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Next-Generation Product Analytics

Jordie Hannel
Aug 01, 2022 Jordie Hannel

To stay competitive, it’s essential to understand how your customers are interacting with your brand. Enter product analytics. Broadly, the goal of product analytics is to understand user behavior and identify which product experiences led to customer success and which led to customer friction or churn. Product analytics can help businesses answer questions like: What are users doing in the product? How do different segments behave and perform? When does attrition begin? And what are our funnels and pathways of engagement?

Not surprisingly, product analytics is heavily leveraged in departments charged with delivering products: product management, growth, design, and engineering. Marketing teams also leverage product analytics by treating a website or ad campaign as the product. And customer success teams can leverage product analytics for insights into customer usage to drive adoption and engagement, help customers unlock value from new features, and facilitate upgrades and renewals.

The current first-generation of product analytics tools are designed to provide top-level visibility into outcomes. But how do you understand patterns of behaviors that drive those outcomes? Next-generation product analytics tools enable deep understanding of how behavioral patterns, across every touchpoint, drive outcomes. They empower organizations to act quickly to shape outcomes rather than just reporting on it.

Challenges with 1st-gen product analytics

The first generation of product analytics was born out of Web 2.0. The tools that emerged (Mixpanel, Amplitude, Heap, etc.) have served product-driven companies well by providing top-level visibility into product usage that they didn’t have before. However, in today’s digital landscape, there are several challenges and deficiencies with 1st-gen tools. These include:

1. One-size-fits-all canned analytics

1st-gen tools are designed to provide out-of-the-box reporting templates for basic self-service reporting. Unlike business intelligence software, which has slice-and-dice capabilities for advanced ad-hoc analytics, product analytics solutions generally offer only pre-defined reports on rigid data models. Moreover data collection and processing is designed to fit this pre-defined data model, and data that’s not needed to produce the prescribed reports is discarded along the way. 

What if the user wants to ask a follow-up question, and it’s a domain or business-specific question that goes beyond the reporting templates? The workarounds today are painful. Typically, you’ll need to export all the product telemetry (or at least what telemetry remains from the prescribed data collection process) into a relational data warehouse, and write complex SQL for modeling and analyses. The users of product analytics tools are business users — they likely don’t have the latest skills or access to tooling to do this. As a result, they have to rely on overloaded and organizationally expensive data engineering and data science teams. 

2. Siloed single-channel visibility

1st-gen tools typically focus on a single channel of the customer experience: the in-product experience. While that data provides some insights, it’s incomplete. In a multichannel, always connected ecosystem, customers interact with brands not just through their instrumented products, but also through out-of-product channels like social, customer support, marketing, events, and offline channels. Product analytics tools offer little, if any, support for multi-channel analysis.

Product analytics tools also lack the ability to sufficiently enrich product data with data from other business systems, contributing to the fragmentation of analytics solutions in the organization. For example, a tool may offer a well-modeled notion of a “user” based on the events being captured in the product or application. But what is the complete profile of this user? Are they a power user that’s part of an account paying $1M and up for renewal this quarter? Customer engagement or financial systems possess this data. Other examples of business context include supply chain, sales history, or support channels, but such data is not in the event streams for 1st-gen product analytics tools — it lives in other business systems (Salesforce, Zendesk, Marketo) or in internal data lakes/warehouses.

3. Closed legacy stacks

1st-gen tools have built proprietary closed data stores for the event data they collect. This is typically messaged as a necessary step to generate analytic performance. The results in yet another a black-box, siloed data store. Legacy product analytics tools predate today’s modern data stack where all data resides in central data warehouses/lakes. Their data is not in industry standard formats, nor is it exposed through standard APIs such as JDBC, and SQL. 

As a result, for even a moderately large amount of data or analytical complexity, customers have to build ETL jobs to dump data out of these stores into other databases. They then have to use yet another tool to analyze this data, creating fragmented analytics, more overhead, and increasing the TCO of their analytics machinery. 

4. Customer data outside the enterprise

1st-gen tools capture customer behavior and store data within their SaaS service, outside of their customers’ secure enterprise environments. Their tag-first approach used by business users, are inherently prone to security and privacy violations. This creates significant business risk for enterprises given the increasing regulatory pressures.

5. Scale and performance issues

1st-gen tools evolved from basic reporting templates for simple use cases with simple computation engines. They weren’t designed to scale to support the sheer amount of raw data that businesses are capturing today. To avoid performance degradations, these tools summarize and purge large amounts of high-fidelity data that could otherwise provide answers to important business questions.

