How to Choose the Best Product Analytics Tools to Optimize Your Conversion Rate [a Step-by-step Guide]

How to Choose the Best Product Analytics Tools to Optimize Your Conversion Rate [a Step-by-step Guide]

Elena Doynova

Apr 19, 2023 • 7 min read

How to Choose the Best Product Analytics Tools to Optimize Your Conversion Rate: A Step-by-Step Guide

How do people find your product? How do they interact with it before converting? What makes them convert? What do they do afterward? You either guess these things – or you have specific data that helps you walk in your customers’ shoes. But before you begin empathizing with them, you need to set up the data ecosystem. Today, we’ll take a hard look at conversion and the most useful product analytics tools that can help you optimize this crucial step of the user journey.

Understanding product analytics tools

Product analytics tools are software applications that you can use to understand how users interact with your digital products or services. In simpler terms, these tools help companies gather product data on user behavior: what actions they take, how often they use the product and for how long, and what features they like best. Once the data is collected, it’s analyzed to provide insights that can be used to improve the product development process, make data-driven decisions, and achieve better business outcomes.

Product analytics tools come equipped with a range of features, such as event tracking, user behavior analysis, funnel analysis, A/B testing, and cohort analysis. Some of these features are directly related to the conversion process and that’s what we’ll be exploring further in this article. 

Understanding conversion rate optimization

Conversion Rate Optimization (CRO) is a process in which you help more people on your website perform a specific action. Conversions can take the form of product subscriptions and purchases, but also smaller events like newsletter signups or playing a video (these are called micro conversions and play a vital role in the customer journey). Each business sets different goals and defines different conversion events for each goal but the ultimate one is to derive as much value as possible from every visitor and every click.

CRO is also the shortest way to increase revenue, provide better UX, and improve user retention.

What is Conversion Rate? 

To put it simply, conversion rate is the percentage of people who have completed a specific action. Let’s take as an example the number of visitors who have signed up for your service. In this case, it will be the number of people who signed up divided by the total number of visitors – and then multiplied by 100 to get the percentage.

Conversion Rate Optimization Formula

Conversions define the extent to which your customers enjoy interacting with your product, website, or app. As if it wasn’t difficult enough to attract their attention – advertising, SEO, social media, and whatnot, but now you have to please them, too? Well, yes. But that’s actually the fun part. How do you make sure visitors fulfill their potential to become customers? With different types of product analytics software, of course!

What are the benefits of CRO?

Any activity that helps you craft a better user journey is worth pursuing – conversion rate optimization helps you do that while also helping your bottom line. Nice, right? Here are some ways in which it does that…

  • CRO helps increase revenue

A higher conversion rate means more paying customers, which leads to increased revenue. Which means you can spend less on marketing and advertising. Or, you can keep the spending as is and get more customers for the same budget!

  • CRO helps improve customer acquisition cost (CAC)

CRO can also help to lower CAC by maximizing the value of each user and reducing the number of users needed to convert into paying customers. 

  • CRO helps enhance the user experience

The CRO process involves analyzing the user experience (UX) and identifying areas for improvement. By making changes to your product, website, or app to create a better user experience, you can increase customer satisfaction and reduce the likelihood of churn.

  • CRO helps optimize marketing campaigns

In the process of conversion optimization, you will be identifying which channels are driving the most conversions, which features drive the adoption process, which campaigns are not performing well, etc. This information can be used to allocate marketing resources more effectively and improve the overall ROI of marketing efforts.

  • CRO helps you test and iterate quickly

CRO involves continuous testing and iteration. This iterative process enables you to quickly test and refine your product to optimize the user experience and enhance adoption. This agile approach allows for faster decision-making within different departments (Development, Customer Success, Sales, Marketing).

How to choose the right product analytics tools for CRO: your step-by-step guide

Did you brush your teeth this morning? We anticipate the confused look on your face. But when asked whether they have set SMART goals for the conversion stage of the user journey, most businesses look even more confused. What goals? 

