Product vs data vs business analytics
Data analytics is the umbrella; product analytics and business analytics both sit under it. Product analytics studies how users behave inside the product. Business analytics answers questions about business objectives: revenue, markets and internal reporting.
Most founders use Data analyticsThe broad term: taking data, pulling insight out of it and understanding what is happening. Product analytics and business analytics both sit under it.Glossary, Product analyticsThe analysis of what users do inside your product. The test is whether you can point at a row of data and name the user who did it.Glossary and Business analyticsAnalytics answering questions about business objectives rather than user behaviour: revenue by country, cohorts against targets, reconciling revenue with finance data. It sits alongside product analytics under data analytics.Glossary to mean the same thing. They are three different things, and the difference shows up when you hire.
Product analytics
Where users drop off after they sign up. Which steps the people who stick around take that others skip. How users actually move through the product, compared with how you think they do.
Business analytics
Which countries revenue comes from. Which cities are doing well. Which cohorts are hitting the sales target. Reconciling revenue against the finance numbers.
What is product analytics?
Product analytics, as we covered in the last chapter, is the study of users and how they behave in your product. It answers questions like:
- Where are users dropping off after they sign up?
- Which steps do people who stick around take that others skip?
- How do users actually move through the product, compared to how we think they do?
What is business analytics?
Business analytics is any other analytics you do around business objectives:
- What countries are we getting revenue from?
- Which cities are doing well?
- Which countries, or which groups of customers (a cohort), are hitting our sales target?
Business analytics also covers internal numbers. Looking at revenue data, or reconciling revenue and financial data, which means checking that the numbers match across your billing tool, bank and books.
Most of that sits in business analytics, not product analytics.
Do product and business analytics need different skills?
Yes, even though in practice people move between them. Someone doing product analytics will end up doing business analytics some weeks, and a business analytics person will end up doing product analytics.
The work is still different. Product analytics needs someone who understands how users move through the product, what you can measure along the way, and how to read those numbers. Business analytics needs someone who can tie the numbers back to money, and who notices when two systems disagree about the same revenue.
| Product analytics | Business analytics | |
|---|---|---|
| Questions it answers | Where users drop off after sign-up; which steps the people who stick around take | Which countries revenue comes from; which cohorts hit the sales target; whether revenue matches the finance numbers |
| What the person needs | An understanding of how users move through the product, what you can measure along the way, and how to read those numbers | The ability to tie numbers back to money, and to notice when two systems disagree about the same revenue |
| Hire for it when the costly question is | "Where are users dropping off?" | "Are our revenue numbers right?" |
Which analyst should you hire?
Hire for the kind of analytics that is costing you more right now.
Most founders write one job description, call it "Data analystThe umbrella title for someone who analyses data. It says nothing about which kind: a strong data analyst can reconcile revenue perfectly and still be a weak product analyst, so hire for the kind of analytics you need.Glossary", and then wonder why the person who reconciles revenue perfectly can't tell them where users are dropping off.
Those are two different skill sets, and very few people are strong at both.
So is it "where are users dropping off?" or "are our revenue numbers right?" Hire for that one.
Common questions
What is the difference between product analytics and business analytics?
Product analytics studies user behaviour inside the product: drop-off, activation, feature use. Business analytics answers questions about business objectives: revenue by country, cohorts hitting sales targets, reconciling revenue with finance data. Both sit under data analytics.
Can a data analyst do product analytics?
Not automatically. A strong data analyst can be a weak product analyst, because product work needs an understanding of how users move through the product rather than only the ability to query data accurately.
What is data analytics?
Data analytics is the broad term: taking data, pulling insight out of it and understanding what is happening. Product analytics and business analytics both sit under it.
Should I hire a product analyst or a business analyst first?
Hire for the question that is costing you more right now. If it is where users are dropping off, you need product analytics skills; if it is whether your revenue numbers are right, you need business analytics skills. Very few people are strong at both.