What Is Digital Analytics? Definition, Examples, & Tools

Digital analytics helps you harness the power of customer data to guide product strategy and marketing.

January 26, 2022

Solutions Consultant, Amplitude

Digital analytics is the process of collecting and analyzing product data from multiple digital sources to inform product and marketing strategies. Amazon and Netflix have famously leveraged digital analytics to power new features, but companies of all sizes can use digital analytics for a variety of uses, like minimizing churn, encouraging experimentation, and increasing the value of existing customers.

Key Takeaways

Digital analytics is the process of collecting, analyzing, and ultimately acting upon the data from all of your digital sources.
Companies use digital analytics to minimize churn, encourage experimentation, and increase the value of existing customers.
Any company hoping to take advantage of the power of their own customer data requires the assistance of a capable digital analytics platform like Amplitude.
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 leverage customer data and digital analytics to make the best recommendations.

And in the era of Big Data, it’s not just tech behemoths that can leverage customer data in this way. Most companies are now sitting on a gold mine of customer data just waiting to be analyzed. Customers are logging time with digital products every day, giving marketing and product managers direct insights into what’s working, what’s not, and what might work in the future.

Of the businesses surveyed recently by MicroStrategy, 94% identified analytics as vital to growth and digital transformation. Despite this, only 30% of businesses maintain a clearly defined data strategy. Businesses who fully and meaningfully engage with their various data streams hold the advantage over competitors still stuck crafting analog strategies.

Where Does Digital Analytics Data Come From?

Website Data

Website data helps companies identify who is coming to their site and what they’re doing once they’re there. Evaluating this data helps determine which demographic groups are most attracted to certain products and features, or which acquisition channels prove the most effective.

Website data is also valuable as a means of tracking visitors as they hop from page to page. Tracking the user journey lets you measure everything from the efficacy of your blogs to the highest-performing pages for conversion.

Product Data

Your customers are generating behavioral data within your product as you read this. The way 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, and product data leaves little room for ambiguity. It’s data from your existing customers trying to use your product as they’re intended. In the event that they’re not, a careful look at their behavior will help you specify the shortcomings of their user journey.

Digital Marketing Data

The data from your digital marketing campaigns provides you with essential information concerning prospective customers. For example:

Keyword data: An analysis of your keywords could reveal a surging trend in a previously untapped market. Your most and least successful PPC campaigns both contain valuable information concerning what interests would-be users have and what messaging best represents their interests.
Social media: A reported 82% of Americans use at least one social media account. Not every single one of them follows you, but the ones that do interact with your content in meaningful ways. Your social media data reveals what content types, voice, and messaging promote the engagement of prospects and customers alike.

Internal Customer Data

Studying your internal data also helps determine the lifetime length and value of user cohorts. Your analytics reveals trends in terms of when customers are likely to upgrade, downgrade, and churn.

A low-value cohort could be targeted with an incentive offer to improve engagement. Alternatively, marketing campaigns could be tweaked to target customers identified as inherently high value.

You could find useful data in all kinds of proprietary areas, including:

Customer complaints
Account details
Transaction histories

The Benefits of Digital Analytics for Business

Before the adoption of digital analytics tools, product managers and marketers were often left to make decisions based on intuition or past experience. The only data available to base product strategy on was past performance, a data set that offers a limited picture of customer preferences. If you wanted to know what customers thought about your product, you’d have to ask them directly through interviews, surveys, and focus groups.

Your customers are online now more than they’ve ever been, giving you more insight than ever before into their thought processes and behaviors. However, it isn’t until these disparate streams of information are brought together that their true value can be unlocked.

Unite Data From Multiple Sources

Uniting your analytics data under a single umbrella allows you to compile a customer profile that encapsulates the entire user journey. Your website data can show you what ad brought a customer into the fold and your product data reveals the events and actions that same customer undertook to successfully complete onboarding.

However, without a unified digital analytics platform, you’re left without the ability to link the marketing customer data to that same customer’s product data. Your ability to access the entire customer journey benefits your business in several ways. Digital analytics helps you:

Minimize Churn

Digital analytics enables you to align the expectations set forth for customers through your marketing and the actual performance of your product. If you promise a seamless music streaming experience but experience churn before the first song is downloaded, a look at your analytics will help pinpoint what stages in the process are causing friction.