Product Analytics Tools for conversion rate optimization

1. Set up a goals and metrics framework

Setting up a robust goal framework before embarking on the quest to improve conversion rates is a no-brainer – but only in hindsight. We cannot stress enough the fact that choosing the right goals and mapping them to the right metrics is what separates successful product teams from unsuccessful ones. 

To begin with, calculating CR is typically done for a specific period of time – say, monthly or quarterly. You can also choose to calculate the CR as a whole (all visitors to your website or app who signed up) or for specific pages only (for example, the landing page for a marketing campaign). 

2. Define how customers engage with your product

Next up, you need to define how customers engage with your product to complete the signup process. This gives you the specific steps (page visits or micro conversions) that you can then map onto funnels. When you have this visual representation of the journey, you can identify the drop-off points. That’s where you fail to meet the customers’ expectations (sad face). Have in mind that your potential customers don’t always take the same path to do something with your product – you need to have visibility into different scenarios with different funnels. But only knowing where they drop off won’t get you far!

To truly understand what’s happening, you need to take a walk in your customers’ shoes – understand what drives them to convert or what prevents them from converting, and why. Easier said than done, you say. 

One way to go about it is to ask them directly – with customer surveys. Not ideal, as designing efficient surveys takes a bit of knowledge in statistics and sociology (and even then, it’s not exactly a precise science). Customer surveys can be done in person – as part of a focus group or literally someone from the company reaching out to specific users, but this is expensive and time-consuming.

Another way is to use platforms that allow you to design a survey and send it out automatically to a specific group of people. Some platforms then give you an aggregated summary of the results or spit out the raw product data and let you handle it.

A better way to have a holistic view of what happened during drop-off sessions is using tagless autocapture – this type of data collection gives you details such as browser console calls, errors, warnings, mouse movements, and even dead and rage clicks – all of that without any manual instrumentation. Tagless autocapture gives you the opportunity to inspect specific user sessions, or scale up your reconnaissance activities with segments, and is indispensable for product development teams.

And yet another way to empathize with your customer base is to use session replay tools. They allow you to see exactly what happened from the customer’s perspective (in real time or in retrospect) and help you reach an assumption as to what might drive your customers to convert rather than drop off. Then, they help you test that assumption. Visualization of user sessions is a powerful tool to understand what, how and why something happened – a feat that no ordinary analytics tool can achieve.

3. Segment users

Next up, you would definitely want to segment users so you have a clearer idea of what is happening when different segments interact with your product. Slicing up your data in new ways might give you unexpected insights – and further ideas for optimization. Some basic examples of segments: by channel (where your visitors are coming from; for example Google organic search), by behavior (basic behaviors on your website or app; for example devices used – mobile or desktop), by event (what they did on the website; for example what they clicked on).

4. Test, validate assumptions, implement

Finally, when you have all of these data points and have formed an assumption on how to improve the conversion rate, you would want to test that assumption. A/B testing tools enter the stage and help you decide whether you were right. Some best practices for this type of testing include focusing on a single item at a time and always making sure the results are statistically relevant before deeming an experiment completed. What’s interesting about A/B testing is that sometimes it proves us completely wrong – and we have to learn to live with it… 

The best part of Conversion Rate Optimization is that it doesn’t end with a single improvement. Rather, successful companies repeat the process over and over again, and each time they find new ways to improve the customer experience. What can you test? Feature structure, design, copy, forms, navigation… Any element that you pinpoint as problematic or as an opportunity!

To wrap it up…

Conversion rate optimization is no easy task but when done correctly, it sets your business up for success. By tracking user behavior, you can make better, data-driven decisions to increase the conversion rate to boost revenue, provide a better user experience, and improve user retention – all of the hallmarks of a successful business.

To choose the right product analytics tools for CRO, you need to set up a robust goal framework before you start: map out the journey that users take to get the desired result and identify the drop-off points where your product fails to meet customer expectations. Your little helpers will be analytics tools such as customer surveys, session recordings, and session replay. As always, the best bet to get the best results is to take nothing for granted and keep your mind open to new opportunities!

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