How to Leverage Product Usage Analytics Data

The market response is the true test of any product’s potential. And the pattern of usage that your users exhibit towards your product is probably one of the most important leading indicators of your product’s eventual fate.

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No matter how much you love your product, here is what matters: Do users use your product as an infrequent good-to-have? Or do they use it as a must-have painkiller? Do they struggle to justify its value and cancel in the second month? Or do they go around recommending it to friends unprompted?

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Paul Graham of Y Combinator is right in urging teams to make something people want. It's incredibly crucial for you to know how your customers use and relate to your product. This knowledge reveals the most helpful picture of what is happening with your product, what are the untapped opportunities, and what your next development step should be. With this context, let’s dive into the details of product usage analytics.

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The Old vs. The New Way — Getting Product Usage Analytics Information

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For a long time now, user feedback surveys have been one of the most used devices to gather feedback from users. However, these surveys bring up very limited data points. They can help you with some leading questions, but you will need more to get any tangibly useful insights.

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This is what product usage analytics is made for.

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Whenever your users interact with your product, your back-end creates and stores data on these interactions. Then your system sends this data to a product usage analytics which allows you to dig deep into your user interactions, accurately understand their activity within and engagement with your product. It can uncover some brilliant insights and help you create a data-driven product strategy.

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So in this article, we will explore product usage analytics, understand how it can help you build products that users love. We will then also review a list of widely-loved product usage analytics tools, just in case you are looking for one.

What Is Product Usage Analytics?

Product usage analytics is the process of tracking and analyzing how your customers use your product. It monitors user behavior to generate actionable insights that can help you improve user experience and product metrics like stickiness, retention, and engagement.

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It offers accurate insight into important questions like:

• How many users are using your product frequently?
• Which features are being used regularly?
• Which are the least popular features?
• What is making your customers drop off?
• How long do users spend on our application?
• How long does it take users to complete specific tasks?
• Do your users refer to your product?

Importance of Product Usage Analytics

Product usage analytics offers you quantitative data about your product's user engagement. It lets you evaluate your product performance from a user's perspective. This helps you tailor your product offerings to their requirements without wasting time developing features that are not needed.

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Data-Backed Decision-Making:

To deliver a product that addresses critical pain points, you must have a fair picture of your customer's expectations. With excellent product usage analytics, you get thorough insights into product usage and user behavior. You can observe the patterns and trends in user engagement and predict what features your users might find valuable. You no longer have to rely on hunches to make product decisions.

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Better Product Features:

65% of customers expect companies to offer solutions per their changing needs and preferences. Product usage analytics helps you build a product that caters to these user needs. Whether introducing a new feature or fixing bugs or design flaws in the existing product, product usage analytics help you identify these requirements and maximize their acceptance. You can find weak points in your product that need improvement or elimination.

It facilitates an environment of continuous product refinement where you upgrade your product features to meet the constantly evolving user requirements.

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Enhanced Customer Experiences:

Depending on how your users utilize different features of your product, you can build more engaging and personalized experiences for them. For example, if you notice your users frequently using a feature, you can refine your offering to address their needs better. A recent study by PwC revealed that 73% of customers admitted that customer experience is the #1 thing they consider when purchasing from a company.

With product usage analytics, you can easily spot any usability issues your users might face and take measures to address them proactively. Thus, making the experience smoother and more efficient for your users. Remember, a better product experience means a better customer experience.

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Maximized Customer Retention:

Product usage analytics helps you identify your most valuable users. It shares critical insights into their behavior, preferences, and needs. Analyzing this data allows you to track various behavioral patterns and detect early signs of dissatisfaction. This can help you build personalized campaigns to retain these users and increase the customer lifetime value.  

Product Usage Analytics vs. Marketing Analytics vs. Business Intelligence

Product usage analytics, marketing analytics, and business intelligence aim to improve business decision-making. They leverage product data to gain insights into user behavior and purchasing habits. Although all of them focus on harnessing the power of data, their applications differ significantly.

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Marketing Analytics:

Marketing analytics uses historical data to understand where the users are coming from and track activities related to your product's marketing campaigns. It aims to improve the performance of your campaigns and boost ROI.

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Business Intelligence

Business intelligence focuses on analyzing historical data to optimize business decisions. It provides a detailed overview of your business' performance across various finance, sales, and customer service departments.  

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Product Usage Analytics:

Product usage analytics tracks how users interact with your products. It tracks feature usage and product engagement to monitor user journeys. It focuses on improving product functionality and design to build amazing user experiences and boost customer retention.

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Here is a quick comparison table to help you understand these analytics types.

How to Leverage Product Usage Analytics Data?

Product usage analytics tells you how your customers are using your product. It helps you identify user holdups and observe friction points in your product. By giving you a 360-degree view of how these bottlenecks are affecting their behavior, product usage analytics helps you build an intuitive product.

