The 3 Key Questions Framework

Transcription

1 The 3 Key Questions Framework Do you know the fundamental drivers of your business? Do you understand what drives growth for your business? Is your business fueled by acquisition or engagement or both? Do you understand your customers? And is the analytics within your company helping answer any of these questions for you? In my experience, analytics is sometimes an afterthought function rather than a core function as part of decision making. There is often disconnect between what models or dashboard an analyst is building and where the business is going. However, when companies and departments are able to align the two, they turn the business onto its head and give competitors a run for their money. So the question is how to go about leveraging analytics towards better business decisions. The answer: Ask 3 critical questions of your data and run your business with those insights. The questions are: How am I doing? What drives my business? Who are your customers and what are their needs? The Answers: The Three Pillar Analytics Approach Engage across and through your organization to fully understand and build the three pillars of analytics approach, which are: Measurement Framework to answer How am I doing? Portfolio Analysis to answer What drives my business? Customer Analysis to answer Who are your customers and what are their needs?

2 You may want to build these three pillars simultaneously, going from 20,000ft view level of gross intelligence across the three pillars and drilling down iteratively to derive maximum benefit from them; each pillar depends on the other two to provide the most useful insights into your business. Building Pillar I: Measurement Framework How is your company performing? What are the current strategic goals and priorities and what key metrics (KPI) do you use to measure success or failure towards those goals? Can you align these metrics with your stated priorities, goals and strategies? Useful steps you can take in establishing a measurement framework are: Top down Financial Mapping: You can take a look at your top down financials to establish metrics for measuring success in your various business units aligned all the way to top level goals and priorities. Balanced Score Card: You can also balance the financial inside-out view of the company with customer outside-in view of the company to layout the strategic roadmap

3 Align projects to Measurement Framework KPI/Metrics The measurement framework will establish sound and repeatable steps for evaluating your company s performance, both in relation to its competitors and to its own stated goals. Once you ve created the measurement framework, now you can choose the right projects (analytics or otherwise) which are likely going to move the KPIs. So for example, if you were a financial services company optimizing on transaction margin, as you build your top down financial map, you may find that one of the biggest driver of your business is current customer base, and that the customer churn rate is an issue; having so identified an area of focus, now if you build a churn predictive model and use that to effectively catch customers before they churn thereby lowering your churn rate, you have started leveraging data effectively to have the largest impact on your business for the resources and time spent. Building Pillar II: Portfolio Analysis What are your business dynamics? How do your products perform in the marketplace? What drives your business, and how does it relate to your company strategies and priorities? In analyzing your portfolio: Taking a careful look at your company s profit and loss statement, with an eye to analytics, may identify the strengths and weaknesses of your company, enabling you to build on the strengths, and work on reducing or eliminating the weaknesses. If you compare as many financial metrics related to your products as possible, you ll be able to create a series of 2 x 2 or 2 x 2 x 2 graphics to visualize how have your products been performing.

4 By understanding how your products interact with the marketplace and within your own business dynamic across multiple business metrics of growth, profitability, size, revenue, competitive benefit, customer value etc., you can see where your greatest growth potential lies and where the greatest danger of failure lurks.

