What is Product Analytics ?

Building great products requires adopting a continuous improvement mindset . But how do you know what changes to make? Product analytics can help you answer that question. In short, product analytics is the tracking and analysis of data related to your products and their use. You can use this information to make better pricing, marketing, and product design decisions. This article will discuss product analytics, give a basic introduction, and explain how it works. So, let's get started.

In technical terms: product analytics is the quantitative data collected about how a product is used. This data can be used to improve the product, understand customer behaviour, and track engagement.

In simple words, product analytics is a powerful tool that can help you understand how people use your product and identify ways to improve their experience. By tracking key metrics and analysing user behaviour, you can gain insights into what people love about your product and what could be improved.

Product analytics can also help you measure the impact of changes you make to your product. You can make sure your product meets users' needs and expectations by keeping track of how they react to new features or changes to the way it looks.

Product Analytics Funnel

So, where does product analytics fall in your sales funnel? Consider the well-known ”Pirate Funnel" popularised by Dave McClure. Every step in the funnel can be translated into a product analytics metric.

  • **Awareness :**The phase where customers learn about your product. An example of this might be a customer watching your ads for the first time on social media.
  • Acquisition : Where the customer finally gets into your product, it involves trying it out or getting more details.
  • Activation : When they take the first important step. For some companies, that might be signing-up for the product.
  • Revenue : when the person becomes a paid customer.
  • Retention most important step, when a customer becomes a repeat customer.
  • Referral when the customer starts bringing other users into your product.

Product analytics sits along the lower part of the funnel, from when users first enter your product until the point when hopefully, they never leave. It will help you understand how they behave once they start using your product.

What Is the Distinction Between Product and Marketing Analytics?

People tend to confuse the two terms Product Analytics and Marketing Analytics. But they are two different things. So, how is product analytics different from marketing analytics? The following are a few notable differences to mention:

  • Product analytics is user-focused. So, you are looking at a specific person and what they are doing with your app. In contrast, marketing analytics is more channel-focused. So you might look at how many users Facebook is bringing you versus paid google or LinkedIn ads.
  • Product Analytics is more granular, so you look at every step a user takes within your product. On the other hand, marketing analytics is where you observe users conversion from a higher level.
  • As we discussed previously**, product analytics focuses** on the lower part of the funnel. Whereas marketing analytics is focused more on the upper part of the funnel, and the goal is to attract people to your product.
  • Finally, with product analytics, your goal is to improve your product, improve retention and conversion and get more referrals. With marketing analytics, your goal is to improve your ROI from specific initiatives you might be carrying out.

How Can Product Analytics Help You Build A Better Business?

The main question is how product analytics will help you and how you can change your product experience to reach your business goals. Product analytics help you build a better business in the following ways:

  • Finding bottlenecks in your product funnel, the barriers preventing conversion. means the users stop going toward the stuff you want them to carry out.
  • Understanding how users navigate your product just to observe behaviour, and uncovering what you might ignore about your product users.
  • Analysing A/B test performance to see how one feature performs against another or a state where no additional feature exists.
  • Identifying what makes some users your best customers.

Product Analytics Approaches

There are a few different ways to approach product analytics, each of which can provide valuable insights:

  • Splitting users into cohorts on selected properties: The goal of this approach is to split users into cohorts based on selected properties. This can help identify patterns and trends among groups of users.
  • User flows: This approach consists of analysing user flows. This helps to understand how users move through the product and where they may drop off.
  • Retention Analysis: Finally, retention analysis can help identify why users are leaving the product and what can be done to keep them engaged.

These approaches can be used to get a complete picture of how users interact with the product.

How Does Product Analytics Work?

Product analytics works by implementing tracking to help you tell a story about your users. To illustrate this and find out what the building blocks are to your analytics setup, we imagine you're launching an online program. So, let's see what user experience would look like!

Suppose you have a student named Roger. He enrolled via paid ads campaign, finished the first week's materials. He then recommended the course to two other users, watched the videos, took some quizzes, and downloaded some resources. Roger navigated through the course materials following a particular flow.

