What are Customer Analytics and their Types

Harry McKay
min read
March 9, 2023

Why has your customer churn rate gone up?

What went wrong and where?

Just like Hansel and Gretel left behind a trail of breadcrumbs to get back home, your customers leave a trail too. All you need to do is follow the track and understand what made them take action.

Customer analytics can help you walk in your customers' footsteps and identify what they do, how they engage when they leave, at what point, and more.

Engaging with customer data enables you to paint a clear picture of your customers, and thus, you can make better business decisions.

That’s not all! Customer analytics has so much to offer.

Read on to know!

What is Customer Analytics?

Customer analytics captures and analyzes customer data across multiple channels to derive insights and make better-informed decisions. These analytics also help to build improved strategies, products, and services that boost customer engagement and satisfaction.  

Customer analytics involves data collection, segmentation, modeling, visualization, and more. It is often performed using software that tracks user behavior and analyzes them to offer insights. Companies use these insights to power marketing, sales, and product development efforts.

Importance of Customer Analytics

According to Oberlo, 81% of consumers say a positive customer service experience increases their chances of purchasing another. And customer analytics is what you need to offer customers a quality experience.

Moreover, Mckinsey’s reports say that the companies that use customer analytics are 2.6 times more likely to experience a massively high ROI than their competitors.

Customer analytics provides a peek into customer behavior and offers valuable insights to guide your planning and analysis.

For example, incorporating an interactive product walkthrough for new customers will allow you to analyze their interaction with your product. As a result, you can improve your pricing strategy, marketing campaigns, and other processes based on understanding customer behavior.

Here are three reasons why customer analytics is the need of the hour.

🤝Customer Acquisition

There’s no business without customers. So, gaining customers and expanding your customer base is the foremost concern. Customer analytics gives you insights into customer behavior, buying patterns, and online interactions, based on which you can develop effective marketing strategies, personalize campaigns and attract more customers.

💰Customer Satisfaction and Retention

Impressing customers is no big deal if you use customer analytics. Study, analyze, and understand your customers' likes and dislikes through predictive customer analytics and do what makes them happy. Higher customer satisfaction better retention!

One of the best customer analytics examples is how Netflix uses it for retention.

Netflix probably understands you better than anyone else in your life! 😐

The global streaming service, with over 130 subscribers across countries, gathers a wide range of customer data to understand the pulse of its audience. Netflix knows what type of shows you watch, what you’re currently watching, and for how long. It also knows when you switch to something else. That’s exactly how Netflix recommends the perfect shows and doesn’t let its subscribers leave. Ever.

📊Low Costs, High Revenue

What can help you reduce customer acquisition costs? High repeat customer rates, purchase frequencies, and average order values.

Since customer analytics can ensure better satisfaction and customer loyalty and help in selective targeting, it can also guarantee lower acquisition costs. Therefore, you can improve your revenue with low costs and better strategies.

That was enough about the importance of customer analytics! Now let’s look at the types of customer analytics you can play with.

Customer Analytics Types

Without understanding customer analytics in detail, one’s condition might be somewhat similar to the above illustration😉

So, let’s get right into understanding the customer analytics types.

1. Segmentation Analytics

Your target market is most likely made up of several customers that have different choices in different things. Therefore, using the same marketing strategy for all of them doesn’t make sense.

Segmentation analytics lets you learn about and group your target audience based on their characteristics. Thus, you can tailor specific messages, campaigns, and content that cater to different customer segments.  

This customer analytics type also enables companies to identify emerging customer clusters and helps them understand specific buying behaviors, online interactions, and motivations.

As you incorporate segmentation analytics in your business, your marketing teams can discover new ways to impress each customer segment, increasing their satisfaction and retention.

2. Customer Acquisition Analytics

Do you have a customer acquisition strategy? Of course, you do.

Around 44% of companies consider customer acquisition the most important business goal.

Customer acquisition analytics measure the effectiveness of your strategy in acquiring the best-fit customers. It tells you whether or not your pricey campaigns work and whether the new customers you attract are an excellent match to your ideal customer profile.

With customer acquisition analytics, you can find out the cost per lead you incur and also try to reduce it. You can also compare leads generated from different campaigns to pick the strongest and high-potential ones.  

3. Customer Engagement Analytics

Customer engagement analytics is what you need to follow customer-brand interactions, that is, their online behavior.