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Here is a short guide on how to leverage product usage analytics to build a customer-centric product.

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• Gather the Necessary Data: Collect different usage data into a centralized data repository to comprehensively understand your customers' requirements. For example, frequency of product use, feature adoption, actions taken upon logging in, goals achieved, etc. Integrate robust analytical tools with your product to collect desired usage data without hassles.
• Analyze User Behavior: Track product usage by monitoring how a particular user utilizes your product.  Monitor user actions and the paths they take to complete those actions. Identify patterns and trends in their behavior to learn about their challenges or friction points. This analysis will help you identify opportunities for product improvement. A product analytics platform like Houseware could be of great help here.
• Design a Product Roadmap: List these feature upgrades to prioritize which features would best fulfil your users' requirements. Build a product roadmap to give direction to your development efforts. Share it with your key stakeholders and other cross-functional teams for suggestions and improvements. You may run product experiments to understand how your users react to these changes.

Which Teams Use Product Analytics?

Although product teams primarily use product usage analytics, they do offer significant insights to other teams. As different teams work together to build a successful product, they must monitor these usage analytics and understand the value your product offers to the users.

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• The Product Team: To design and create a product/feature that users love.
• The Product Manager: To research and build a solid product roadmap. For example, understanding users' needs, building a product strategy, working on feature prioritization, and more.
• The Marketing Team: To understand users better and build engagement strategies that demonstrate product value, strengthen customer relationships, and increase sales.
• The User Experience Team: To identify areas where user experience can be improved to build satisfying customer experiences.

Best Product Usage Analytics Tools

To successfully implement product usage analytics, you must gather accurate information from within the product and convert it into actionable insights. Product usage analytics software is specialized tools that monitor user behavior and generate incredible insights about your product performance.

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Here are a few product usage analytics software you can consider investing in.

1. Houseware

Best product usage analytics software for analyzing user actions

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Houseware is one of the best product usage analytics tools, and it is designed to offer you a detailed overview of user behavior. Being a warehouse-native platform, Houseware resides on top of your existing data warehouse to capture, process, and analyze various user behavior data while eliminating the need for complex data transfers.

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It offers impressive visualization capabilities that present crucial contextual insights in easy-to-interpret dashboards.

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Key Features:

• User segmentation and analysis using Cohorts.
• Event tracking and user path tracking using Flows and Funnels.
• User behavior monitoring and analysis using Trends

2. UXCam

Product usage analytics tool for analyzing mobile-focused user behavior.

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UXCam is an intuitive product usage analytics tool for analyzing user interactions on mobile apps. It helps you monitor user behavior, identify with your mobile applications, and make informed product decisions.

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Key Features:

• Session replays to monitor user interactions.
• Heatmaps to gauge user engagement and their app navigation patterns.
• User journeys to visualize how users flow through your app.

3. Google Analytics

Free web analytics tool.

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Google Analytics is the next tool in this list of best product usage analytics tools. It is designed to examine user behavior and their activity on websites or mobile apps. It offers thorough insights into user demographics, acquisition sources, website clicks, ad clicks, and more.

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Key Features:

• Event tracking and conversion tracking to measure user engagement.
• Accurate real-time activity monitoring.

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Refer to this blog post about the best product usage analytics tools to explore more options.

Product Usage Analytics Metrics to Track

The success of your product usage analysis depends mainly on measuring the right metrics. You must choose and measure only those metrics that impact your business most.

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Here are a few essential product usage analytics metrics to measure.

• Number of Active Users (DAU/WAU/MAU) - This metric tells you the number of users who use your product daily, weekly, and monthly.
• Activation Rate - This metric depicts the percentage of users who have signed up and utilized your product and identified its value.
• Usage Frequency - This metric tells how often your users use your product.
• Feature Usage Rate - This metric tells you how long your users have used a specific feature.
• Retention Rate - This metric tells you how many customers have continued using your product over a period.
• Churn Rate - It tells you how many users have stopped using your product in a given time.
• Free-to-paid Conversions - It tells you how many users have found value in your product and have upgraded their subscription to a paid plan.

How Houseware Powers Product Usage Analytics

Product usage analytics is like GPS for your business. It offers you excellent insights to keep yourself one step ahead of your users. It eliminates the guesswork from your product development roadmap and helps you build engaging products.

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Houseware offers you granular user behavior insights by observing and capturing minute details from user interactions to create a product your users would love. It provides incredible features that aid your decision-making process.

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For example, cohort analysis can be used to segment your users into different groups and monitor their behavior. Funnel analysis can be used to observe user journeys and identify the bottlenecks.

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Every feature of Houseware is designed to help you discover valuable information for optimizing your users' journey. These features can also help you uncover areas of friction for improving the product and delighting customers with seamless experiences.

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If you want to see how Houseware can help you extract actionable product insights, book a demo today to see what we offer.