For most companies, the quality of their product determines whether they sink or swim in the competitive market. As such, product analysis has become an increasingly popular tool utilized for understanding and optimizing business performance and improving the customer experience.
According to Vantage Market Research, the global product analytics market is projected to grow at a CAGR of 20.9% over the next five years, before eventually reaching a valuation of $29 billion by 2028.
Clearly, product analytics has become an increasingly important aspect of successful product development, but what exactly is it, and how can you use it to your advantage?
What is product analysis?
Put simply, product analytics is the process of gathering, analyzing, and interpreting data to gain insights into the performance of your product. It allows you to build a clear picture of your offering, highlighting its strengths, weaknesses, and areas of improvement.
When implemented correctly, quantitative product analysis can help you track key performance indicators (KPIs), including customer engagement, user activity, conversion rates, and other important metrics.
Using these insights, you can develop targeted strategies for growth, identify opportunities, and drive innovation. Without product analysis, companies would be simply relying on guesswork and intuition, rather than data-driven evidence, to make product-related decisions.
The benefits of product analysis
Now that you know what product analysis is, let’s take a look at some of the benefits it can provide:
Identify customer needs and preferences
By closely monitoring customer behavior, you can gain valuable insights into their needs and preferences, allowing you to tailor your products for maximum success. Improving the customer experience and tailoring your product offering based on these insights can help you boost sales and increase revenue.
Highlight bugs and technical issues
Regularly monitoring product performance and usage data can help you quickly identify any bugs or technical issues, allowing you to resolve them and maintain a high level of customer satisfaction. Regularly monitoring customer data can also help you identify any potential risks, allowing you to take corrective action before any damage is done.
For example, if your product relies on data-intensive applications, you can monitor usage and performance to ensure it remains stable and efficient, regardless of the number of users.
Grow loyalty and retention
Analyzing customer data can also reveal which customers are more likely to remain loyal and stick around for the long term. Armed with this knowledge, you can provide additional services and offers to encourage customer retention.
Differentiate from competitors
By understanding customer needs and preferences, you can create products that are differentiated from your competitors. This allows you to stand out from the crowd and gain a competitive edge.
Inform pricing and marketing strategy
Accurate data on pricing and user activity can help you understand the best way to monetize your product, as well as inform marketing strategies. Understanding the elasticity of your product’s pricing allows you to set prices that maximize revenue without sacrificing customer satisfaction.
Different types of product analysis
There are several types of product analysis, each with its own advantages and applications. Here is a quick introduction to some of the most common:
- Trends analysis: This type of analysis helps identify trends in customer behavior, usage patterns, and other metrics over a predetermined time period.
- Funnel analysis: This type of analysis examines the performance of your sales or conversion funnel across different stages, allowing you to identify areas of improvement.
- Cohort analysis: This type of analysis is used to compare the performance of different groups, or cohorts, over a given period of time.
- A/B testing: This type of analysis is used to compare two versions of a product in order to determine which performs better.
- User persona analysis: This type of analysis is used to identify and understand customer personas, or profiles based on their behavior, preferences, and other characteristics.
- Retention/churn analysis: This type of analysis is used to analyze customer retention and churn rates over time – observing which customers are more likely to stay and which are more likely to leave.
Getting started with product analysis
Before you dive head-first into product analysis, it is of the utmost importance to understand your desired goals and objectives; this will keep you on track and help you maximize the potential of your analysis. Once those are established, select the most appropriate method from the various options available – some popular methods include:
- SWOT analysis: This method helps you to identify and analyze the strengths, weaknesses, opportunities, and threats associated with your product offering.
- KJ analysis: This method helps to explore the relationships between different ideas, as well as uncover customer needs and preferences.
- PESTLE analysis: This method helps to identify external factors that may affect your product, such as political, economic, social, technological, legal, and environmental trends.
- Competitive analysis: This method helps to identify how your product is performing in comparison to competitors.
- Value chain analysis: This method helps to identify the activities that add value to your product and can help you make decisions about where to focus your resources.
Product analysis can be a laborious process, but it is invaluable in discovering customer wants and needs, fostering growth, and surpassing the competition. Even if you believe your product offering has already reached its peak potential, conducting product analysis can help you uncover and identify new areas for improvement so that you can stay ahead of the game and keep delivering value to your customers.