Communications platform 8×8 used Amplitude’s digital analytics to bolster their retention efforts. An evaluation of their analytics 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 7 retention rates double.

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 highest-value customers. Once you know which customers spend the most and stay the longest, you should 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

Improvements aren’t always about fixing issues with your product—46% of businesses have used their digital analytics to find opportunities for new revenue streams and to create new features and strategies. An analysis of your data might reveal that your playlist-building feature achieves surprisingly heavy usage. Such a realization could serve as 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 10 times less likely to churn within their first year. You decide to blast out emails to customers not currently making playlists, highlighting and linking directly to the feature itself. A digital analytics solution like Amplitude allows you to A/B test multiple variations of a feature to quantify which version provides the best conversion rate.

Increase Customer Value Through Personalization

Personalization has quickly become the marketing methodology of the future; 80% of customers are more likely to buy from brands leveraging personalized communications and offers. This preference directly translates to real revenue, with 80% of businesses reporting a sales lift derived from the use of personalized marketing content.

The right analytics platform can predict what customers want and need next based upon a combination of previous purchase history, profile, and behaviors. Recommendations not only contribute to a personalized customer experience; they also provide excellent opportunities for upselling and cross-selling. Amazon now attributes 35% of total sales to its top-tier recommendation engine.

What To Look For in a Digital Analytics Platform

You need a capable digital analytics platform to reap the benefits of your own data. Crafting an actionable strategy from the sheer volume of information is daunting. Giants like Slack deal with millions of customers daily, with each one generating their own unique data profile. Even smaller companies grapple with making sense of the data of thousands of prospects and customers.

Before you begin to take advantage of your customer data, you need to find a solution to manage it all. The key components to look for in a digital analytics solution include:

Data Unification

You need an analytics solution capable of connecting each of your digital sources. Available 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. Your digital analytics platform should allow 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. The ability of your analytics platform to handle volume and integrate with new sources is crucial in creating the most complete picture of your customer base.

Digital systems often grow clunky as new features and capabilities are slapped on to accommodate growth. Yet, the more your company comes to rely upon analytics insights, the higher the number of people who are likely to use the platform. It’s important to have a digital analytics solution that scales, but is also easy to use for the majority of people at your company.

Examples of Digital Analytics Tools

There are a number of digital analytics solutions available to help businesses wrangle their customer data. Which solution works best for your company is dependent on how you plan on using your customer data.

Amplitude

Amplitude is the Digital Analytics Platform that’s perfect for businesses looking to get the most out of their data. Amplitude’s suite of products (Amplitude Analytics, Amplitude Experiment, and Amplitude Recommend) enables teams to:

Unite and analyze data from multiple channels and platforms within a single product
A/B test and experiment while analyzing results in real-time
Make and test predictions to build recommendations
Provide micro-level insights on customer behavior across the user journey

Amplitude is built with an understanding that gleaning insights from a high volume of data can be confusing even for the experienced. The Digital Analytics Platform is built with all digital-first teams (like product and marketing) in mind, making it seamless for teams to get insight, take action, and drive outcomes that bring about customer lifetime value.

[Explore Amplitude in just 6 clicks]

Other digital analytics tools

There is a range of other digital analytics tools available, including:

Learn more about each of these digital analytics tools on a review site like G2.

How To Implement A New Digital Analytics Strategy

There are several critical steps you must take before being able to fully leverage your valuable digital data.

1. Identify Your Current Limitations

If your business currently employs a digital analytics strategy, you must have a reason for wanting an upgrade. Perhaps your old system doesn’t allow 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 as both a team and a company 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 is capable of delivering 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.

Catch Up on Digital Analytics (Or Get Left Behind)

Businesses are positioned at a unique crossroads concerning digital analytics. The benefits of data-driven insights are both well-documented and undisputed. However, many companies have been slow to adapt their existing infrastructure to an analytics-centric approach. Executive teams argue themselves to a standstill on when and how to transition their processes to the new norm. Meanwhile, more agile competitors are passing them by, guided in large part by their data-driven strategies.

Soon enough, the gap between businesses using digital analytics and those who don’t will shrink completely. Holdovers will either adapt to an analytics-powered model of operation or be replaced by businesses that already have. It’s always better to be the one everyone’s catching up to than the one catching up. Give yourself a head start with the right digital analytics platform.