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 Product
Analytics
Amplitude® 2nd Special Edition

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 Product Analytics For Dummies®, Amplitude® 2nd Special Edition

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 Introduction
I n today’s crowded digital market, more products than ever are
vying for customers’ time, attention, and money.

Product analytics are a must for creating unique experiences to

stand out from the competition and are the cornerstone of any
product-led growth strategy. They provide rich customer insights
that have propelled companies to become category leaders.

While tackling product analytics may seem daunting, getting

started has never been easier. Today’s product analytics tools and
technologies have made these products accessible to anyone. And
understanding these insights can pay dividends for years to come.

About This Book

If you’re new to product analytics, this book offers guidance and
resources from industry experts on how to get started.

Find out why product analytics are important to building bet-

ter products and driving business outcomes such as acquisition,
retention, and monetization.

Icons in This Book

We occasionally use icons to draw your attention to useful
information:

This icon marks a paragraph with information that you’ll find

helpful to remember in the future.

Take note of these shortcuts to help streamline your process.

Introduction 1

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 This icon marks spots where we highlight how businesses have
successfully used product analytics to grow.

Beyond the Book

In addition to this book, check out our other product analytics
resources:

»» Product-Led Growth Guide Volume 1: amplitude.com/

resources/what-is-product-led-growth
»» The Amplitude Guide to Product Metrics: info.amplitude.
com/product-metrics
»» The Amplitude Guide to Behavioral Data & Event Tracking:
info.amplitude.com/behavioral-data-event-tracking
»» Get started with a free Amplitude account: analytics.
amplitude.com/signup

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 IN THIS CHAPTER
»» Leveraging your product for growth

»» Cultivating a collaborative culture

»» Exploring customer journeys

Chapter 1
Understanding Product
Analytics

A
s a product team, how do you know if your product is
valuable to customers? What features do users love the
­
most? Where do they get stuck? Is your product driving
acquisition, retention, and monetization?

Product analytics answer those essential questions, illuminat-

ing how customers engage with digital products by tracking,
visualizing, and analyzing real-time behavioral data. Indeed,
­
product analytics have dramatically changed how product teams
operate. More than ever, businesses can put customers first by
identifying opportunities to better meet customer needs and
improve the digital experience. And that translates into customer
loyalty with direct business impact.

This chapter covers how product analytics lead to business growth

and foster collaboration within your organization. It also helps
you choose use cases, ask the right questions, and build customer
journeys.

CHAPTER 1 Understanding Product Analytics 3

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 Driving Product-Led Growth
Product analytics matter more than ever. Under pressure to do
more with less, businesses are increasingly turning to product-
led growth (PLG). PLG uses products to drive customer acquisition,
retention (including activation and engagement), and monetiza-
tion with the benefit of lowering the cost of customer acquisition.

The key to PLG is product analytics. After all, the success of any
PLG strategy hinges on a deep understanding of your custom-
ers’ end-to-end journey: where they experience friction during
onboarding, which features bring them back, and what triggers
conversion. Insights like these enable you to create products cus-
tomers love — ones that grow and sustain your business.

PRODUCT ANALYTICS IN ACTION:

UNDER ARMOUR
After acquiring popular apps like MapMyRun and MyFitnessPal in
2015, Under Armour Connected Fitness became the leading digital
fitness company. Eager to see how these new mobile offerings helped
users meet their fitness goals, Under Armour turned to Amplitude.

Among its first tasks: testing Form Coaching Tips, a product designed
to inspire MapMyRun users to log more weekly runs. The product
takes aim at poor form, which can cause injury and pain, keeping
runners off the road. Using Amplitude’s Cohort, Segmentation, and
Retention analyses, Under Armour saw the feature was a success,
boosting day-seven retention by 30 percent. “This was something
that really lifted retention for us, and that equates to dollars for us
because the more users we have using our app, the more money
we’re making,” Kaiti Carpenter, former Under Armour Senior Product
Manager, said.

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 Building a Collaborative Learning Loop
Organizations that maximize learning flows between teams,
tools, and products achieve better outcomes. When teams think
of their product as a learning system, they shift from thinking
about product development as a linear journey to thinking about
it as a loop.

A learning loop (see Figure 1-1) is designed to inspire discovery,

kick off analysis, measure outcomes, and continuously learn.

Step 1: Ask: Start a learning loop by asking a question, such as:

»» What goal are we trying to achieve?

»» What behaviors or experiences are hindering this goal?
»» Why are users behaving this way? Why are these experiences
not working?

Use a mix of quantitative and qualitative research to answer your

questions.

Step 2: Act: Use the findings from Step 1 to align, decide, and take
action.

FIGURE 1-1: A four-step learning loop.

CHAPTER 1 Understanding Product Analytics 5

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 Step 3: Measure: Use product analytics to measure the outcomes
of your actions. Be sure every release is tied to an outcome you can
track over time.

Step 4: Share: Broadcast your findings, whether they were suc-

cessful changes that drove impact, neutral changes, or negative
changes you had to roll back.

