that your users may not be having. These should be a priority for your product and engineering teams.

Wrapping up

User analytics are crucial for every product manager, engineer, marketer, customer experience specialist, and in the end, CEO. By analyzing how users are interacting with your product, you can refine it and make it even more valuable. Only by understanding how people use your product or mobile app can you solve their pain points even more effectively.

And if you want to provide that value to your users and their customers, an analytics dashboard is an excellent place to get started. Get in touch with us today and you can build your first one for free - it’s on us.

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