With this customer analytics type, you can track user engagement - what ads prospective customers click on, whether they read an email newsletter, respond to surveys, their social media activities, and more.

Customer engagement analytics measures the interaction between customers and brands. It tells you which campaigns are working well, what can be improved, obstacles coming in the way of product adoption, and what customers think about your services.

Moreover, customer engagement analytics can give you a 360-degree view of the customer journey. Thus, you can identify the touchpoints with personalization opportunities and offer a better customer experience.

Customer acquisition and engagement analytics can help you refine your GTM strategy and enhance personalized experiences.

4. Customer Satisfaction Analytics

Measure satisfaction with customer satisfaction analytics. Track their footprints on review sites, social media, in-app feedback, surveys, and more to know their level of satisfaction.

Customer satisfaction analytics enables you to measure and boost customers’ perceived brand value and, as a result, brand loyalty. It uses quantitative and qualitative data to provide a clear picture of customers' thoughts and feelings about your product and service. For example, you can use customer satisfaction analytics to see how well your customer resonated with your interactive product tour. Further, you can make personalized demos based on customer insights.

Once you get down to work with customer satisfaction analytics, follow the metrics. The insights will help you adjust your branding and support services and plan future strategies.

5. Customer Churn Analytics

With customer churn analytics, you can measure the average customer-brand relationship period, that is, for how long the customer has been sticking to the company.

High churn rates suggest customers are returning products, canceling subscriptions, and not making repurchases. Zendesk discovered that 66% of customers end their relationship with a brand due to poor customer service. So, monitoring churn rates and keeping customers happy is the key to a flourishing business.

Tracking customer churn analytics significantly impacts your bottom line because you investigate what went wrong as soon as you see the churn rate going upward. Immediately identifying the issues lets you act faster, address the mishaps, and make fresh efforts toward customer satisfaction. Moreover, with low churn rates, you can also identify your strengths and enhance them to retain customers.

6. Customer Lifetime Value Analytics

If you watch your customers closely, you’ll find two types of customers.

  • First, the ones buying your product once just to test it. They never come back.
  • Second, those who make repeat purchases.

Customer lifetime analytics enables you to understand how much an average customer spends (value) in their lifetime or tenure. In other words, it helps you identify the customers who are good for your company’s financial success.

With customer lifetime value analytics, you can gain insights to help you retarget customers and focus on the right customer acquisition and retention campaigns. Overall, it ensures you utilize your resources wisely and speed up your profit and revenue growth.

Also, check out: Best way to delight customers

How Customer Analytics Works?

When you work with customer analytics, here's a three-step plan to follow.

📈Collect Data – Get access to different marketing tools, CRMs, and other sources to collect customer data like demographics, social media/ online activities, buying patterns, purchase history, and more.

🗃️Organize – Choose a customer data platform to store and organize your data. Ensure all customer data is stored in one place for easy access.

📝Analyze – Feed the organized data in your chosen customer analytics tool (we’ve listed our top picks below!). Let the analytics tool do its work. Then, get the reports, derive insights, make data-driven decisions, and improve your buying process.

Customer analytics works best for tech B2B businesses or SaaS companies as it offers a complete view of how target customers interact with their products or solutions at both macro and micro levels.

At a macro level, customer analytics enables you to understand the prevailing consumer trends, like,

  • The best product features,
  • Where customers find value, and
  • At what point do customers leave and why.

At a micro level, customer analytics allows you to study and understand individual target buyers. You can use segmentation based on customer interests, behaviors, demographics/ firmographics (company size, job title, decision-making authority, etc.) to understand their unique buying journeys. The insights you get from micro-level analytics can be used by your sales reps to personalize and cater to each buyer persona.

Let’s look at a customer analytics example to understand how it works.

Sendible, a social media management tool helping brands and agencies manage their social channels, needed a thorough understanding of their on-site customer behavior – how customers arrive on the website and interact before opting for a free trial.

Then, the SaaS company considered Crazyegg (one of our top three customer analytics platforms) and achieved valuable insights into customer behavior. Crazyegg’s confetti report showed significant metrics like,

  • Individual website clicks
  • New vs. returning customers

This helped Sendible optimize its website experience for different customer segments. Apart from deeper customer insights, there were a few more benefits of using customer analytics,

  • 10+ hours saved per month
  • Identification of website readability issue for a Mozilla Firefox version.
  • Building of more informed and in-depth marketing strategy.

