Customer Analytics and how to track them
Customer analytics is the process companies use to capture and analyze customer data to make better decisions. Customer analytics often comes in the form of a software that furnishes companies with insights into their users’ behaviors. These insights power businesses’ sales, marketing, and product development efforts and studies show that companies that use customer analytics are more profitable.
Why do companies use customer analytics?
Customer analytics helps businesses break big problems into manageable answers. When companies need to look at how their customers behave, either as individuals or as overall, customer analytics decodes their actions so that they’re easier to understand. This helps companies make better decisions on pricing, promotion, and management. Better decisions are great for business. According to McKinsey, “Companies that use customer analytics comprehensively report outstripping their competition in terms of profit almost twice as often as companies that do not.” A good consumer analytics platform can help your team increase:
- Mobile adoption
- Customer retention
- User engagement
- In-app purchases
Today, companies are more reliant upon analytics than ever before because it helps them keep pace with consumers who are increasingly sophisticated. According to an IBM study, 85 percent of customers now expect a seamless experience and desire faster responses, count on optichannel support, and have less attention to spare. Analytics help companies measure and improve their products to cater to modern customers.
How do customer analytics work?
Customer analytics gives companies full visibility into how customers use their products. Analytics is particularly useful for companies with technology offerings because they can collect step-by-step data on how customers, users, or subscribers flow through their sites or apps. At a macro-level, this exposes major trends such as how users discover their product, which features they like best, where they find value, and what causes them to leave. At a micro-level, customer analytics allows companies to understand who their users are as individuals. They can segment users by demographics, interests, and behaviors and view their unique journeys. This knowledge helps businesses better cater to each customer persona. Elavon, for example, is a mobile payment app that found its users were complaining they couldn’t download the app. Using Mixpanel’s customer analytics software they were able to instantly identify all users trying to download the app on incompatible OS systems, reach out, and suggest a fix. Another Mixpanel customer, STARZ PLAY, was able to segment their customers by behavior to detect fraud and reduce it by a factor of 1,000. Which teams have a need for customer analytics?
- Marketing can create segments and look-alike audiences.
- Sales can scores leads, prospects, and users.
- Product can measure features, usage, and customer journeys.
What questions can customer analytics answer?
Customer analytics platforms can answer questions on anything that can be measured or tracked. That said, the answers they provide are only as good as the questions asked of them. Open-ended, subjective, or relative questions like, “Is our product the best?” are difficult to clearly answer. Good questions are concrete, easily proved or disproved, and tie back to core business objectives like acquisition, revenue, retention, and engagement. Examples of common customer analytics questions:
Which channels drive the most new customers?
What is the most common customer journey from awareness to advocacy?
What are our most profitable revenue channels?
Which users are the most profitable?
Where do we lose customers and why?
What behaviors are correlated with high retention rates?
What features resonate with which customers?
What is the optimal experience for users?
To receive accurate answers from their customer analytics platforms, businesses capture and analyze their data. For this, proper implementation is key.
How to implement customer analytics?
To implement customer analytics and derive useful insights, companies must do two things:
- Capture, store, and organize their data.
- Analyze and make decisions with that data.
To capture and make use of data, companies must collect lots of it. They may run surveys, conduct user research, purchase third-party data, and, if they offer a technology solution, passively collect usage data through their site or app. In the case of websites, most customer analytics platforms passively collect all visitor data. With apps, companies may need to define activities or “events” where data is collected, such as login, logout, and user actions. For storing data, it is immensely useful to have a central repository that unites all of your data sources into one single view of your customer. This is a key feature of most customer analytics platforms.
Companies that do not properly maintain their data will have trouble getting straight answers from their customer analytics. If data is stale, unstructured, or incomplete, it may lead to misleading results. This often happens when there has been a lack of process, multiple owners over the years, or when companies have custom-built their own customer analytics platforms. To analyze and interpret results, it can help to have a dedicated product manager, UX/UI designer, or data scientist. They’ll be able to frame customer analytics inquiries in terms of core business objectives and steer the company towards better results. Companies that invest in customer analytics will gain a tremendous advantage over their competition because they can more easily understand and cater to their customers. What can customer analytics uncover for you? Learn more about Mixpanel.