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How to use product analytics to increase customer engagement
The right metrics help you find improvement opportunities and create a standout digital customer experience. They’re also essential to measure the impact of individual product features and help with product performance analysis.
But wait, which product metrics matter most? And how can digital teams use these metrics to encourage user engagement and drive business growth?
We’ll go over five essential product analytics metrics to track and why engaging digital experiences are built on analytics that go beyond metrics.
1. Daily Active Users (DAUs)
DAUs measure the number of unique users interacting with your product (i.e., performing an action or accessing your app.) This user engagement metric clearly shows how many customers actively use your product.
To calculate DAUs, count the number of unique users who interact with your product. Use web analytics tools like Google Analytics, product analytics platforms like Heap and digital experience analytics platforms like Contentsquare to track this metric.
2. Monthly Active Users (MAUs)
If DAUs measure daily interactions, MAUs give you insights into user engagement in the last 30 days. It’s the perfect metric to measure how your product keeps users over time and how regularly they come back to use it.
Calculate MAUs by counting the unique users interacting with your product in a month. Similarly, platforms like Google Analytics, Heap and Contentsquare can help track MAUs.
3. Customer Acquisition Cost (CAC)
How much are you spending to bring new users to your product?
That’s what CAC helps answer – a chief concern of anyone reviewing budgets, product strategy or the efficiency of your sales and marketing funnel.
Calculate CAC by adding up the sales and marketing costs associated with attracting new leads and customer acquisition. Divide this number by the number of new customers gained in that period.
4. Customer Lifetime Value (CLV)
As per the name, CLV describes how much a customer spends during their relationship with your business.
You’ll know how much you can afford to spend to gain a new customer. More importantly, you’ll know how valuable your product is to customers.
CLV formula: Average customer revenue/month average customer lifetime in month
5. Customer Churn Rate (CCR)
How do you fix a leaky bucket?
You can either pour more water to make up for the lost water, or fix the hole.
In product analytics, customer churn rate measures how much water you’re ‘leaking’ – or the percentage of customers who stop using your product. High churn rates show user dissatisfaction or low engagement – something you want to address as soon as possible.
Calculate the monthly churn rate by dividing the number of customers you lost over the month by the number of customers you had at the beginning. Multiply the result by 100.
How to use product analytics metrics to improve product engagement
Making decisions based on assumptions isn’t proactive or efficient. Thankfully, having the right data on hand can help you avoid this sticky situation.
We’ve outlined two situations where referring to product metrics can help you make intentional decisions to improve your product and grow your business.
Situation 1: A high DAU but a low MAU.
This situation suggests users are using your product frequently but irregularly.
You could try to improve this by adding new features or content to your product that addresses your customer’s needs, or by identifying user friction in your digital customer journey to make it easier for users to return regularly.
Situation 2: A high CAC but a low CLV
When your metrics trend in this direction, it suggests you’re spending too much money to acquire new customers.
It’s not an ideal situation to be in.
But don’t fret, there’s a way out.
To reduce CAC, focus on more efficient marketing and sales channels, or improve customer retention by investing time to understand their digital needs and expectations.
Track your product analytics metrics with Contentsquare
Contentsquare is a digital experience analytics platform that helps you track and analyze user behavior across all of your digital channels, including your website, mobile app, and email.
With Contentsquare, you can track all the critical product analytics metrics along with other metrics to get a full picture of your customer journey from acquisition to conversion to retention.
Contentsquare tracks behavioral metrics like:
- Session length
- Page views
- Bounce rate
- Conversion rate
- Product feature usage
Any of these burning questions seem familiar to you?
- What features are users using the most?
- Where are users getting stuck or dropping off?
- What are users searching for?
Contentsquare’s insights help you answer these questions, and more.
In a world where customer acquisition costs are on the rise and competition is fierce, you’ll need ready answers to these questions.
By monitoring these product analytics metrics, product teams can understand how they’re meeting customer needs and identify opportunities for improvement.
The result? With the right insights, you’ll know how to retain existing customers, build lasting relationships and give them more value – a win-win for your customers and business bottom line.
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