5 Leverage insights, drive decisions using Portfolio Analysis Once you have an informed understanding of your portfolio, you ll be then be able leverage data to glean insights against your risk/opportunities and drive projects which help strengthen your portfolio. For example, by looking at products across growth and profit dynamics, you may find a product (Product B) with very high growth and high profit. Having thus identified your golden product, you can then build x-sell predictive model to effectively identify top customers from the customer base who are well suited and likely to buy the golden product and thereby grow your golden product base. You can also build a look-alike model to find external prospects best suited to your golden product thereby delivering not only incremental revenue for present but also incremental growth for future. Building Pillar III: Customer Analysis Who are your customers? What do they want? How do they behave? These are the crucial questions in your customer analysis. Customer attributes span several categories, including: Demographics: What are your customer demographics? How many are female? What s the average age? What percentage is married and has children? The relevant demographic metrics will depend on your specific product/service, i.e. gender may or may not matter, or all of your customers may even be of the same gender or age group, etc. Needs: Determine your customers needs. Do they have a feature need incremental to your current product? Do your customers need installation or operating support? Behaviors: You can look at how your customers behave. Do they pick up your product at a warehouse or retail outlet? How many are convenience seekers always going for fastest shipping etc.? Are they mail catalog subscribers? Once you start looking at your customer dimensions, you will find many insightful nuggets. With every new dimension, you will grow the matrix of information and it may soon like a big N X N where a lot of useful insight about your customer may be hidden because of the size of the matrix. Then you can use advance analytics techniques like clustering to segment your customer base into 5-7 meaningful segments so you can customize your product and messaging appropriately to your customer base. In this process, you can take several inputs to understand your customer need. Voice of Customer metrics like Opinion Lab Web data, customer service forms and survey as well as direct customer feedback from complaints and comments. (Text mine implicit needs and issues from this information.) Market research in the form of NPS (net promoter score) surveys, needs and feature surveys and product surveys. Competitive intelligence in the form of relative value proposition data, pricing etc. The implicit needs you ll derive from this analysis can help you fine tune your segment definitions and will help you to see if you re meeting your strategic goals as they relate to your customers.

6 Identify focus areas using Customer Analysis Once you ve established customer segmentation, you can use 2x2 S to identify areas of focus as well customize your offering, messaging, marketing on your top customers (current and future) vs. treating all alike.

7 Summary As you deepen your understanding of your business by building the three pillars, your new insights well help reveal opportunities to maximize the ROI and drive the business forward. By combining what you ve learned about your business, products and customers through data, you can make smarter decisions with greater predictability. Knowing how you want to grow your products or services, will help determine how you interact with your customers, and knowing how your customers want to interact with you will determine what kind of services you might offer in the future. Your measurement framework is ultimately what ties these elements together and allows you to understand how you are doing against your company s strategies and priorities. Executives high up in the organization know their Big KPIs, but the understanding of those KPI s gets diluted as it travels down the org chart. Furthermore, it is the understanding of drivers that finally uncover the levers to pull, to have the impact we desire on the KPIs. So in order to truly, start leveraging data to make wiser decisions, all employees be it marketing or sales, engineering or finance, analyst or product manager, need to be trained on how to ask the right questions of data in their daily work flow that will help make breakthrough insights needed to maximize ROI. About the Author: Piyanka Jain, President & CEO, Aryng Piyanka, founder of Aryng - a management consulting company focused on analytics, is a wellregarded industry thought leader in analytics, keynoting at business and analytics conferences including Predictive Analytics World, Data Science Summit, TDWI Big Data Conference, Google Analytics User Conference, Business Performance conference on data driven decision making in an organization. With her 15 years of experience in analytics, she has had 150M+ demonstrated impact on business. Her prior roles include the head of NA Business Analytics at PayPal and senior marketing analytics position with Adobe. About Aryng Aryng is a management consulting company singularly focused on Analytics. We believe - Data has power to transform our day-to-day product, marketing and operations decisions. The people, who are most well placed to extract insights from the data, are those who are working within the organization in the respective product, marketing, sales and operations role. 80% of business problems can be solved using simpler techniques, which can be learnt by business professionals with no statistical background and can be performed in Microsoft Excel.

8 Timely and relevant insight from data holds the key to drive up revenue and growth, and reduce cost and loss. Aryng is about building Organization s capability people, process, and tool, so the organizations can leverage data for smarter decision making. We do that through systematic analytics maturity assessment and then addressing the gaps through- 1. Analytics training for business professionals, 2. Setting up decision making processes, 3. Executing analytics projects while teaching and mentoring, 4. Executive coaching and recruiting 5. Enabling right data tools. Contact Aryng info@aryng.com Bowers Avenue, Suite 130, Santa Clara, CA 95054