Product analytics allows businesses to analyse behavioural data, identify opportunities for conversion, and create impactful digital experiences
Amplitude, a product analytics platform, offers companies its platform and tools to measure the impact of their products on users and improve key business metrics
Currently, the platform is working with more than 6K digital products at over 1,400 companies
Digital, today, has become a way of life; Today’s companies are increasingly focussed on cutting through the noise and emerging as customers’ favourite. This is where the term “product analytics” — that helps brands analyse and improve their digital product experience and outcomes — comes into the picture.
Leveraging product analytics, many brands are successfully differentiating themselves from the rest of the pack. At its core, product analytics empowers brands to gain insights into customer behaviour. It allows digital teams to answer both simple and complex questions — from measuring baseline metrics to understanding, exploring, learning and predicting what will happen next.
According to marketing research firm, Expert Market Research, the global market for product analytics reached $6.66 Bn in 2020 and is further projected to grow at a CAGR of 14.9% in 2022-2027 to reach $15.33 Bn by 2026.
Indian startups and other businesses, across sectors and stages, have started realising the potential of analytics tools and their impact. According to a 2019 study by Analytics India magazine, 70% of Indian businesses had adopted analytics as a business tool with the highest rate of adoption coming from the APAC region. In other words, more than two-thirds of Indian companies were implementing analytics in some form.
However, most businesses in India use analytics sparingly due to the lack of resources and capabilities to develop a complex product analytics system. To democratise data and make insights available to all teams, global players such as Amplitude, Heap and Pendo have entered the Indian market with a wide range of tools. They aim to help homegrown businesses understand user behaviour and their products accordingly to improve retention and growth.
“Indian businesses today want to build a product that can be scaled both locally and globally. And the right way to do so is by understanding how their users interact with their product. Product analytics is the key to understanding user behaviour and converting it into drivers of revenue and growth,” says Julio Bermudez, vice-president of the APAC and LATAM, at Amplitude.
Frameworks Of Product Analytics
Digital transformation has enabled businesses to easily tap into a sizeable consumer base. As businesses across sectors shift to digital, the intensifying competition has resulted in a substantial shift in focus — from customer acquisition to customer retention and growth. And that’s where digital optimisation accelerates digital transformation.
According to a recent report by Salesforce, a cloud-based software company, 85% of business buyers and 79% of consumers value the experience of a brand as much as its products and services. Backing that up is the CX Index data of Forrester, a research and advisory firm, which revealed that if a company focusses on customers’ experience, 80% of its customers will spend more and 87% will further recommend it to their friends and family.
However, achieving a great customer experience is more complex than it sounds. Effective engagement with customers largely depends on a robust feedback system, but gathering data can be a challenge. For instance, relying on qualitative data sources like surveys and focus groups is not always effective, as people-oriented feedback tends to be biassed.
How can product analytics make a difference for brands here? Let’s take cohort analysis — a feature of the same — and analyse its use case. Through cohort analysis a brand can identify a group of users who interact with its product in a specific way, while also comparing a specific cohort to another group of users. This helps brands understand the customer behaviour, preferences and allows them to build engagement accordingly.
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Hence, it doesn’t come as a surprise that analytics has become a sought-after tool for every business. The challenge here is that most companies cannot afford to build an in-house analytics unit due to its resource-heavy nature. Bermudez cited the example of an Indian client — the popular OTT platform Disney+ Hotstar — that faced this dilemma as it acquired users at a breakneck speed.
It had to decide whether to use its resources to build a better delivery infrastructure that scales globally or develop an analytics system that enables developing strategies to drive higher user engagement.
The OTT giant found the solution when it partnered with Amplitude.
“We used Amplitude’s product analytics tool to devise new strategies that helped improve retention, while our core engineering effort focussed on implementing those strategies and applying them at global scale. Thanks to this two-pronged strategy, not only were we able to acquire new consumers during the pandemic but also deliver super user experiences that will help us retain them”, says Shobhit Singhal, director of products at Disney+ Hotstar.
“Indian businesses have a culture of hard work. At Amplitude, we give them the option to optimise their resources and focus on building the core product. In the end, using a product analytics service is always going to add more value to a business than building a company-owned data centre,” says Bermudez.
Amplitude’s Vision And Product Analytics Journey
Before Spenser Skates, Curtis Liu and Jeffrey Wang set up Amplitude in 2012, the trio had spent months learning more about how to build a successful product, to know if customers were using the product as intended and which drivers can help improve user retention. Subsequently, Amplitude was born. Today, the company claims to have made a significant foray into the global market with 500 new clients signed up in 2021 while clocking a 63% YoY revenue growth.
The company launched its first core offering called Amplitude Analytics back in 2014. Powered by Nova, Amplitude Analytics processes event data to uncover insights on customers’ behaviours. These insights help businesses understand the metrics and ways to improve user experience and drive growth.
“We also bring efficiency to product iteration cycles,” says Bermudez. “Unlike the traditional method, where measuring every metric takes weeks of data collection, analysis and determination, Amplitude Analytics can simultaneously process 10-15 metrics and provide real-time insights.”
Currently, Amplitude is the brain behind more than 6K digital products across over 1,400 enterprises, he adds.
The company started its India operations in 2016, and its list of clients includes brands such as streaming platform Disney+ Hotstar, crypto exchanges CoinSwitch and CoinDCX, self-publishing and audiobook portal Pratilipi, Indian language Q&A platform Vokal and online tutoring platform Vedantu.
According to Bermudez, many businesses still follow static segmentation patterns and classify users based on gender, age and region for marketing campaigns. And the same method is followed when they provide users with a first-time, personalised experience. It means businesses are missing out on a great opportunity as they are not looking at how their customers use their products and the immediate scope for enhancing user experience.
After all, those are the parameters that dictate how a product should be marketed to a specific customer. For instance, if a user books a cab three days a week to go to work, offering a free ride on Day Four instead of a silo incentive (say, a voucher for a gender-specific product) will help retain the customer and earn his/her loyalty.
Today, with unicorns coming out every fortnight (13 new unicorns formed in 2022 so far) and many companies looking to aim towards IPO, a loyal customer base has become a necessity in the competitive startup ecosystem. And product analytics offer a unique opportunity for brands to not only engage but also convert and retain new customers without overly relying upon traditional marketing processes. It remains to be seen how companies adapt to this new wave of analytics to push forward their growth journey.