Today I want to talk about how to create an analytics strategy. I can already hear people clicking to exit their tabs or move away from their computers but don’t do it!
This is actually a crucial component and skipping it can have serious consequences. You see, analytics will be the backbone of almost everything that you do such as:
This means that having a solid analytics foundation matters. In this post, I want to help you understand how to create an analytics strategy even if you’re just getting started or don’t know much about the 100+ analytics tools out there.
Seriously, the image below shows just part of the potential tools that you could implement.
An analytics strategy will guide your efforts as you implement different tools and try to figure out how to use them.
I also want to help you figure what things you should focus on right now and what things you can ignore. This applies whether you’re using web analytics, mobile analytics or some other kind of analytics.
Let’s first start by seeing what a lack of an analytics strategy looks like.
Simply just “doing it” tends to be a bad idea when it comes to analytics. Choosing a tool because it seems to be “hot” or because “X company” uses it, is an even worse idea.
I was talking to a company a few months and I was trying to understand what their biggest challenges were when it came to analytics. They said this to me:
“[Our] biggest problems [are]: scattered data, having to do a lot in in excel, trouble generating daily visualizations of what is going on, whatever we build breaks.”
The last part of that quote is the most interesting: whatever we build breaks. Imagine spending your limited development time trying generate key reports but they keep breaking and you have to do it all over again.
This is an example of what happens when you don’t properly think through how you will use analytics and what you need to get there.
Once you’re growing or spending significant money in marketing, it can be 10x harder to figure it out. After all, you will need analytics reports yesterday and your team won’t have the time to calmly think through the problem.
Lucky for you, a small amount of time in the planning stages can save you a lot of headaches later on.
Even if you find yourself in the same situation as the company mentioned above, pausing and properly thinking through the problem is much better than continuing to struggle to get analytics right.
Let’s look at what you need to focus on when creating your analytics strategy.
Before we jump into this section, I just want to mention that I won’t be talking about any specific tools. If you’re interested in that, I have an article on the best tools for different company stages and even the best tools for SaaS companies.
During the planning stage of your analytic strategy, you need to be thinking of the fundamentals principles of how your company will use analytics.
If you ask most founders, marketers or developers what the end goal or outcome of analytics should be, they will all say reports or dashboards. This means you’re interested in seeing a small amount of KPIs or metrics in an easy to digest format.
It makes sense to start by figuring what metrics or reports matter to your company and work backwards to the implementation of specific tools. However, most companies do it the other way for some reason.
Once you figure out what metrics & reports are important then you can figure out what events or tools you need. This also means that you only implement what you need and nothing more.
This idea builds on the previous point of only implementing what you need. Instead of implementing 25 different events, focus on figuring out the top 5 events that you really need right now.
Figuring these top 5 events will be much easier once you know what reports & metrics you want to see on a regular basis (see idea #1).
Starting small also means that you can avoid making errors in how you name and structure your events. I always seeing companies that messed up the naming structure of their events and now have to sort through data that looks like this:
This is also a good time to talk about companies who don’t have a lot of data but are trying to implement every single tool under the sun.
In the early stages, you may be interested in seeing how well your marketing campaigns are performing, user retention and adoption but you simply don’t have enough data. If that sounds like your company, then take a tip from Heap Analytics who recommend this to early stage startups:
“The single most important tool at your disposal in an early stage product is individual user analysis: the process of monitoring user activity at a granular, individualized level.” – Source
This could be done with one tool and with a relatively straightforward setup. Keep it simple in the beginning.
The last thing you should consider right now is who will control your data. If you want to export your data and work with it in excel or in an SQL database, can you do that?
I had a client tell me this when we working through creating their analytics strategy:
“We don’t want to get locked into any tool and want to make releases as easy as possible.”
Most third party tools make it hard to export your data (especially all historical data) and this is something that can come back and bite you later on.
Related: If you’re not familiar with Segment.com, I recorded a 25 minute video that will give you a crash course in this tool. You will learn what Segment is and why your company should use this too alongside your analytics tools. You can
Once you have answers to these 3 ideas, you can move on to figuring out what tools you need and how to use them.
I also want to cover the things you can & should skip during this initial stage. These are some of the most common questions I hear from clients.
There’s endless possibilities in the world of analytics and you want to do everything. You want to set up everything to be perfect right now.
However, there are some things that just simply aren’t worth thinking about right now.
This is the opposite of the idea #2 above: starting small. Just because you can implement 25 events doesn’t mean you have to.
Most of the events won’t help you at all. If they aren’t needed to generate the reports & metrics that matter to you, then skip them.
The folks at 500 Startups had this to say about over tracking:
“Over-tracking makes you lose sight of what you really need to watch. The shape of your conversion funnel gets obscured by a flood of data points that don’t tell you the most meaningful and actionable things you need to know — why people visit but don’t register, why people register but don’t convert, and the biggest opportunities to dial down churn.” – Source
Related: The best way to think through your analytics events is to use an event tracking plan. You can download the same tracking plan that I use with my own clients.
The second thing that I see startups waste a lot of time is in trying to choose the best tools possible. This is especially hard since a lot of tools out there are pretty similar and do roughly the same thing.
Instead, start with 1-2 tools that will you generate the reports & metrics that you’re interested in seeing (are you seeing a pattern here?). You can always add more tools and easily switch tools if you end using something like Segment.com.
There’s also something to be said about figuring out what a specific tool is good at. I had a client tell me this regarding choosing the best tools:
“We don’t know what tools are needed for what parts. Where does Google Analytics play a role, etc.”
This is a common problem and one that can be solved by talking to the sales team at a specific tool. They should be able to tell you the most common use cases and what their tool is designed for.
If they tell you that you can do anything with their tool, find another company.
This is one might be controversial to some companies. I get the importance of SQL and I think that most companies will eventually end up running all their analytics queries through a database but SQL isn’t relevant in the beginning stages.
Let’s look at a typical early stage startup. You have a few people in your development team and you have a few people in your marketing team. Odds are, most of your marketing people (and non-technical people) do not know how to use SQL. Maybe eventually all marketers will know how to use SQL but alas, not at your company right now.
However, you need to generate analytics reports. Should you figure out how to teach SQL to all of your company employees? Perhaps you should only hire marketers that know SQL? Or better yet, ask your developers to constantly run queries for you?
Related: If you’re interested in properly setting up Mixpanel, then I reccomend you check out a free video course that I created that will teach you everything you need to know about Mixpanel.
If you get the foundation right (see idea #3), moving from third party tools to SQL databases when the time is right shouldn’t be a complex problem.
Tools like Segment.com also make it easy to store your analytics data into a Redshift database which you can use once you’re ready to tackle more complex queries. This can give the best of both of worlds: third party tools for creating reports and long term storage of data to be queried through SQL.
However, in the meantime, stick to third party tools that can be easily learned by everyone inside your company.
As you develop your analytics strategy, you need to balance the need for perfection with what matters right now (reports & metrics).
You can still take some decisions that will lay the proper analytics foundation for your company without having to sacrifice the usefulness of analytics today.
I had a client recently describe this to me in the perfect words:
“We don’t need a full roll out but we do need a proper configuration for where we are right now [that] can also scale with us.”
I don’t think I can say it any better. Focus on getting your analytics to help you where you are right now while still thinking of how it will scale with your company.
One final point about Segment.com. This is one of the most popular tools out there and one that I hear a lot from my clients. It is so popular that I created a short video explaining what Segment and what role it can play within your analytics strategy.
This video will popular questions like:
To access this free video, simply click the image below:
Let me know what you think in the comments or message me @ugarteruben.