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Product analytics: what is it, and why should you care?

Move over, web analytics. There’s a new kid on the block. It’s called product analytics and it will revolutionize how you evaluate and improve your digital products, from websites to mobile apps, and anything in between. It’s a new way of analyzing customer behaviour on digital platforms, which is far more in-depth than its precursor, web analytics. Here’s how product analytics works, and why you should care.

Web analytics: a relic from simpler times

To understand why product analytics is reshaping the analytics horizon, we need to compare it to the old way of doing things. For a long time, web analytics – you know, tools like Google Analytics or Adobe Analytics – were all we had to get insight into how users behave on our platforms. It gave us information like page views, how much time users spent on a page or how they navigated our website.

They are called web analytics tools, because they were made to analyze websites. In a time when websites were considered nothing more than a collection of webpages, it made total sense.

New bosses, new rules

Remember when we used to say things like “I’ll go on the computer for a bit”? Or: “I’ll be in the computer room?” Today, we effortlessly traverse the digital realm through multiple devices across mobile apps, streaming platforms, digital tv… you name it. Our online behaviour is not limited to merely visiting webpages anymore. The websites we do visit have become much more complex and interactive.

Web analytics just isn’t built for that complex landscape. Take Facebook, for instance. Web analytics on Facebook will be able to tell you that a user spent an hour and a half on Facebook’s homepage. But that homepage is not the static page web analytics was designed for. There’s no way of knowing if the user is commenting, liking, watching videos or shopping.

Towards a holistic measurement

Whereas web analytics gives you insight in who is visiting your website, and how they are using it, product analytics measures behaviour holistically: what exactly is a user doing on my application or digital product, and more importantly: why?

If you want real insights with web analytics, you need to make your own hypothesis and test it endlessly to see if your theory holds up. Product analytics functions with a whole different Modus Operandus. You can ask it a complex question like: ‘why are these 10% of users staying on my app longer than anybody else?’ And without needing to form a hypothesis yourself, product analytics tools will give you the exact answer, based on a whole lot of metrics and data.

In short:

Product Analytics tracks the entire user experience. Whatever your business goal is, Product Analytics tells you what you need to change or improve to achieve that goal.

Acquisition versus retention

There is another essential difference between web and product analytics, which is embedded in the philosophy of what the tool is trying to achieve.

Since web analytics is mostly aimed at marketeers, the focus is on ‘acquisition’: attracting new users. In the web analytics era, we would simply throw more budget at advertising, retargeting and so on. But there’s a limit to how much you can push your product, especially in a saturated market.

Product analytics, on the other hand, puts the emphasis on ‘retention’: keeping your users on board by optimizing your digital product. Product analytics tells you exactly where and how you need to improve your digital product, so that the overall customer experience improves. Not only will it enable you to keep users on your platform, it will also help you attract new clients in the long run. Instead of aggressively pulling new users in through acquisition, you rely on the user experience of your product to attract users organically.

The comparison

So how does product analytics compare to web analytics? Here’s an overview of the key features of both tools.

Web analytics

  • Measure behaviour on a static website
  • Gives you the what and the who
  • Insights for marketeers
  • Make your own hypothesis and test it
  • Tools include Google Analytics, Adobe Analytics and Matomo.

Product analytics

  • Measure behaviour on any digital product: websites, apps, digital platforms...
  • Gives you the why
  • Insights for your whole digital team, including product owners, UX designers, engineers…
  • Get straight answers to complex questions
  • Tools include Amplitude, Mixed Panel, Woopra and Heap.