5 Customer Analytics Best Practices

What is customer analytics. Check ✅

Customer analytics types. Check ✅

How customer analytics works. Check ✅

Now, let’s go through a few best practices that can help you make the most out of customer analytics.

Use surveys. Use qualitative and quantitative surveys to evaluate and understand the customer-brand relationship and customer satisfaction. Customer feedback can also help you devise better market plans.

Identify trends. One of the best practices of customer analytics is to note the trends in big data and analyze customers’ online behavior to market strategies and boost sales.

Keep your goals clear. Why are you conducting an analysis? Before you start, list the goals you want to achieve – customer retention, branding, selling a more specific product, increasing sales team efficiency, or acquiring new customers.

Manage customer data well. Clean and consolidate the collected customer data into a central platform before you start analyzing them. It is easier to mine data from a single source for actionable insights.

Draw data-backed conclusions. Make sure to use the findings of the analysis to make informed business decisions. Let these decisions be calculative and fully backed by data instead of being predictive.

3 Best Customer Analytics Tools

You need the best customer analytics tools for your business to work with customer analytics and leverage it for maximum benefits. Here are our top three picks.

1. Mixpanel

Mixpanel is a behavioral customer analytics platform with over 950 reviews and 4.5 ratings on G2. The tool helps you understand customer interactions with your brand. For example, you can get insights into how potential customers interact with your product and funnel content, which features they use the most, who uses the product most frequently, and more.

This customer analytics tool gives you an in-depth view of customer behavior, enabling you to improve your sales processes. Thus, you can analyze, measure, and use analytics reports to improve your customer experience.

Key features

  • A/B testing
  • KPIs and trends identification
  • Easy integrations and flexible KPIs
  • Real-time reporting
  • Limitless customer segmentation and user-level analytics.


  • Free plan
  • Growth plan - Starting at $25/month
  • Enterprise plan – Contact sales for custom quotes.

2. Crazyegg

Crazyegg is one of the most popular and fantastic customer analytics tools. Its key highlight is the heatmapping feature, which tells how a user behaves on specific web pages. Further, the tool lets you identify the website areas that have the most clicks, the most-visited pages and posts, how far the user scrolls, and when they leave.

The insights from this customer analytics platform can help you optimize your website. With an in-built A/B testing feature, you can also use Crazyegg to test different website layouts and experiment with different elements to see what works best for users.

Key features

  • Heatmaps
  • Recordings of user interaction on the website
  • Website traffic analysis
  • Tracking JavaScript errors


  • 30-day free trial
  • Basic- $29/month
  • Standard - $49/month
  • Plus - $99/month
  • Pro - $249/month
  • Enterprise – Build custom plans

3. Sprout Social

Sprout Social is the customer analytics platform to help you up your social media game. Using this tool, you can track everything on social media – customer interactions, responses, campaigns, and events.

With Sprout Social’s smart social inbox, you can track and respond to messages across social channels like Facebook, Instagram, Twitter, and LinkedIn.

Key features

  • Convert social media messages into reminders and tasks
  • Automate Facebook chats and Twitter DMs by setting up chatbots.
  • Get trend alerts
  • Perform sentiment analysis and optimize positioning.


  • 30-day free trial
  • Standard - $249 per month
  • Professional - $399 per month
  • Advanced - $499 per month
  • Enterprise – Contact for pricing.

Power-Up your Strategies with Customer Analytics

There’s only one way to accelerate your business growth: to know customers better. In fact, you need a profound understanding of your customers to give them the experience they are looking for. Hence, it’s time to build your customer analytics stack if you haven’t already done so.

Customer analytics can make a significant difference in your company’s ROI. Even though you might be doing pretty well without customer analytics, you can leave your competitors behind only by building a connection with your potential customers.


What does customer analytics involve?

Customer analytics involves processes to collect customer data, organize them, and analyze them to get a complete view of your customers – how they are, how they interact with your product, online behavior, purchase history, demographics/ firmographics, and more.

What is the purpose of customer analytics?

The purpose of customer analytics is to understand your target audience better with the help of data-derived insights. These insights, in turn, help businesses to build more profitable and personalized strategies that result in better customer experience, increased sales, and higher retention.

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