Analytics
How to Use Data-Driven Analytics for SaaS
Selection right analytical tool is a crucial decision for each SaaS company. Google Analytics is an excellent thing, but it cannot help with many cases for a software application. Understanding your users and customers affects to the success of the startup. I can definitely say that every SaaS startup should use a data-driven analytical tool. Why?
Making right decisions based on events helps you grow your business much more than making decisions on traffic and intuition. Google Analytics mainly is focusing on traffic, not events. That’s why many startups using only Google Analytics cannot understand usability bottlenecks in the application, define the more attractive feature, or understand the behavior of paying customers.
In this article we will cover:
– Why should you use an event-based analytical tool, not only Google Analytics?
– What event-based tool to choose?
– How to fix usability bottlenecks?
– How to find «aha» moment?
– How to segment users to understand personas?
Why should you use the event-based analytical tool, not only Google Analytics?
Yeah, why you should pay for another analytical tool when you are using Google Analytics? Google Analytics is a great tool you can use for free. But Google Analytics is focusing on traffic traction. It gives you understanding where users are coming to your website from, and how long they read your site.
At the same time, Google Analytics can not help to understand behavior signed-up users. What do they do in the application? Why did they finish using your app? What features do they like more and what they don’t use? You don’t know answers if you use only Google Analytics. For these questions (and even more) you should implement the event-based analytical tool.
3 crucial things what can do event-based tools (not Google Analytics):
1. Focus on events. It is tough to understand your website events (especially in the application) in Google Analytics. Tools like Amplitude, Mixpanel, Heap make it much better. They can show you how to optimize your website and app.
2. Details tracking. You can not understand which customers came on a specific page of your website through Facebook advertising and used smartphones. In event-based tools, you can.
3. Understanding personas. You can not analyze different personas in Google Analytics. For example, users who paid for a Premium tariff uses only one specific feature and were online more than 5 times last week. Also, you can not compare in Google Analytics these customers with free users to understand the fundamental differences in their behavior. In event-based tools, you can.
What event-based analytics to choose?
Hope that now you understand the power of event-based tools and why you should use it. Then you may ask what tool is better. There is 3 event-based analytics we used in work.
In Aworker we are using Heap, but there is no best tool ever. Each event-based software has differences, and the best fit depends on your goals and resources.
Three event-based tools:
1. Mixpanel. The oldest analytical software in this list. It includes many different features, like push notifications, A/B testing. Generally, it’s a better tool for analyzing mobile apps. However, it’s also a good choice for web applications. Mixpanel offers free monthly plans with 2 events and 2 funnels. Previously there was a limit for 20 million events per month. Paid plans start at $150 per month.
2. Amplitude. It works great. There you can do many things what available at Mixpanel, but they have fewer steps and sometimes a little more reliable. Devil in the details. It’s all about Amplitude. They are also the cheapest software on this list because they use great backend technology for storing data. It’s harder to set up than Heap. Amplitude offers free monthly plans for 10 million actions per month.
3. Heap. The easiest integration and event tracking software on my opinion. Heap is a more dynamic tool in this list. It collects all the data from the beginning without any required code changes. Also, you can look back in time. If you make any changes on the website, you will be available to get retroactive analysis. With Heap you can collect data when you don’t know what events you want to track, it’s easy to make retroactive analysis later. However, it doesn’t have A/B testing and push notifications. Heap offers free monthly plans for 5,000 sessions per month, or 50,000 sessions per month if you install their badge on the website. Paid plans start at $299 per month.
If you want to figure out more differences between these tools and choose the best one, you can find more information on the web. For example, here is an analysis from Stackshare.
However, now I want to show you primary use cases you can analyze in the event-based tool. I am using Heap for it, but other application also can do these things. Let me show what you can do there.
Use Cases: Fix Usability Bottlenecks
Activation is a crucial stage for each SaaS startup. Scott Belsky is an Adobe CPO, Behance co-founder claims that startups with strong growth must spend at least 30% of their resources on optimization the «first mile». The first mile is a first experience interacting with your product – especially in the first thirty seconds. It is the most critical yet underserved part of a product. In this article, I wrote more about activation and other stages.
Now you can analyze your onboarding. For example, you have 3 steps onboarding process. Create the funnel with 3 steps in your analytical tool for understanding how this flow go through each stage.
In this example, we see that we have a crucial issue in the third step. Most users go away on this stage. Now you should add new events between stage 2 and stage 3. For example, it could be filling in a form or viewing a video.
It helps you track the most important steps on these stages to understand why users go away in this process. Iterate your funnel with adding new essential events in the onboarding, track it, and make your activation is excellent.
Optimizing of the activation stage in the funnel is the new gold for SaaS startups.
Use Cases: Finding «Aha» Moment
«Aha» moment is the action or experience when a user suddenly understands the true value of your product and becomes the loyal user or customer. Understanding «aha» moment for your users help you increase retention and customer engagement. That’s why you should build your onboarding around this moment to help your users reach «aha» moment as soon as possible.
For example, in Facebook one thing they were able to determine on early stages was a key link between the number of friends a user had in a given time and his/her probability to churn. Knowing that allowed them to do a lot to get new users to their “aha” moment quickly.
How to understand «aha» moment for your users? Use the event-based analytical tool.
We use Graph feature in Heap analytics to segment users based on how many times the performed an action and became our customers. It helps to see does event X correlate with payments or not. If event X doesn’t correlate with payments, we will check the next event.
For instance, we decided to check the idea that viewed an instructional video about key feature is correlated with an increase in the number of customers. You also may monitor how the video is related to the number of using this feature or not.
How to do:
1. Choose Graph «Count» – «Ordered a Premium Plan»
2. Group by «has done» – «Watched Instructional Video»
There we can see that video has a strong correlation with sales of our paid plan. Knowing that allows us to do more experience to get new users to watch this video quickly.
Also, you can determine how many sessions users made before they become customers. Just create a group by count sessions.
Now you will see how many times users had logged in the app before they became customers. Understanding that you may start a series of experiments to make this way shorter.
Use Cases: Analyzing Personas
Understanding your target audience is the key to success for any company. How can you analyze different personas in your application?
Using Segment in Heap (or similar menu in another event-based tool) to create different personas. You can filter users based on their behavior using including, equals, and other parameters.
For example, we want to create a segment of users who are our customers for more than 10 months and came from Facebook.
How to do:
1. Create filters «Count of» – «Ordered a Premium Plan» – greater than 10 times
2. Also, add filter «Initial Referrer» – «Contains» – Facebook
Also, you may use the time to monitor active users. For example, you can track people who use specific features in your app last week. In this case, create a segment with filters of these features and period when you want to track users.
Now you will see the number of active users in your app. It also helps you to understand how optimization or new features will impact on the number of active users. If you see that customer engagement growing up after last educational article, it’s a good indicator of your traction.
Conclusion
– Selection right analytical tool is a crucial decision for each SaaS company;
– Google Analytics can not track many events in an application;
– You can use an event-based analytical tool like Amplitude, Mixpanel, Heap, etc;
– The event-based tool helps you to track each event inside your application;
– You can fix usability bottlenecks, find «aha» moment, understanding user’s behavior, analyze different personas, etc.
Anton Cherkasov
https://aworker.io/Anton is a co-founder of Aworker, which is a blockchain platform for Recruitment. He is also a co-founder of Kepler Leads, is a lead generations software for eCommerce. Previously Anton has worked in Wildberries (#1 eCommerce store in Russia). He is falling in love with growth hacking and product management.