Selecting the right analytics tool for your business (part 1)

The Segment Growth Team on August 3rd 2018

This is our fifth post in a series about integration categories. Revisit our blog post “Choosing the right performance monitoring tool” here to read about our series objectives.

Understanding your customer data

The amount of customer data now available to companies has reached vast proportions, creating new opportunities to understand user behavior and anticipate their needs in increasingly sophisticated ways. Teams that make the most of this data have a significant competitive edge—and many would agree that enhancing their analytical capabilities is a top priority. However, every company has different analytics needs depending on its goals and life stage, so there’s no one-size-fits-all approach to designing the ideal analytics stack.

In the first part of this post, we’ll provide a framework for evaluating different analytics providers and highlight the top players in the market. From there, you’ll be able to consider different options in the context of your business’s specific needs and goals. Keep in mind that Segment supports more than 50 analytics tools, so we’ll only cover the tip of the iceberg here. To learn more about other analytics providers, check out the “Analytics” section of our catalog.

Basic requirements for digital analytics software

Before we dive in, let’s recap what digital analytics software does:

First, at the most basic level, it’s used for the measurement, collection, and analysis of user behavior within digital products. It works by installing a tracking library to record data from your website, mobile app or servers. Once installed, events such as a video view or an item added to a cart can be tracked. Common track events include visits, sessions, unique visitors, entry and exit points, and behavioral funnels.

Once tracked, product and analytics teams can use event tracking for insights on which features keep users engaged and identify potential friction or drop-off points in the user flow. Additionally, marketers can understand which channels drive the most (and the most valuable) visitors to optimize their marketing efforts.

Finally, digital analytics platforms help with user segmentation, customer lifecycle funnels, A/B testing, and automating messaging.

Developing your criteria

If you’re just getting started with analytics or looking to improve your current system, there are quite a few factors to consider. We suggest starting with these two key dimensions:

#1 - What volume of data do you expect to track?

The amount of data that your company generates is an important factor in determining which vendor (or level of service) to choose. Many analytics providers offer tiered plans where the lower tiers, which are designed for startups and smaller mid-market companies, limit the number of monthly total users, user sessions, user actions, or web properties that can be tracked. Analytics providers geared toward enterprises accommodate much larger volumes of data and guarantee that it will be updated in real-time. Additionally, these enterprise providers, such as Adobe Analytics and Google Analytics 360, have been developing their machine learning capabilities to mine large datasets more quickly and effectively. They allow for much deeper customization, but might require developer support to achieve their full potential.

As one might expect, data volume is also a key price driver. While an enterprise solution with all the bells and whistles might sound desirable for a startup, it’s often not very practical. Smaller companies with only a few thousand users likely wouldn’t have datasets large enough to yield statistically significant analyses from these more sophisticated providers. They might be better served by a more plug-and-play analytics tool with out-of-the-box functionality that could be utilized quickly by a business or non-technical user.

With pricing as a factor, more sophisticated solutions start at approximately $30,000 per year, and they can stretch to well over $100,000. They require significant investment, both in the technology itself as well as in the in-house developer resources required to implement and maintain these more powerful tools.

#2 - From a data standpoint, how complex are the business questions you need to answer?

Next, you’ll want to think about your business’s specific tracking needs. Do you work for a lean startup that needs to focus on key engagement and retention metrics without being overwhelmed by extraneous data? Or, do you work for a mature company that has multiple teams with different needs and more nitty-gritty, complex questions like, “Which content is most successful at converting users who discovered our website by entering these specific keywords?”

While all analytics providers offer certain basic functionality, many have different specialty areas and are better at answering certain types of questions than others. For example, Adobe Analytics and Mixpanel offer advanced segmentation capabilities, including predictive analytics to identify users who are most likely to convert. Amplitude focuses on helping product teams enhance user experiences and increase retention. Woopra maps user journeys at the individual level and, with its live chat integrations, can answer questions like, “How does live chat impact conversion rates?” Think about which questions are most important to your business and at what level of detail you need them answered.

Zoom with margin

You may also want to consider these questions:

  • Do you want the ability to run any analysis retroactively, without having to put the right set-up in place beforehand?

  • Do you have significant technical support available, or do you need a tool that’s relatively easy to implement and integrate with other services? Once the tool is up and running, will non-technical users need the ability to access data and run reports?

  • Would marketing automation features, such as behaviorally-triggered emails and in-app notifications, be an asset?

In part two of this post, we’ll profile these providers in more detail.

Considering an analytics tool? You may want to look into Segment — instead of implementing each tool individually, you can use Segment to collect customer data with a single API. From there we automatically transform the data and send it out to any tools your team uses. Segment currently integrates with more than 200 tools—check out our full catalog or request a demo to learn more.

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