Product Analytics will allow you to collect all the data points in regards to Roger’s experience (and every other user), and to tell stories about how he interacted with your online course.

What Do We Track?

So, the above example brings us to the building blocks of product analytics: events and users. Events are the interactions that happen with the product, whereas users are the entities interacting with the product.  Now, let’s dive deeper into their properties. The event properties and user properties:

Event Properties

Considering the example of the online course again, we want to explore and answer the following:

  • What are the course sections that have been the most useful to your users?
  • How many recommendations of your course did each user make ?
  • How much time users spent on the course ?
  • What’s the typical user flow of the course ?
  • What are the characteristic events of your target users in terms of their usage of the course materials.

User Properties

Like event properties, you can also track properties against users. User properties help you understand who your users are and how they interact with your product. And what kind of customers they are.

So, take the example of owning an e-commerce app. Attributes like your name, email address, age, and date of birth tell you a little about who they are, the operating system, the app version, and other technical details that will tell you how they are accessing and interacting with your product.

At the same time, the number of purchases, average order value, sign-up date, and acquisition channel are all historical information about your customers. So, that might help you tailor your experiences towards them and understand where people are coming from.

Popular Tools For Product Analytics

Various tools are available to product managers who want to track and analyse their products performance. Here are some of the most popular:


Mixpanel is a popular tool for product analytics. It allows you to track how users interact with your product so that you can improve the user experience. Mixpanel also provides a range of features to help you understand your users better, including user segmentation and Funnels.


Mixpanel has the following features:

  • Free to start
  • Event-based
  • Granular user data
  • Messaging and A/B testing modules


Another popular tool for product analytics is Amplitude. It allows you to collect data about how users interact with your product so that you can make informed decisions about how to improve the product.


Amplitude also provides several features, such as it is:

  • SQL interface
  • Free to start
  • Granular user data
  • Event-based
  • Cohorts can be synced with other tools

Google Analytics

Google Analytics is a famous tool for product analytics. It provides detailed insights into how users interact with products, allowing businesses to make informed product development and marketing decisions. Google Analytics is a free service that integrates with numerous other Google products, making it a powerful and convenient tool for product analytics.


  • Free to start
  • Page based
  • Anonymized user data
  • Granular source tracking


Heap is another popular product analytics tool that allows you to track and analyze user behavior in your app or website. Heap automatically captures every user interaction and makes it available for analysis. This makes it easy to track how users use your product and identify areas of improvement. Heap is easy to use and integrates with your existing analytics tools.


  • Free to start
  • Event-based
  • Granular user data
  • Can be implemented without technical knowledge

How To Implement Product Analytics Stack?

There are four critical steps to implementing a product analytics stack:

  1. Define Your Goals

The first step is to define your product analytics goals. What do you want to learn from your data? What decisions do you want to be able to make? Some common goals for product analytics include understanding user behaviour, measuring product engagement, and determining what features are most used (or not used).

  1. Develop A Tracking Plan

Once you know what you want to track, you need to develop a plan for how you will do it. This involves deciding what data to collect, how to collect it, and how to organize it. You also need to decide who will be responsible for gathering and analysing the data.

  1. Choose The Right Tool

Various product analytics tools are available, so it's essential to choose the ones that are right for your needs. Some common choices include Google Analytics, PostHog, Mixpanel, Amplitude and Heap.

  1. Follow A Consistent Process

Io get the most out of your product analytics, it's essential to follow a consistent process. This means setting up your tracking plan, collecting data regularly, and analysing it regularly to look for trends and insights.

Following these steps, you can set up a product analytics stack to help you make better product decisions.

Wrapping Up

The blog post covers the basics of product analytics and how it can be used by businesses to improve their products and increase sales. Some key takeaways are:

  • Product analytics can track and analyse customer behaviour, identify trends, and predict future behaviour.
  • Different product analytics approaches include splitting users into cohorts on selected properties, user flows, and retention analysis.
  • To use this tool, you must collect and analyse the data and make decisions based on your findings.

If you're interested in using product analytics to improve your business, there are a few things you need to do, including collecting data, analysing the data, and making decisions. You can take steps ahead with product analytics to increase your product value!

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