This is what Amy wrote when her SaaS stopped growing – and it came as a total surprise to her:
“I own every analytics tool out there, and we use them all, but they’re all so opaque it wasn’t at all clear what was going on (or why)”
I’m really glad she shared that, because a lot of entrepreneurs have the same challenge.
You need a bunch of different analytics tools, and you’ll need to know what you can do with each. Otherwise you’ll be looking for insights where none can be found. Or live with a false security that everything is OK while things are getting worse.
So let’s take a look at different analytics tools and their purposes.
The business improvement steps
To master your business and drive it where you want, you do something like this:
- Understand what’s going on and where your business is heading. Now you know where to focus and what to improve to get the results you want
- Study or troubleshoot the thing you want to improve. Now you have ideas how to improve it
- Follow-up so that you’ll know if any improvement happened.
I think the number 3 is nicely covered with available tools, but numbers 1-2 are where people struggle. You’ll know you have this problem, when you feel that you need to guess things to improve your business.
But anyway, there are analytics tools to help you with each of these steps.
Three types of analytics tools
If you roughly group analytics tools by step, it looks like this:
The tools list gives just a couple of examples. In principle, if it tracks user events, it’s probably a troubleshooting tool. If it shows a lot of percentages, it’s probably a follow-up tool.
But none of the tools sits nicely in a single box.
For example KISSmetrics has a simple follow-up dashboard. BareMetrics used to have a view that helped to get a little overview on what’s happening (this don’t seem to be available anymore). FirstOfficer has metrics dashboard too.
Google Analytics could be put to any of these boxes. You can do pretty much anything with it, but unless you are just tracking visitor counts it can be pretty intimidating and has a huge learning curve.
Tools like BareMetrics, GeckoBoard and your own dashboard with several key percentage-based metrics are great for following up that you are making improvement.
If you have a customizable dashboard, you can show just one metric at a time – the one that you are currently trying to improve. That helps focusing on the right thing.
Following up improvements is so important that almost all analytics tools offer some type of dashboard.
What are follow-up tools bad at?
You can’t use follow-up tools to assess your business health and really understand what’s going on. Not unless you already have the big picture of your business in your head and can memorize all the figures that these metrics were calculated from and recall all the relationships between different metrics.
Some top CFOs can do actually that. I can’t do that. There are just too many figures to memorize.
If you try to use these tools as a canary in the coal mine, that won’t work either. They will show you when things are really wrong, but by then shit has already hit the fan.
Why? Because percentage-based metrics have no “this is ok”-range. It always depends on what your overall business situation is.
Let’s take an example:
￼13% of $10.000 is $1.300. But 13% of $100.000 is $13.000, and that might not be easy to replace with incoming customers. So especially if your business is growing fast, you can’t afford to miss up things like that.
Event-based SaaS analytics tools like KISSMetrics and MixPanel are great for troubleshooting and studying your customer-base. But they are a bit complex to get started with.
The most common mistake people do with these tools is to buy them too late.
These tools start to gather events when you buy them and install triggers to your code. They don’t have access to any data before that.
If you play the canary in the coal mine game mentioned previously, you’ll end up buying these tools 6-12 months too late. Then you waste valuable time waiting that you’ll have enough data to actually do something. In the meanwhile, all you can do is to just try out random things. You lose money and may miss your goals.
The gap in troubleshooting tools
There’s one thing that KISSmetrics and MixPanel don’t do well. If you don’t know a specific event or property that you are interested in, these tools don’t help you much. You’ll need guesswork to find out events that matter.
We are seriously lacking good customer success troubleshooting tools.
For example, you can easily find groups of interesting people with FirstOfficer.io, and it would be important to find out which properties and events are common to these people. But that’s not easily done with KISSmetrics or MixPanel.
And that’s why I listed Intercom.io, even if it’s a messaging tool. Intercom.io has an API that can be used to tag interesting people, and they have a view that shows several properties for several people at the same time.
But I haven’t yet found a tool that would take a list of customer emails and return a list of events that are common to given people. If you know a tool for that, please let me know!
Business health & overview tools
This is the area that lacks tools the most – which is why I built FirstOfficer.io.
If you want to understand what’s happening in your business and where things are going, the only other tool that I know of is SaaSOptics.
But if you take a look at their reports, you can easily see that they are targeting larger companies. So if you use accrual-basis accounting and have someone (a CFO maybe?) who can actually interpret SaaSOptics data for you, just go for it.
FirstOfficer.io doesn’t cover all the areas that SaaSOptics does, but my goal is that any entrepreneur could use it. No MBA/CFO skills needed. So I visualize just a couple of key things that no SaaS owner can afford to miss, but I visualize them well.
FirstOfficer.io is launching 28th of May. If you want to know more, please sign up to the FirstOfficer.io launch list.
And please share this article with your entrepreneur friends, because they are going to love this tool!