Table of Contents
What is Growth Analytics?
Growth analytics refers to the systematic, computational analysis of a company’s growth efforts, using data to inform decisions and strategies aimed at improving various aspects of business performance. It encompasses a wide range of activities and metrics, including user acquisition, retention, engagement, revenue growth, market expansion, and product development.
Broadly speaking, the growth analysis process involves the following steps:
- Gathering data from various sources, like website traffic, customer interactions, sales performance, social media metrics, or customer engagement with your product
- Defining and tracking KPIs (e.g., CLV, CAC, conversion rate, churn rate)
- Segmenting data (e.g., by customer type, product line, geographic location) to identify patterns, trends, and insights
- Using statistical models and machine learning algorithms to predict future growth based on historical data
- Systematically testing different strategies and tactics (marketing messages, sales frameworks, product features, pricing strategies) to see what hits
- Communicating insights to stakeholders across the organization
- Translating your findings and analysis into actionable recommendations
There are several types of analytics your company will focus on — product, pricing, sales, marketing customer success, the list goes on and on. What separates growth analytics from the rest is its approach. It looks at all of these pillars and defines the metrics and processes that connect the dots between them.
While it has numerous different applications throughout your organization, the ultimate goal is about the same: drive sustainable business growth through data-driven decision-making.
- Business growth analytics
- Growth data analytics
- Marketing growth analytics
- Revenue growth analytics
- Sales growth analytics
Importance of Measuring and Analyzing Growth in Marketing and Sales
The main reason you’d want to measure and analyze business growth is because…well…you want to grow your business.
Beyond that, there are several reasons you’d want to prioritize growth analytics as a critical part of your marketing, sales, and product strategy:
Growth analytics empowers B2B firms with insights that illuminate the path to strategic decision-making. By analyzing trends, patterns, and outcomes, these firms can identify the most lucrative markets, optimize their sales and marketing strategies, conduct cost-benefit analyses, and allocate resources more effectively.
Customer Insights and Personalization
Understanding customer needs, behaviors, and preferences is particularly important in B2B relationships due to their often complex and bespoke nature. Tracking your growth metrics is what enables you to segment their customer base granularly. It helps them tailor their offerings and communications to match each customer’s specific requirements and misdirection costs.
Product Development and Innovation
Product innovation is the key business growth driver, and sales and marketing analytics provide the evidentiary backbone for it. By analyzing customer usage data, feedback, and market trends, B2B companies can identify gaps in their product offerings and prioritize new features or services that address customers’ actual needs.
The stakes in B2B transactions are high — 5-, 6-, and 7-figure deals are the norm. Analysis is what helps high-level decision-makers consider potential risks in market trends, customer behavior, and operational performance. It’s the starting point for proactively mitigating certain risks and financially preparing for others.
Staying ahead means not just keeping pace with industry trends but anticipating and shaping them. Growth analytics gives firms the foresight to identify emerging opportunities and threats. It enables them to pivot strategies, create a product differentiation strategy, and enter new markets ahead of competitors.
Efficiency and Scalability
Analyzing marketing and sales growth helps decision-makers pinpoint inefficiencies and optimize processes across the organization. Using analytics to improve everything from production to delivery to customer service, B2B firms can create the momentum required to scale their operations more effectively and sustainably.
Benefits of Growth Analytics
In 2023, 91.9% of businesses achieved quantifiable growth from their investments in data collection and analysis. Heading into 2024, more than half (56%) of data leaders plan to increase their budgets for analytics initiatives.
Why are companies making growth analytics a priority, exactly?
Let’s look at some of the key benefits driving this trend:
1. Real-Time Financial Performance Monitoring
Analytics tools give you real-time access to all your financial data in a P&L format. Using them in addition to sales CRM data helps you make timely and informed decisions based on your company’s current and forecasted financial status.
2. Deep-Dive Customer Satisfaction and Engagement Insights
What separates growth analytics from sales or revenue analytics is it handles more than revenue tracking. Based on customer engagement with your product and marketing collateral (e.g., a newsletter or downloadable reports), advocacy (reviews, referrals, etc.), and CSAT surveys, its models are able to genuinely understand the health of your customer base.
3. Promo and Price Optimization
Pricing is arguably the most important aspect of your business strategy to test. You never know whether you’re leaving money on the table or if a different price point could bring in more customers.
- Should you switch your payment schedule from monthly to weekly to bring in customers with shorter-term demand?
- Are customers less price-sensitive than you initially imagined?
- Is your pricing structure too confusing, costing you conversions?