Understanding What Questions to Ask

Product analytics are a powerful tool — but they’re only useful if
you know what questions to ask. To figure that out, create a map
of your customer journey, from acquisition to monetization (see
Figure 1-2). Customer journeys help your team home in on the
moments you want to better understand.

Different teams might leverage different tools to analyze vari-

ous customer journey stages. But these analyses have become less
siloed as tools such as Amplitude have unlocked insights across
the entire customer journey.

After mapping your customer journey, identify your use cases for
each stage and translate them into the questions you need to ask.
Use cases represent how users leverage your product to meet their
goals.

Identifying the right questions to ask is crucial to meeting your

goals. The data they yield forms the bedrock of your product ana-
lytics and helps shape your customers’ product experiences.

FIGURE 1-2: A customer journey map with example product metrics

for each stage.

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 Acquisition use case
Your company hopes to acquire new customers and understand
how various acquisition sources impact product KPIs. You can
track the number of new leads, signups, trials, and subscribers to
identify when customers start using your product and what digi-
tal campaigns and channels led them to it. This data informs your
best acquisition strategies, campaigns, and channels. Consider:

»» How are acquisition channels contributing to key conversion

KPIs?
»» What is the impact of specific campaigns or channels on
engagement?
»» What is campaign attribution when tied to subscriber
growth, product outcomes, and revenue?
»» How does product or subscription revenue vary by campaign?

Retention use case

You want to boost retention and understand how new user
onboarding and trial experiences impact activation and engage-
ment. To do this, you can track in-product engagement, conver-
sion paths, user retention, and sticky features. Consider:

»» Do certain trial features influence new user engagement and

retention?
»» Which onboarding experience leads to higher free-to-paid
trial conversions?
»» Which onboarding experience leads to higher two-week
retention?
»» Do customers who engage with certain product features
have a higher two-week retention rate?

Monetization use case

Increasing revenue is your company’s topline goal. A good use
case might focus on increasing paid subscription conversion over
the next six months — a direct revenue driver. (See Chapter 1 for

CHAPTER 1 Understanding Product Analytics 7

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 more about use cases.) Tracking user behavior, especially power
user behavior, helps you find ways to improve the user experience
and, in turn, boost the number of paid subscriptions. Consider:

»» How soon do users convert to a paid subscription after a

free trial?
»» What types of user behavior tend to lead to paid
subscriptions?
»» What are the journeys that converting users take?
»» What percentage of free users who access personalized
recommendations convert?

PRODUCT ANALYTICS IN ACTION:

WEMONEY
WeMoney, one of Australia’s fastest-growing financial wellness plat-
forms, found out through Amplitude that users who set a financial
wellness goal had a higher retention rate at the 12-month mark than
users who didn’t. But the company’s goal feature was buried on its
homepage. WeMoney changed that and built goal-setting into its
onboarding process. The result yielded a 20-percent increase in reten-
tion. Amplitude also helped WeMoney learn more about these power
users so they could send them personalized messages, reducing
retention costs by 85 percent.

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 IN THIS CHAPTER
»» Using event-based analytics

»» Documenting your event data

»» Tracking the right product metrics

»» Implementing data governance

Chapter 2
Getting Your Data Right

D
ata management, or how you plan for and organize behav-
ioral data, is fundamental to product analytics. Good data
management ensures the right data is available to the right
people in the right places. Choosing what questions to answer, as
Chapter 1 outlines, can inform what data to track. By focusing on
the data that matters most, teams can achieve success sooner and
avoid unnecessary risks. Once you have determined what to track,
you can identify your product’s various data sources and use
pipelines to funnel that data into your product analytics tool.

Product analytics need to be accurate, secure, and accessible. At

scale, you can achieve this by practicing data governance, which
enables you to maximize the potential of your product data as it
grows and changes over time.

This chapter covers which customer data to collect, which product

metrics to measure, and how to document both in a tracking plan.

Understanding Your Data

Amplitude’s platform is event-based; it analyzes data that con-
sists of the actions customers take with your products and helps
you work more efficiently. Knowing what data is available enables
you to accurately project scope and make the most of engineering
resources.

CHAPTER 2 Getting Your Data Right 9

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 Whenever an instrumented event fires in your product, that data
is sent to the platform in the form of events, as well as its associ-
ated event and user properties:

»» Events refer to users’ behavioral actions, but you can

designate any action in your product as an event.
»» Event attributes or properties add context to an event. For
example, if the event is clicking an ad, the ad’s campaign ID
might be an event property. If it’s a purchase, it might be the
cart amount.
»» User properties are attributes specific to each user that
describe the user’s state, such as where they are located,
what platform they joined, how they were referred, and how
many friends they invited.

Building a Tracking Plan

An event tracking plan is a document that acts as a source of truth
for your event data. It’s a living document that contains all the
information related to the data you gather about your customers’
product interactions.

In practice, you should update the tracking plan every time you
gather a new event or event property, modify the name of an
event, modify the name or the data type of a property, or stop
tracking an event or a property.

