What Is Digital Analytics? Definition, Examples, & Tools
Digital analytics helps you harness the power of customer data to guide product strategy and marketing.
Originally published on January 26, 2022
Digital analytics collects and analyzes product data from multiple digital sources to inform product and marketing strategies. Amazon and Netflix have famously used digital analytics to power new personalized product features. However, companies of all sizes can use data analytics to improve decision-making. This helps them reduce churn, run experiments, and increase the value of existing customers. Web, digital marketing, and product analytics all fall under the umbrella of digital analytics.
- Digital analytics involves collecting, analyzing, and ultimately acting upon the data from all of your digital sources.
- Companies use digital analytics to understand customer needs, minimize churn, and increase the value of existing customers.
- A capable digital analytics platform like Amplitude is crucial for any company hoping to unlock the power of its data with actionable insights.
- There is a narrowing window of opportunity for businesses to adopt an analytics-first approach before they fall behind their competitors.
Where is digital analytics used?
Ever wonder how Netflix or Amazon makes content or product recommendations? Their personalization engines use customer data and digital analytics to recommend relevant products and content.
In the era of Big Data, tech behemoths are not the only ones who can use data this way. Most companies are now sitting on a gold mine of customer data, just waiting to be analyzed. Customers use digital products every day, which gives marketing and product managers direct insights into what’s working, what’s not, and what might work in the future.
Digital analytics is divided into two main types: product analytics and marketing analytics. In leading companies, marketing and product teams work collaboratively to achieve outcomes.
Digital product analytics
Digital product analytics involves collecting and analyzing product data to inform product strategy and guide product optimization. For example, let’s say you want to improve your onboarding flow. Digital analytics helps you pinpoint where customers drop off and test variations for a new flow.
Product analytics metrics include:
Web and digital marketing analytics
Digital marketing analytics involves analyzing marketing data. The goal is to improve marketing efforts and maximize return on investment.
Web analytics, which specifically looks at website performance, is part of digital marketing analytics. A company might analyze conversion rates from different marketing channels, such as email, paid ads, and organic social media, and prioritize resources toward the channels with the highest conversions. They’ll also typically investigate website performance to understand things like which pages are driving conversions and where users are dropping out of the funnel.
Marketing metrics include:
- Website metrics like organic website traffic, page views, and pages per session
- Customer acquisition cost
- Conversion rate
Where does digital analytics data come from?
There are several places where companies collect data for digital analytics. Typically, they’ll pipe data from multiple sources into a digital analytics platform.
Marketing channels
The data from your digital marketing campaigns provides you with essential information concerning prospective customers. For example:
- Keyword info. Analyzing keywords people are using to get to your site could reveal a surging trend in a previously untapped market. Your PPC campaigns contain valuable information concerning what interests would-be users have and what messaging best represents their interests.
- Social media stats. Your social media data reveals what content types, voice, and messaging engage prospects and customers.
- Website data. Evaluating data on site visitors and behavior helps determine which demographic groups are most attracted to certain products and features and which acquisition channels prove the most effective. It’ll also uncover how well different pages and campaigns are performing.
Product behavior
Your customers are generating behavioral data within your product as you read this. How they use your product contains key insights into its potential and limitations. Analysis of product data can reveal:
- Your most and least popular features
- Critical conversion events
- Points of friction that lead to churn
- Commonalities between customers with high lifetime value
Digital analytics aims to remove the guesswork from product strategy so you can take action based on what is actually happening in your product.
Customer interactions
Studying your internal data also helps determine the lifetime length and value of user cohorts. Your analytics reveal trends about when customers will likely upgrade, downgrade, and churn. From there, you can, for example, tweak marketing campaigns to target customers identified as high-value.
You could find useful data in all kinds of proprietary areas, including:
- Customer complaints
- Account details
- Transaction histories
What are the benefits of digital analytics for businesses?
Before digital analytics, product management, and marketing decisions were based on intuition and experience. Today, with customers increasingly active online, there’s a wealth of insights into their behaviors. Combining your analytics data under a single umbrella enables you to investigate the entire user journey—from the initial ad interaction to long-term retention. A unified digital analytics platform enables you to gain valuable insights that benefit your business in several ways:
Minimize churn
With digital analytics, you can align the performance of your product with the expectations set through your marketing. Suppose you promise a seamless music streaming experience, but customers churn before downloading their first song. In that case, looking at your analytics will help pinpoint what stages in the process are causing friction.
A forward-thinking way of improving churn rates involves using your digital analytics to optimize your marketing campaign targeting. Your data will provide you with the demographic and behavioral makeup of your most loyal customers. Once you know which customers spend the most and stay the longest, create marketing campaigns targeting those same demographics and behaviors to bring in the customers most likely to add long-term value to your product.
Power experimentation
Analytics aren’t always about fixing issues with your product—they also help you find opportunities for new revenue streams, features, and strategies. An analysis of your data might reveal that your playlist-building feature achieves surprisingly heavy usage. Such a realization could be the basis for additional supporting features or even an entirely new product.
Experimentation also extends to product marketing. Perhaps you notice that customers building playlists are ten times less likely to churn within their first year. You send an email campaign to customers who are not currently making playlists, highlighting and linking directly to the feature itself.
