Understand KPI Changes with Driver Analysis

How many times have you reviewed a report and dashboard and wondered why a metric has gone up or down? Staying on top of your business key performance indicators (KPIs) is challenging. When metrics shift, it takes time, effort, and guesswork to figure out what might be driving changes in the business. This headache is exasperated when multiple teams are working to optimize the same performance metrics.

Driver analysis is a powerful type of analysis that can help you identify what factors are impacting your KPIs, either positively or negatively. In this blog, we’ll cover what driver analysis is, the benefits and challenges of it, and how it can be automated with AnswerRocket.

What is Driver Analysis?

Driver analysis is a statistical technique used to identify the key factors that influence a particular outcome. In the context of business, it is often used to identify the factors that drive KPIs such as customer satisfaction, revenue, or profitability.

Driver analysis typically involves a three-step process:

  1. Data collection: The first step in driver analysis is to collect data on a range of variables that could potentially impact the outcome of interest. This might involve surveying customers, analyzing sales data, or conducting market research.
  2. Statistical analysis: Once the data is collected, statistical analysis is used to determine which variables have the greatest impact on the outcome of interest. This might involve running a regression analysis to identify the strength of the relationship between each variable and the outcome.
  3. Actionable insights: The final step in driver analysis is to use the insights gained from the statistical analysis to inform business decisions. This might involve optimizing marketing campaigns, improving product features, or making changes to the customer experience.

Benefits of Driver Analysis

Driver analysis can help businesses optimize their performance in a number of ways:

  • Targeted decision-making: By identifying the key drivers of success, businesses can make more informed decisions about where to focus their efforts. For example, if customer satisfaction is identified as a key driver, businesses can invest in initiatives that improve the customer experience.
  • Optimization of marketing efforts: Driver analysis can help businesses identify the marketing campaigns and strategies that are most effective at driving customer engagement and revenue. This allows businesses to allocate resources more efficiently and optimize their marketing spend.
  • Product optimization: By identifying the product features that have the greatest impact on customer satisfaction or revenue, businesses can optimize their products to better meet the needs of their customers. This can help drive growth and profitability over the long-term.
  • Improved customer experience: Driver analysis can help businesses understand the factors that have the greatest impact on customer satisfaction, allowing them to optimize the customer experience and improve retention rates.

Challenges of Driver Analysis:

  • Access to the right data: Within an organization, teams are often working on a multitude of platforms, all with their own reporting tools and interfaces. The onus is on individuals to share data and make the connection of how it affects KPIs. 
  • Avoiding your own biases: It’s natural to lean on personal experiences and organizational habits when looking to data to glean insights. This is why an objective third party or tool can be useful in gaining a true understanding of what’s going on.
  • Finding time to analyze data: Many business teams are seeing decreased headcounts and increased expectations for delivering results. The need to “do more with less” lends itself to busier employees and longer days, leaving little time to dig into data. 
  • Identifying actionable insights: While it may be easy to see what’s changed, the challenge comes in identifying why something is up or down. Once you can identify the “why,” it’s much easier to take action to change or capitalize on a situation. 

Automate Driver Analysis with AnswerRocket

With AnswerRocket’s Driver Analysis, teams can easily track and understand why KPIs are changing—in seconds. The solution is designed for the end user who wants to monitor and understand business performance changes quickly. It’s perfect for answering the “what, where and why” questions that you may come across when analyzing your data. 

The KPI Dashboard

The Driver Analysis KPI Dashboard gives you a view of your key metrics at a glance, enabling you to quickly see what’s up, what’s down, and the WHY behind any changes.

Some of the types of metrics you can pull into a driver analysis dashboard:

Criteria that you can refine your data by includes:

  • Timeframe
  • Comparison period
  • Geography
  • Brand

Users are able to click on a KPI in the dashboard and quickly understand why something is happening.

AnswerRocket does the heavy lifting with standard business intelligence capabilities like:

  • What’s happening? 
  • What was it year over year?

It will also be running a trend analysis in the background, to see if changes are above or below where we expected. 

Users can also easily see pacing as it relates your targets and growth rate over time. 

If the selected KPI is dipping or spiking, then we get into the next piece of “why did that happen?”. Scroll down further and you’ll see what the Top Drivers of that change are.

AnswerRocket Highlights Top Drivers

The Top Drivers section of the KPI analysis shows what’s having the greatest impact at a glance. 

In the example below, we can quickly see, spelled out in simple terms, that mobile was the main driver of the increase in Gross Sales.

AnswerRocket also features:

  • Issues to Investigate

    Highlights things like device categories, source channels or campaigns that may not be performing up to par. Instead of guessing or searching around for a possible issue, users can focus their time and get to the root of a problem quickly.
  • On the Bright Side

    Highlights things like device categories, products or product categories that are performing better than expected. This information can help users understand if a recent investment like a mobile update, or marketing campaign focused on a certain item is paying off.

Drill down even further by switching from “Summary” to “Top Drivers” view and seeing additional details within each segment and subsegment. Details such as:

  • News 
  • Current Period
  • Comparison Period
  • Amount Change
  • Percent Change
  • Driver Impact 
  • Driver Rank

Normally, this analysis could take days or even WEEKS to complete.

In conclusion, driver analysis is an important aspect of data analysis that helps determine what segments are impacting your KPIs. While it can be time consuming, driver analysis offers benefits such as uncovering hidden information and providing value-focused insights. With the right tools and technology, it can be automated to minimize manual effort and generate useful results quickly. Whether you are trying to increase sales, optimize performance, or just make informed decisions about budgets, understanding the drivers behind your organization’s success is essential for any organization looking to evolve and iterate in the digital world.

With Driver Analysis from AnswerRocket, users get answers in seconds so they can take action quickly. These details help users respond swiftly to performance changes with insights that fuel growth.

Scroll to Top