MBA 741 - Study Guide 2

Describe the 3 stages of deriving insights

The process of deriving insights involves reviewing patterns, testing hypotheses, and ideally reporting findings in terms of financial impact. Communication plays a key role at each stage of this process.

  • Reviewing patterns

    • Is there a real problem? What can you notice from distribution of each variable, from trends, and from comparing test vs. control?

  • Testing Hypotheses

    • Determine relationship between business questions and hypotheses variable

  • Reporting findings

    • Determine $ impact of the identified issues or proven hypotheses

Describe the following metrics and how they are calculated

  • Profit = Revenue - Cost

  • Net Present Value (NPV) = PV - Cost = (Revenue_t - Cost_t) / (1+r)^t

    • Calculates the total current value of future cash flows, factoring in time value of money. Difference between the the PV of cash inflows and cost. positive NPV creates value.

  • Internal Rate of Return (IRR) - where NPV = 0 (Revenue_t - Cost_t) / (1+IRR)^t

    • IRR is the rate that money is compounding internally to the campaign or program

  • Payback

    • The time period needed for the revenue to become greater than the cost (breakeven)

  • Customer Lifetime Value (CLTV) = (Revenue_t - Cost_t) * p^t / (1+r)^t


Rules of Thumb for making decisions based on NPV, IRR, and Payback

NPV > 0, Good

IRR > r, Good

Short payback, Good


Describe general approaches to value-based management of customers based on their CLTV

Low/negative value customers: manage costs

High value customers: retain, cross-sell, and up-sell

Med value customers: turn them into high-value


Remember questions to ask for balancing decisions based on short and long term CLTV

What is the customer’s short-term profitability?

What is the customer’s risk?

What is the customer’s vulnerability to churn?

What is the customer’s long-term profitability?


Remember that presentations should be delivered in a manner that:

  • Engages the audience

  • Establishes your credibility

  • Call the decision makers to action

Describe:

  • Knowing your audience

    • Consider how analysis will be received based on the stakeholders’ personalities and backgrounds. Communicate in terms meaningful to them.

  • Delivering a narrative

    • Deliver a compelling narrative with new insights rather than summarizing data. Highlight the value of the recommendation for the organization

  • Calling to action

    • Compel decision making by explicitly recommending a course of action and articulating the outcomes that the action will lead to based on the analysis

  • Specifying the level of risk

    • One-way doors - meaning the decision cannot easily be reversed

    • Two-way doors - decisions can be more easily reversed over time

Describe the 7 potential components of an analytics presentation

  • Objective

    • describe the problem or goal of the analysis

  • Background

    • why is the problem occurring and why the problem is important for the business to solve

  • Scope

    • what is and what isn’t included in the analysis

  • Approach

    • steps to collecting data and what types of data are included and how we define our metrics

  • Recommendations

    • present stakeholders with recommendations of what we think they should do

  • Key insights

    • support the recommendations be implemented with key findings from our data

  • Next steps

    • how will recommendation be implemented and what comes next. what type of outcomes should the company expect

Remember having alignment between your message and…

  • Key business drivers (How am I doing?)

  • The business portfolio (What drives my business?)

  • Customers (“Who are my customers, and what are their needs?”)

Identify presentation pitfalls

  • Not identifying and aligning with stakeholders

  • Not tailoring your presentation

  • Not anticipating obvious questions

  • Not providing a synthesis

  • Not specifying success criteria

  • Not calling to action

Describe the characteristics of a data-driven leader

  • committed to learning about his/her customer and all dynamics that affect the customer to drive growth and innovation

  • inherently believes that data will help drive superior business decisions and outcomes

Describe the four components of analytics maturity

  • Leadership

  • Analytics talent

    • 3 key skills for analytics talent on the business side

      • Hands-on business analytics

      • Working effectively with analysts and data scientists

      • Basic understanding of predictive analytics

    • 4 key skills for analytics talent on the data side

      • Hands-on business analytics

      • Hands-on predictive analytics

      • SQL skills

      • Statistical skills

  • Decision making

    • 4 requirements for the decision-making process

      • Collect

      • Review

      • Prioritize

      • Execute

  • Data maturity

    • 4 components of data maturity

      • Infrastructure

      • Access

      • Usability

      • Instrumentation

Describe amplifying impact in the organization through…

  • Influencing

    • Vision - Define “that” which you want to drive the team toward

    • Plan - Lay out a plan detailing scope, stakeholders, resources, and timelines

    • Execute - Act according to the plan, and adjust in flight if required

    • Learn - Learn from the initiative and feed the results into the next project

  • Prioritization - involves understanding the investment (I) and returns (R) from each initiative and ranking the initiatives with the best ROI or highest R.

    • Form a core team with representation from different groups working on the initiative

    • Agree on prioritization metrics and criteria

    • Establish a process for accepting new ideas and then meet regularly and frequently to prioritize them

    • Adjust priorities based on new inputs

  • Coordination

    • Define a common learning agenda and have regular meetings or brown bag lunches to share roadmaps and knowledge

    • Prepare a weekly/monthly communication to update everyone on what is happening.