Strategy plan
ETHNICAL CASE STUDY – Diagnosing the Problem
APPROACH
With the newly defined problem statement, you now need to conduct a root cause analysis to understand why competition from BC2K’s new portal has eroded EthniCal sales, and therefore how to respond.
Is the CEO’s strong gut intuition correct that the issue has been caused by defection of Ethnical’s existing customers to BC2K? What other causes are there? What data is available to determine the root cause?
This exercise should be approached in two steps:
Step1: construct an issue tree which breaks down the issue (erosion of Ethnical revenues) into all possible drivers. If defection of existing customers is one explanation, what are some others?
Step 2: for each driver, identify the data you will need to confirm or rule out that factor as a possible cause. The company’s CEO and Head of Marketing currently receive a set of KPI’s to track sales trends and portal activity, which are shared with you. Is this sufficient to answer the questions, or do you need additional data?
AVAILABLE DATA
There is currently no analytics function at EthniCal and the only information is available from some basic KPI reporting that is done through their IT function. The IT team is largely focused on optimizing the user experience for web portal and mobile apps, and one person on the Ux team spends a portion of their time creating reports for the CEO and Head of Marketing.
The available data exists in siloes and it is inefficient and difficult to work with. Reporting is done by Jeff on the IT team, who is capable but spends most of his time doing manual work to clean up and organize the different datasets. The categories of data are:
User activity on web portal and mobile app
E-mail campaign delivery, open rates and click-throughs to web portal
Customer transaction logs
Loyalty program registrations and offer redemptions
While the information is rich and potentially insightful, there are some significant obstacles:
Datasets cannot be linked so there is no way to create a 360-degree view of the customer to connect interactions and behavior
KPIs are provided separately through the different systems/vendors in different formats, requiring manual effort and cutting/pasting to create one overall report for management
Customer transaction data is managed by a vendor who provides some basic information on customer counts and sales totals, but charges a very high premium (tens of thousands of dollars) for raw data extracts and ad-hoc analyses
The one dataset that is easily accessible is from the loyalty program, where the CEO’s attention has driven investments to store and access the data with the best technology. Customer-level data from the loyalty program can be easily pulled and explored, but is under-utilized.
REQUEST DENIED
After constructing your issue tree and reviewing the available data, you are concerned that it does not give you the information needed to diagnose the root cause of declining revenue. You approach the CEO (Sam) and Head of Marketing (Sherin) with a request to fund ad-hoc analyses of the customer transaction data.
In particular, you want to see how customer lifetime value has changed after competitor entry, and confirm that the sales decline is due to loss of existing customers as Sam believes. The vendor has estimated these analyses will cost $25K but you believe it is essential to solve the problem.
Sam is polite but firm in his answer. “We don’t need to spend all that money just to be told something we already know. I would rather spend it on retaining more customers. We know the losses are coming from an issue with loyalty. Please focus on analyzing the loyalty program data to help us understand how to improve retention!”
YOUR TASK
Develop an issue tree to show the possible causes of the sales decline
Leverage the information in the KPI report as best you can to diagnose the issue