Keeping an up-to-date tracking plan has many benefits, including:

»» Ease of implementation: Tracking plans include a reposi-

tory of data to track and specify the sources where the data
comes from, the destinations where the data needs to be
sent, and who is responsible for implementation.
»» Quick reference: After implementation, different teams
consume and use the data across destinations. Tracking plans
provide the meaning and purpose of each event or property,
making it easy for teams to analyze and act upon that data.
»» Knowledge transfer: An updated tracking plan helps
organizations avoid the many challenges of project handoffs
or employee onboarding by making it quick and easy for
new team members to get up to speed.

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 To get started, try this tracking plan template: amplitude.com/
resources/event-tracking-plan-template.

Defining Your Product Metrics

Product metrics show how users interact with your product. They
typically have a numeric component such as time, ratio, or rate.
For example, activation rates measure how well your efforts
increase the number of new active users. Product metrics help
you better understand what users find helpful, what keeps them
coming back, and the best way to turn them into loyal customers.

Product metric categories

Product metrics help gauge your efforts at each stage of the cus-
tomer journey:

»» Acquisition metrics, such as the number of new signups and

qualified leads, customer acquisition cost, and payback period,
measure when someone starts using your product or
service. They’re great for understanding what marketing
channels are working best.
»» Activation metrics, including the activation rate, time to
activate, and free-to-paid conversions, show how well you
move users from acquisition through that critical “aha”
moment, where they discover why your product is valuable
to them and become active users.
»» Engagement metrics, like monthly active users and feature
usage, measure how (and how often) users interact with your
product. Those interactions might include sharing a song or
editing their profile.
»» Retention metrics, such as retention and churn rate, gauge
how many users return to your product over a certain period.
»» Monetization metrics, such as net revenue retention, monthly
recurring revenue, and average revenue per user, capture how
well your business turns engagement into revenue.

Choosing the right metrics

You need data to make informed decisions about changing,
improving, and growing your product. But the sheer volume
of data available to product teams today is so vast that it can

CHAPTER 2 Getting Your Data Right 11

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 complicate the process of deciding what to measure and how,
including:

»» Choosing a tool that gathers high-quality data and presents

it in an intuitive format
»» Matching the data to your overall product goals
»» Deciding the right questions to ask and the right data to
track to find a meaningful answer
»» Interpreting the data to reveal insights and next steps
»» Determining benchmarks for products in your industry and
comparing how your product stacks up against competitors

Practicing Good Data Governance

Data governance describes the people, methods, and tools orga-
nizations use to ensure their data is accurate and useful. Effective
data governance enables teams to trust their insights when they
rely on data to make strategic decisions.

A good data governance process includes:

»» Creating a data taxonomy. Maintaining a taxonomy and

supporting documentation helps you ensure consistency.
»» Planning new events. Working with product and engineer-
ing teams helps you determine plans to instrument new
features and updates.
»» Setting up data approval and maintenance. Verifying data
accuracy addresses broken, missing, or inconsistent data on
a regular basis.
»» Controlling access. Managing permissions and access
controls ensures the right data is accessible to the right
people.
»» Removing data. Regularly removing outdated, irrelevant, or
unused events and properties every 30 days means you can
declutter your analytics tool.

By collaborating with engineering teams, you can establish scal-

able approaches to data governance. Sharing the same analytics
goals makes it easier to keep pace with a rapidly changing product.

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 Chapter 3
Answering Ten Key
Questions with
Product Analytics

P
roduct analytics help teams answer important questions
about customer behaviors, product experiences, and overall
performance. This chapter includes ten example questions
and the types of analyses you can use in Amplitude to answer them.

1. How many users from a specific country tried a specific

feature last month?
Event Segmentation lets you define which users, periods,
countries, and other criteria to analyze.
2. What is the retention rate for iPhone versus Android
users? Does it improve if they use the social sharing
feature in their first 30 days?
Retention Analysis shows how often users return to your
product over time. You can also compare retention for
Behavioral Cohorts — groups of users who act similarly
within a specific period.

CHAPTER 3 Answering Ten Key Questions with Product Analytics 13

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 3. Why do users drop off during onboarding?
Funnel Analysis uncovers friction points. Conversion Drivers
show the behavioral differences between users who convert
and those who drop off.
4. What journeys do users take before converting?
Journeys show the paths users take within your product
between selected events. It helps uncover behavioral
patterns that drive conversion or cause friction.
5. How do power users behave differently from other
users?
Stickiness shows the distribution of engagement levels to
identify how many users have formed product usage habits.
6. Which features perform well? Which should be
deprecated?
Engagement Matrix determines which features are used.
Data Tables compare the engagement of multiple features
and whether specific campaigns influence feature usage.
7. Which users are predicted to make a purchase in the
next 30 days?
Predictions can segment users with the lowest and highest
propensity to purchase so you can take tailored actions.
8. How many products does an online shopper need to view
before making a first purchase?
Milestone Analysis enables you to track the behavior of a
desired outcome. Historical Counts helps you understand
how repetitive behaviors influence outcomes.
9. What is driving a sudden drop in a specific KPI?
Anomaly Detection automatically monitors metrics. Root
Cause Analysis detects meaningful changes and explains
impact.
10. Are the new users we acquire each month active the
following month?
Lifecycle tracks whether users remain active or dormant
so you can reengage them.

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