Zooming in on key metrics for growth at different periods shows you which offers delivered the most and least sales. Of course, there are other variables, like the marketing campaigns you ran at the time and the sales strategies you used. But this data is the starting point for understanding whether a price adjustment, promo, or discount benefitted you or not.
4. Ease of Implementation
Today’s analytics tools are about as easy to use as the possibly could be.
- They integrate with your databases, sales CRM, marketing automation tools, financial software, and customer data platform so you’re always looking at the most accurate data.
- AI and machine learning handle the predictive elements of growth and revenue analytics for you.
- Visualization is usually at least somewhat automatic.
- Advancements in technology mean they’re a lot cheaper than they used to be.
All these factors significantly reduce the number of barriers between your business and the ability to gain actionable insights from your data.
Essential Metrics for Growth Analysis
Really, there are dozens of different growth metrics you need to track if achieving your business goals is a priority.
We can divide them into nine categories:
1. Customer Acquisition Metrics
Across all industries, customer acquisition costs have risen ~60% over the last 5 years. A huge part of a sustainable growth strategy is managing your CAC, particularly in reference to the lifetime value of your average customer.
To analyze user acquisition, you’ll want to look in the following areas:
- Traffic sources. Which sales and marketing channels perform best? Paid ads, organic search, referrals, cold outreach, social media? Organic growth tactics cut your cost per lead by roughly half, but you can still garner a huge amount of valuable leads through paid channels and outbound sales.
- Marketing conversion rates. You’ll track these for each piece of marketing collateral. You want to know, for example, how many people sign up for your email newsletter from a lead capture form, or how many customers booked a demo after reading a blog post.
- Sales conversion rates. These are essentially the results of your sales and marketing efforts. In B2B sales, there are anywhere from dozens to hundreds of touchpoints in the conversion funnel. The most important conversions to track are leads generated, MQL-to-SQL, lead-to-opportunity, and your win rate.
- Freemium and free trial conversions. If you offer a free version of your product, how frequently users who take advantage of it convert to paying customers speaks volumes about its quality and the value of your paid offer.
You’ll also want to keep track of deal sizes, so you can measure the actual ROI of each piece of your sales and marketing mix. A 1% conversion rate on a blog post might not be very interesting. But it surely is if it played a role in landing you a $100,000 contract.
2. Activation Metrics
An activation metric measures the number of users who have reached certain milestones in their journey with your product, and how quickly they do so.
To ensure growth over time, pay close attention to:
- Time to value
- Activation rate
- Product/feature engagement
- Features used per account
- Onboarding completion rate
You can use these to (a) streamline the onboarding process and (b) add/remove features based on how valuable they are to your user base.
3. Retention Metrics
You’ll want to measure retention from two angles: customer and revenue retention.
- Customer retention tells you how many customers stick around over a given period (say, 12 months).
- Net revenue retention adds context to customer retention by showing you the actual monetary value of those retained customers.
- Customer and revenue churn are the inverses of customer and revenue retention. It’s possible to achieve net negative churn by growing revenue within current accounts fast enough to offset the financial impact of your churn.
Your ability to retain customers and revenue is the single biggest driver of your long-term growth. It’s also a telltale sign of product-market fit.
High churn typically means your product isn’t sticky enough and/or your positioning needs work. If you’re bleeding customers, you can’t grow sustainably.
It’s also a good idea to look at your CAC payback window. That way, you know how long you have to retain each customer (i.e., how long they have to generate revenue) before they become profitable for your business.
4. Revenue Metrics
Revenue analytics can help you optimize your pricing strategy, understand which offers drive the most sales, and where cross-sell and upsell opportunities lie.
- Average revenue per user (ARPU)
- Customer lifetime value (CLV)
- Revenue by channel/campaign
- Gross margin
- Contribution margin
These are the fundamental metrics behind your ability to grow revenue over time.
To understand profitability, you should also look at your LTV:CAC ratio, which tells you how much you’ll earn over the lifetime of each customer relative to what you spent acquiring them. Shoot for a ratio of 3:1.
5. Referral Metrics
Word-of-mouth is the most powerful form of marketing. B2B vendors with referral programs are twice as likely to have effective sales efforts.
The two most important figures to monitor with your referral program are referral traffic and conversion rates.
- Low referral traffic could indicate your referral program needs more visibility, incentives, or an easier process.
- Poor referral conversions normally underscore a problem with the quality of referrals or issues with sales qualification.
6. User Engagement Metrics
User engagement pertains to how much and how often people interact with your product. Some common user engagement metrics are:
- Daily/monthly active users
- Time spent in app
- Feature adoption
- Session length
You can improve these metrics by optimizing your user experience, adding guided in-app tours, sharing valuable product “hacks” with your email list and customer base, and promoting underused features.
