Customer Analytics for Growth Hacking

Using Woopra - April 19th, 2013 by Natalie Issa.

If you’ve been around the tech industry the last couple years, you’ve heard a lot about growth hacking, or, the practice of finding innovative ways to accelerate the number of users for your product.

While the practice is often talked up to sound almost mystic, no growth hacker can bring you tens of thousands of customers with the wave of a magic wand. In reality, growth hacking requires quite a bit of analysis to deeply understand how customers use your product. As they say, you can’t improve what you don’t measure.

Your company may or may not have a designated growth hacking team, but the practice of understanding how customers use your product in order to drive growth is a crucial component for every business. Below, we outline a few of the growth hacker’s secret weapons.

Funnel Analysis

Spot & Optimize Key Problem Areas

A central part of a growth hacker’s job is discovering where and why you lose customers. Simply finding and optimizing one key area where you have a large drop off can have a ripple effect, leading to a major improvement in your overall conversion rate. But in order to do so, you have to first find the main problem areas so you know where to focus your efforts.

The best place to start is with Funnel Analytics. This report is built to show you exactly where you have the largest drop offs in your conversion funnel.

The example funnel below shows the conversion process for Facebook users. The conversion steps are:

  1. Complete sign up form
  2. Confirm email address
  3. Add 10 friends
  4. Complete 60% of profile

Facebook Sign Up Funnel

We can see from this funnel that there is a major drop off at the “add 10 friends” step. This is of course a critical requirement for a user to get value out of Facebook’s product as Facebook is essentially useless if you aren’t connected to any friends.

Clearly, in this example, Facebook’s growth hacking efforts should be focused primarily on getting new users to add friends.

Learn more about how to build and optimize your onboarding funnel.

Find Your Best Performing Customer Segments

To get even more growth hacking insight, you can take a look at how different segments of customers move through your funnel. This will tell you which types of customers perform the best so that you can work on getting more of them to drive your growth.

Funnel Segments

In the second part of our Facebook example, we see that the three student segments greatly outperform the other segments when it comes to the “add 10 friends” step. Our conclusion makes sense as student users are most likely to quickly find their network on Facebook and add friends.

However, if we look more closely at the three student segments, we see that the elementary and high school students tend to struggle with the final step “complete 60% of profile”, while the university students convert very well here. What we can take away from this for growth hacking is that the elementary and high school student segments should be encouraged via UI/UX to add information to their profiles. We can also conclude that university students move through the funnel very well and are therefore a good segment to focus on to drive growth.

We also see that there is a very large number of sign ups among the “18-30 Non-Students”, however, they underperform at the “add 10 friends” step. For the purpose of growth hacking, we can conclude that adding features and UI/UX components that help users in this segment find their friends on Facebook will help convert more of them. The sheer number of users who sign up in this segment means that even a small improvement in the conversion will result in large gains.

Retention Analysis

Stay On Top of Customer Retention

No matter how many new customers you add, if you don’t retain existing customers, your growth will be slowed. You can fill a bucket faster than a sieve.

You need to understand if customers find your offerings valuable enough to continue using your service or purchasing from you. Retention reports help you get to the bottom of this by answering the question: for how long do my customers continue to come back?

You may be interested in knowing simply whether or not they continue to return, or you may want to know if they return and perform a specific action (such as make a repeat purchase or continue to upload files).

Let’s take a look at the retention report of an online meeting service. The report measures how long users continue to come back and host online meetings after they first sign up.

Online Meeting Retention

From the report, we can see that customers tend to use the product to host online meetings most 1, 3, and 4 weeks after sign up. By weeks 6 and 7, it starts to drop off, most likely because that is around the end of the free trial period.

Measure How Product Changes Affect Retention

A big part of growth hacking is understanding how product changes and new features influence product usage. By digging just a bit deeper into a retention report, you can get a good grasp of which changes created the most value for your customers.

In the second example from the online meeting company, we see from the report below that customers who signed up after December have shown better retention than those who signed up before that month. Knowing that the company launched a major product update at the end of December, the numbers indicate that customers responded to the change quite well.

Online Meeting Cohorts

Individual-Level Analysis

Watch & Learn in Real-Time

Often times watching how individual customers interact with your product is the fastest way to diagnose an issue or identify a useful feature. This level of granularity is a hallmark of customer analytics.

Customer Analytics Profile

For example, watching a customer as they navigate through your website in real-time can give you an instant sense of what features are “sticky”.

Do they quickly move through certain pages or features? That’s often an indication that the content there isn’t engaging to the user. On the other hand, if you see users spending a lot of time actively using a feature, that is generally an indication that the feature is valuable to them.

Answer Usability Questions

Watching users in real-time can be a more exploratory exercise, but you can also use it to answer specific questions. You can do this by looking for similarities in the behavior of individual users within a certain group.

For example, you can look at the past activity of several users who have been inactive for more than two weeks in order to uncover patterns in their behavior. Similarly, you can look at the customer profiles for several users who recently cancelled accounts, who are power users, or who failed to convert from your free trial in order to find common behavior that will serve as clues for your team.

Going back again to the Facebook example above, we can look at the activities of several users in the “Elementary Students” and “High School Students” segments who completed the “add 10 friends” step, but failed to complete the final “complete 60% of profile” step. By simply monitoring users in this group, we can quickly begin to uncover clues as to why they fail to complete the last step. Once we know why, we can find the appropriate solution and ultimately improve conversions for this segment.

As one Woopra client recently expressed, “we could run a full usability analysis, or we could just spend 5 minutes on Woopra.”

Disclaimer: Some of the examples above reflect stories from Woopra clients and have been included with the consent of those clients. Others are fictional examples used purely for illustrative purposes.

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