7 benefits of customer analytics and how it can boost your business

This article guides you through seven benefits of collecting and analyzing customer analytics, including how to use these insights to understand your customers’ product experience (PX), with actionable tips on how you can make changes and updates to create user delight and drive business growth.

7 ways customer analytics help you build a user-centric product experience

A strong customer analytics process helps you understand who your customers are, how they behave, and how satisfied they are with your company or product experience.

Customer analytics are as important as financial reports in gauging the health of your business.

Let’s take a look at the most significant benefits of customer analytics to help you understand how to use them to drive business growth. Customer analytics help you:

1. Increase the efficiency of your marketing strategy

Paying close attention to the individual customer experience (CX) gives you marketing insights that take you beyond quantitative data. Diving deep into metrics like page views and time on page is great for spotting trends and identifying problem areas. 

But combining these statistics with qualitative data—such as customer feedback, interviews, or survey responses—helps you prioritize the most effective marketing tools and techniques.

Gathering quantitative and qualitative data helps your team figure out where to focus your customer analytics strategy efforts, and whether you need to trim unnecessary processes from your marketing budget or expand your customer reach more efficiently.

Use customer analytics software to capture accurate customer data and start identifying factors that will boost your company’s success.

2. Reduce customer churn

It’s no secret that retaining your current customers is a lot less costly than acquiring new ones. This is especially true for SaaS companies where subscription renewal is a significant contributor to sales numbers. Staying on top of customer analytics helps you reduce your customer churn rate and maintain a strong relationship with existing users.

Use Hotjar (that's us!) to deploy exit-intent Surveys and ask your customers why they're canceling their subscriptions or leaving for a competitor to eliminate your users' obstacles and frustration and ensure they're satisfied. Identifying common traits among customers who churn helps you identify users most at risk of leaving, so you can take extra steps to incentivize them to stay.

3. Increase sales

When you truly understand your customers and what motivates them, it's much easier to increase your sales.

Staying on top of key ecommerce customer analytics helps you understand whether your users are making purchases, to identify what's driving or preventing transactions, so you can validate product decisions and prioritize updates.

For example, an ecommerce company looking to drive web purchases could segment customer analytics like click-through rates, newsletter signups, and conversion rates by device. If the analytics show low rates of engagement and conversion for mobile users compared with desktop, it’s a good sign you need to optimize your mobile user experience (UX). 

Once customer analytics point you toward a potential issue or opportunity, use product experience insights to prioritize actions and fixes. If your ecommerce company has low conversions on mobile, for example, watch Hotjar Recordings, filtered by device type, to see exactly where your mobile users are struggling to navigate.

4. Lower customer acquisition cost

Understanding what drives your current users to make additional purchases or renew subscriptions helps you lower the acquisition cost of new customers. For example, if you’re designing a social media campaign to target new leads and drive traffic to your website, knowing what excites your users by measuring interactions, click-through rates, and more will help you create personalized and engaging posts.

Define your user pain points and the gaps other companies may have in their product experience. Then, track customer acquisition key performance indicators (KPIs), like impressions, conversion rate, and customer acquisition cost, in your analytics to better understand your ideal customer persona and discover how you can highlight your product solution and positioning to stand out in your industry.

5. Validate product updates and features

Monitoring customer analytics is a great way to decide which product updates and features to prioritize. For example, tracking the user flow and customer touchpoints—like call-to-action (CTA) buttons, landing pages, and points of exit—on your website helps you understand what your customers are hoping to find, so you can use your insights as the basis for a new navigation feature. Feature usage metrics also give you a sense of what your users are most interested in. 

It’s also important to simply ask your users what they’d like to see, using interviews, surveys, and feedback tools.

Gauging your users’ responses to potential features or mockups helps you find issues before launch and saves you valuable time by ensuring you don’t invest resources into features customers aren’t interested in.

If you’re releasing small bug fixes or cosmetic product updates when customers have indicated that they need major crash fixes or a new navigation feature, they might seek out a competitor that offers them a better user and product experience. Closely monitoring customer analytics—and going deeper with qualitative customer insights—helps you prioritize the updates and features your customers want the most.

6. Create a more personalized customer experience

Using customer analytics helps you discover which touchpoints in the customer experience are most important for personalized marketing and how you can implement these specialized interactions across the customer journey.

Creating personalized customer content can be tricky, so it’s important to have spot-on data that will effectively drive conversions and engagement.

When businesses fully embrace integrating customer analytics into decision-making and creating a personalized customer experience, they see an improvement in important KPIs, including:

• Overall customer satisfaction

• Customer loyalty

• Customer lifetime value

7. Better customer service

Great customer service is crucial to create satisfied and loyal users, brand credibility, and product advocacy. But how can you determine which areas of your customer service experience you need to improve? You guessed it—customer analytics.

Metrics like overall ratings, customer satisfaction scores (CSAT), customer retention rates (CRR), average support ticket time, and more helps your team determine where your support for your users is falling short.

Hotjar’s Feedback and Survey tools are a great way to ask users how they feel about your customer service: they help you identify common pain points you need to optimize.

Start implementing customer analytics processes

Strategically using customer analytics helps you build your brand, improve your reputation for great products and amazing service, and gain a loyal customer base.

The more you keep track of customer analytics and collect insights that help you understand your customers and their needs, the better an experience you create.