Amplitude : What Is the Purpose of Event Data?

This is part two of the five-part series on Customer Data. Here is partone.

Event data helps understand exactly how a product is being used and whether or not users perform critical actions and complete the tasks that will lead them to derive the product's core value-or in other words, reach the aha moment.

But it doesn't just end at the aha moment.

Once you know how users are using, or for that matter, not using your product, you will be able to identify points of friction and answer all types of questions that arise when trying to understand user behavior.

In essence, event data is crucial for teams to build better products and improve the overall customer experience.

The benefits of gathering event data are best understood by looking at the user journey. It can be broken down into three key stages that are core to every company's growth after acquiring users: activation, engagement, and retention.

Phase 1: activation

Before you start gathering event data, it is assumed that you are already acquiring some users or at least have a plan in place to do so. Without users, there will be no events to track as events take place when a user interacts with a product.

Once users start using your product, the goal should be to activate as many users as possible, as quickly as possible. The definition of activation differs from product to product-it is crucial to define what activation means for your business by specifying an activation event (users are considered activated once they perform this event).

Here are some common industry-specific activation events that can help you define your own:

• Ecommerce: Product Purchased
• Email marketing SaaS: Campaign Sent
• Ride-hailing: Ride Booked
• Music streaming: Song Played
• Video streaming: Video Watched

It helps to look at your activation event as a transaction that once completed, enables the user to derive the product's core value. Once your activation event is clearly defined, it is a real pleasure seeing the rate at which users complete that event, as well as the path that leads them to do so.

Side note: Product analytics solutions likeAmplitude make it really easy to view such metrics and understand the user journey viafunnel analysis.

Hereon, users are considered activated and the next phase is to keep them engaged so that they remain active and continue using your product. For freemium products, the next phase is critical in converting free users to paid ones.

While monetization is also an important stage in a company's growth, it has been excluded here since it often overlaps with one or more of the three key stages. For ecommerce and ride-hailing, monetization takes place at the time of activation while products that rely on advertising revenue monetize users at every stage.

Phase 2: engagement

Activating users is a big milestone as it validates the fact that there is a need for the product you are selling, and that your product is able to fulfill that need for real people.

However, a user never returning to your product after being activated is a cause for concern. Similarly, a user constantly returning to your product calls for celebration.

It is essential to keep users engaged not only to ensure that they keep coming back to your product but also to prompt users to expand their usage of the product. In the context of B2B SaaS, the most common and effective engagement channels are email and in-app messaging.

Event data enables you to engage users based on the actions they take and build personalized experiences across touchpoints. Additionally, event data also helps measure the impact of engagement activities-for example, whether or not users perform the desired actions after opening an email or viewing an in-app message.

Lifecycle emails

Triggering emails based on in-app activity is a proven way to keep users engaged throughout their lifecycle-hence the name "lifecycle emails."

For instance, if a user signs up for your product but does not perform the activation event within a specified timeframe, sending them a contextual email that is personalized for the segment the user belongs to and that nudges the user in the right direction can help bring them back to your product and perform the desired action.

Doing so on a consistent basis keeps users engaged and keeps bringing them back to your product.

Lifecycle emails, however, are not to be confused with email marketing which typically includes sending newsletters to a bunch of users or running drip campaigns that don't take user actions into account.

Emails that are triggered based on user actions or events are also more relevant compared to generic newsletters or even emails sent as part of drip campaigns that are not personalized based on user activity.

Further, you can combine user activity (event data) with user properties (entity data) to provide a highly personalized experience for different cohorts of users.

An ecommerce brand, for instance, can look at the product categories browsed by a set of users, and combine that information with their location to ensure that those users only receive messages about products that are actually available for them to purchase.

Sending event-based emails is one of the best ways to keep users engaged and doing it right can have a sizable impact on your business.

In-app messages

Relevant and timely in-app messages can be highly effective in educating and engaging users while they are already interacting with your product. In-app messages should almost always be triggered based on user actions (or events) and can be delivered via modals, tooltips, or a chat widget.

Also referred to as in-app experiences, these are highly effective for SaaS tools where users have to go through a series of steps in order to derive value from the product. Getting the user to the aha moment becomes a lot more effective by delivering contextual in-app messages based on who the user is and what they wish to achieve.

Measuring the efficacy of in-app experiences is also important and is done by setting up goals in the form of events that a user is expected to perform.

For instance, if a user does not perform the activation event even after going through a series of in-app messages that help them do just that, it indicates that the messages were not clear or relevant to that user and that there is scope for improvement.

On the other hand, if users are successfully activated and engage with your product via invitations, referrals, and feedback after receiving timely in-app messages prompting them to perform those actions, it is likely that these messages are working well, and doubling down on them is the way to go.

Users coming back to your product constantly is a sign of product-market fit, making the coast clear to double down on user acquisition. Users not coming back to your product can mean many things, one of which is poor user onboarding that can be fixed via contextual messages to help users get to the aha moment.

Phase 3: retention

Retention is one of the most important phases in a company's growth and is often the one that gets the least attention.

Users actively using a product is no guarantee that they will continue to do so. A desire to upgrade to a better product or service is only human-it doesn't signify that they're dissatisfied with what they use today. With software being in the end-user era, it is likely that your users will jump ship when they can afford to invest in a product that offers even a 1% improvement.

Similarly, a cheaper alternative that fulfills the needs of your users can easily lure them away.

Hence, in order to retain customers, you need to stay on top of how your customers use your product, what their preferences are, and what their evolving needs are.

This allows you to not only build relevant features that help with retention but also create complementary products to expand use cases and increase revenue without acquiring new users.

Like 'activation,' it is essential to define what 'retention' means for your business. Typically, users who perform the activation event on a regular basis are considered retained. Below are some hypothetical definitions of retention:

• Ecommerce: Product Purchased at leastonce a month
• Email marketing SaaS: Campaign Sent at least once a week
• Ride-hailing: Ride Booked at least twice a week
• Music streaming: Song Played at least twice a day
• Video streaming: Video Watched at least twice a week

It is important to keep in mind that every business is unique and there is no one-size-fits-all rule to define retention.

The average revenue per user (ARPU) also plays an important role in retention-businesses with low ARPU and those with very high ARPU can have very different definitions of retention even if they belong to the same industry.

For instance, a SaaS business with an ARPU of $100 per year will certainly not define retention the same way as another SaaS product that brings in $10K per year from each customer.

Getting started with event data

The objective of this guide was to provide a high-level overview of how gathering event data is essential for every stage of the customer lifecycle and hopefully, this has given you enough to think about and act upon.

It's good to bear in mind that event data has many other use cases and that it also serves as the foundation for all kinds of automation.

Now that the context has been set, see how event data looks inside of a product analytics platform or review our previous guide in this series.