Increase customer value through personalization
More and more companies are tailoring their product and marketing efforts to different customer cohorts. Personalization improves the customer experience, driving loyalty and retention.
But to personalize experiences, you need analytics. The right analytics platform can predict what customers want and need next based on a combination of previous purchase history, profile, and user behaviors. Companies can use that information to create custom messaging and user experiences. Personalized product recommendations, for example, make for a great customer experience and provide excellent opportunities for upselling and cross-selling.
Examples of digital analytics in action
Here’s how some real-world companies use digital analytics to drive tangible results.
8x8 doubled day seven retention
Communications platform 8×8 used the Amplitude platform to bolster their retention efforts. An evaluation of their product revealed a concerning lack of usage within their app. By studying their Conversion Drivers, they found that many users were not downloading the necessary Chrome browser extension required for proper product performance. After a concerted effort to address this issue, 8×8 saw day seven retention rates double.
Ticketswap drove sales funnel completion
The performance marketing team at ticketing platform Ticketswap discovered that many users were dropping out of the sales funnel because of technical hurdles like confirming uploaded ticket details or user authentication. With Amplitude, they drilled down to identify the groups who experienced issues. They synced these audiences out to marketing campaigns to bring users back to the site, leading to a 15% uplift in sales funnel completion.
What to look for in a digital analytics platform
Crafting an actionable strategy from a mountain of information is daunting. Giants like Slack deal with millions of customers daily, each generating their unique data profile. Even smaller companies grapple with making sense of the data of thousands of prospects and customers. You need a capable digital analytics platform to wade through the noise and reap the benefits of your data.
The key components to look for in a digital analytics solution include:
Data unification
A strong analytics solution will enable you to connect all your digital data sources. Customer data has outgrown dated “spreadsheet and database†approaches.
Even if you were magically able to manually log all pertinent data into a spreadsheet or database, the sorting and calculations required to make sense of the data could take you days or even weeks. While tools exist for analyzing just your web, product, and internal data separately, the true power of analytics is in its unification of your data streams.
Dynamic features
An analytics platform that only holds information is just a glorified database. The right digital analytics platform will enable you to:
- Perform experiments and A/B test
- Track customer journeys
- Use your data to create predictions and recommendations
- Segment your users by past and predicted behaviors
- Determine the best time for retention- and value-building efforts
Scalability and accessibility
Growing businesses require platforms powerful enough to handle an increasing data load. Legacy analytics systems often become clunky as new features and capabilities are slapped on to accommodate the growth of users and data streams. It’s important to have a digital analytics solution that can scale with you and is easy to use.
Examples of digital analytics tools
Several digital analytics solutions are available to help businesses wrangle their customer data. The best solution for your company depends on how you plan to use your customer data.
Amplitude
Amplitude is the digital analytics platform that’s perfect for businesses looking to make data-driven decisions. Marketing and product analytics are combined in one platform, enabling teams to:
- Unite and analyze data from multiple channels and platforms within a single product
- Provide detailed insights on customer behavior across the user journey
- Run experiments while analyzing results in real-time
Amplitude is built on the understanding that gleaning insights from a high volume of data can be overwhelming, even for data specialists. Built with all digital-first teams in mind, Amplitude makes it easy for teams to get insights, take action, and drive outcomes—no SQL necessary.
Explore why top digital teams trust Amplitude over Adobe Analytics and Google Analytics 4.
How to implement a new digital analytics strategy
There are several critical steps to take before being able to use your valuable digital data fully.
1. Identify your current limitations
If your business currently employs a digital analytics strategy, you’ll have a reason for wanting an upgrade. Perhaps your old system doesn’t enable you to make calculated predictions and build recommendations. Maybe the A/B testing functionality leaves something to be desired. Some businesses may be looking at collecting and analyzing their data for the first time.
2. Determine your goals
Make a complete account of what you’d like to achieve by adopting a digital strategy. Common goals include:
- Driving product innovation and feature development
- Personalizing the customer journey
- Identifying friction to minimize churn
- Optimizing onboarding flows
3. Choose the right solution
Not every product on the market can deliver the results you outlined in your goals. Most digital analytics products offer demos, webinars, or free trials to highlight how their offerings might help you achieve success.
For instance, Amplitude hosts AmpliTour, a 60-minute interactive workshop that allows interested parties to dive into the product firsthand. Given how important digital analytics is to the success of your business, it’s worth taking the time to research available solutions before making a final decision. Explore our guide to buying a digital analytics platform.
Catch up on digital analytics (or get left behind)
Soon enough, the gap between businesses using digital analytics and those that don’t will shrink completely. Holdovers will either adapt to an analytics-powered model of operation or be replaced by businesses that already have. Give yourself a head start with the right digital analytics platform. Get started with Amplitude for free.
References
- What is personalization? McKinsey
- Future Digital Experiences: Invisible And Immersive. Forrester
- How storytelling helps data-driven teams succeed. MIT Sloan
Audrey Xu Leung
Former Global Solution Architect, Amplitude
Audrey Xu Leung is a former global solutions architect at Amplitude, working with companies worldwide to build better products via analytics and experimentation.
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