Next-gen tools help you self-serve answers to the next question

To address the challenges of 1st-gen product analytics tools, a new generation of tools is emerging. These systems are designed for business users to easily ask more sophisticated questions from a single platform – a platform that goes beyond basic product metrics to higher order business metrics that can significantly improve business outcomes.   

Organizations aren’t limited to looking at the behavior of users in the product — they can also see how users behave across other touchpoints, compared to past historical behavior with dynamically evolving cohorts, and more. For example, instead of just measuring the shopping cart abandonment rate inside an app, teams can attribute channels like supply chain, web-to-retail, offline advertising, or customer loyalty to that metric. With these insights from across business systems, they can personalize their user outreach at the point of cart abandonment. 

The next generation of tools for understanding how customers interact with your brand has arrived. Here are the features to look for:  

Rich business context and modeling

Next-generation analytics tools can connect to any business system out-of-the-box, from multi-channel sales and supply chain management platforms to customer engagement and support systems. This includes streaming platforms (like Kafka), static stores (data warehouses, data lakes, RDBMSs, key-value stores), SaaS applications, and more. The benefits are two-fold. Product teams and other stakeholder functions all have a 360-degree view and full context of their operations and customers, regardless of the systems of record in place for Sales, Marketing, Support, Finance, or HR. And this shared visibility facilitates collaboration between these functions as they all work towards the common goal of delighting customers.

In addition to system integrations, these tools offer advanced modeling capabilities. They allow the organization to schematize raw data in various forms into meaningful relational business entities, with multiple views of the data for various business scenarios, support for semi-structured data, and resiliency to changes in the source data.

Automated actions to personalize experiences

Every customer is unique. Companies that recognize this and serve each customer’s unique needs have a competitive advantage. Providing personalized experiences wins customer loyalty and more business. Next-generation tools use insights from behavioral analytics and real-time data processing infrastructure to enable dynamically tailored personalization for every customer, across all customer touchpoints, in real-time.

Business monitoring and alerting

We are in an era of rapid increase in the velocity of business operations. Every enterprise needs to react to business events faster than ever before to stay relevant, meaning they need to have a real-time pulse on their business operations. Next-gen analytic systems reflect this evolution. They’re capable of processing data in real-time and instantly alerting product and customer-facing teams about issues and opportunities.

Empowered business users

Next-gen tools allow business users to self-serve for data access, modeling, and analytics, with minimal reliance on IT and data engineering teams. No longer confined to prescribed reports or dashboards, business users will have intuitive point-and-click interfaces for accessing, analyzing and visualizing data from any data source. They’ll be able to enrich and extend the organization’s data model according to their domain expertise. And ultimately they will be able to ask more sophisticated questions with advanced analytics.

Convergence of event and state (BI-style) data analytics

Next-gen tools mix traditional product analytics with BI-style advanced dimensional analysis while maintaining a friendly interface for business users.

They can easily combine BI-style state data with any analysis, such as sequences and paths of events. For example, across a dynamic cohort of users who converted within a week of trial, it’s easy to peer into spend by age, region, and product category. With this flexibility, teams can perform the kind of rich ad-hoc exploration, one question naturally leading to the next, that rewards curiosity rather than constraining it. 

Secure deployment models

Next-gen tools have the flexibility to be deployed either as a fully managed SaaS service or within a customer’s own Virtual Private Cloud (VPC). This allows customers to adhere to common corporate security and privacy policies for all applications.

Modern data stack

Next-generation tools are built from the ground up for the modern data stack. The modern data stack has all data residing in centralized Cloud data lakes or data warehouses. This includes product instrumentation data, which sits alongside all other business data, in an open format. Analytics tools are decoupled from instrumentation. They work directly off data in these central stores, with no data movement out to external, black-box silos.

Take your product analytics to the next level

Are you struggling to overcome the challenges of your current product analytics solution?

  1. One-size-fits-all canned analytics
  2. Siloed single-channel visibility
  3. Closed legacy stacks
  4. Customer data outside the enterprise
  5. Scale and performance issues

More importantly, are you expecting more from a modern platform?

  • Rich business context and modeling
  • Automated actions to personalize experiences
  • Business monitoring and alerting
  • Empowered business users
  • Convergence of event and state (BI-style) data analytics
  • Secure deployment models
  • Modern data stack

If you answered yes to any of the above, you should be considering a next generation product and behavioral analytics solution to maximize the value of your investment in product instrumentation and begin asking more sophisticated behavioral questions. Contact us to try for free.

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