7. Virality Metrics
Virality facilitates organic growth. The more people you have sharing your content, publishing their own about your product, and bringing other qualified buyers into your sales funnel, the better.
- Social media engagement
- Web content shares
- UGC volume and engagement
- Third-party customer reviews
- Viral coefficient (the average number of new users each current user refers)
- Qualitative social listening data
Calculate your total word-of-mouth impact by examining the ROI of all of your referral and virality metrics. For example, how much of a role do reviews and testimonials on third-party sites play in your overall win rate?
8. Customer Satisfaction Metrics
On its own, kowing how much of a problem customer churn is isn’t that helpful. You need to know where the issues are coming from and which segments of your customer base feel them the hardest.
- The Net Promoter Score (NPS) measures customer loyalty and satisfaction by asking current customers how likely (from 1-10) they are to recommend your product/service.
- Your customer health score tells you the probability of customers renewing or expanding their contracts.
- Reviews give you a better understanding of how current and past customers collectively feel about your product.
- Surveys can help you pinpoint exactly where you could do better.
9. Cost Metrics
All your growth initiatives would be for nothing if the revenue growth you achieve from them is met with a proportionally equal or greater cost increase. That’s what makes cost management the ultimate equalizer, as far as business health is concerned.
- Customer acquisition cost (CAC)
- Marketing and sales costs per channel
- Software costs
If you can increase your overall sales output without raising these figures too much, you’re in the green.
Best Practices for an Effective Growth Analytics Strategy
To develop an effective growth analytics strategy that stands out, consider these six best practices:
Embed analytics into daily workflows.
To make data-driven decisions, you need data that’s actually reliable. That starts with integration capabilities — throughout the customer journey, can you account for each touchpoint?
Use analytics to prompt actions, trigger alerts directly within the tools your team uses daily, and automate reporting to reduce the hours you spend manually analyzing and distributing data.
Set up custom, multi-touch revenue attribution to get a more accurate understanding of which marketing and sales initiatives create the most value for your organization.
Leverage predictive scenario modeling.
Hindsight is 20/20. The future? Much less so.
Beyond trends analyses and rear-facing metrics, your growth analytics program should also incorporate forward-looking analysis. Use historical data and AI-powered predictive models to simulate the outcomes of different strategies and high-level business decisions.
Cultivate a culture of curiosity and experimentation.
Test. Everything. Always.
Encourage teams to question existing assumptions and to regularly test hypotheses through controlled experiments. A/B test new growth tactics, product features, and marketing messages, then rigorously analyze the results to guide future strategies.
Adopt a multi-discinplinary approach.
Combine insights from fields like behavioral psychology and economics interpret data in a richer (more human) context. Understanding the “why” behind the numbers normally leads to more innovative growth strategies because they’re deeply rooted in human behavior and market dynamics.
Focus on micro-conversions.
While significant metrics like revenue and customer acquisition are important, paying attention to micro-conversions (smaller actions that lead to the main conversion goal) deepen your insights into the customer journey.
- How many people download the free version of your product?
- Who signs up for a webinar after reading an ebook?
- Which web pages to most buyers read before making a purchase?
- Where in the funnel do most leads drop off?
Optimizing for micro-conversions throughout the funnel will lead to a much better lead conversion rate overall.
Prioritize data privacy and ethical use.
According to a new Forbes study, 86% of Americans are more concerned with how companies use their data than they are with the state of the US economy. Considering what a big deal inflation is to the average US consumer, that’s pretty telling.
To improve data privacy and build consumer trust, consider:
- Collecting only the data you need to answer the questions you have
- Being clear and transparent about what data is collected, how it’s used (and not used), who processes it, and for how long
- Setting up regular reviews of your data analytics practices
- Using zero-party data (data that consumers willingly give to you) and first-party data (from your own apps, tools, and websites) instead of third-party data (data collected by someone else)
Also, if you operate in a highly regulated industry like FinTech or healthcare, ensure your software is 100% compliant with your industry’s data protection laws.
People Also Ask
What is the difference between product analytics and growth analytics?
Product analytics are focused solely on your product and how it performs, while growth analytics take a more holistic approach. They look at all the pillars of business growth, which include product analytics, but also cover marketing, sales, customer loyalty, and more.
What technology is used in growth analytics?
Data warehouses, customer data platforms (CDPs), web analytics tools, business intelligence (BI) tools, and predictive analytics software are all widely used in growth analytics. Integrators like marketing automation, CRM software, and your apps and websites are what feed data into your analytics program.