Six Steps for Answering Ad Hoc Business Questions with Analytics
Big data and analytics are critical in today’s competitive landscape. They deliver insights that guide organizations to make better business decisions, which boost revenue through streamlining operations, tracking performance, and improving the customer experience.
By strategically approaching ad hoc data analysis, you’ll be able to leverage the information, software, and services at your disposal to transform raw data into valuable insights for intelligent decision making.
Here are six steps analysts can follow to answer ad hoc business questions for data-driven answers:
1. Quantify the business question
Business questions are often vague or not fully defined from an analytics perspective. Take for example a question from an e-commerce retailer’s CMO – “Who are our best customers? How do we acquire more of them?”. This feels like a simple business question at first, but it isn’t fully defined. Let’s start breaking this down. What do we mean by “best customers”? It could mean several things from High Lifetime Value or Low Cost Per Acquisition to something completely non-monetary such as customers that engage most with our social content and are great influencers and brand builders for us. How we define “best customers” will then influence how we answer the question about acquiring more of them.
Before starting your analysis, come up with quantifiable definitions for the questions at hand and get alignment from the business on whether that’s the right/appropriate quantified interpretation of the question. Asking for the context behind the question will also help you come up with possible quantifiable definitions of the question.
2. Generate Hypotheses
Once you’ve clearly defined your specific business question, the common pitfall is to start “boiling the ocean”, gathering data you have, getting access to the data you don’t have and might need, and grind that into the hottest data science model in vogue. Even though that approach might get you to find some serendipitous insights, it’s neither the most scientific nor the most economical way to solve a problem. Use your domain expertise to generate hypotheses. Say the quantified business question is “How do we increase revenue by 10% year?”. You could hypothesize that it can be done by hiring more salespeople, spending more on marketing, doing more cross-selling or upselling, expanding into new markets and so on.
3. Determine the Analysis method
Once you have some hypotheses, you can select one or more analytical methods to test these hypotheses. Think about the desired output and actionability of it. Analytical methods could include any of the following and more,
- Predictive models
- A/B testing
- Time Series analysis
- Machine Learning techniques such as clustering, classification or NLP
During this phase, you will also want to answer questions around the type of data and metrics you will need for the analysis. A few questions to answer would be,
- What are different types of data that I need?
- What are the features I need in that data?
- How much data do I need to apply the desired analytical method?
- Are there any derived metrics and calculations I need to perform?
Being clear on these questions will help you validate your chosen method and adjust it promptly as you start discovering and exploring the available data. For instance, if a certain type of data isn’t available or if you don’t have enough historical data about something, the chosen analytical method may turn out to be ineffective.
4. Data Discovery and Preparation
With your ad hoc business question quantified, hypotheses generated and analytical method proposed, it is time to discover, collect, organize, and prepare your data.
Start by discovery of existing data sources within your organization. Explore where information is stored – within databases, in the cloud, or SaaS applications. There may be pain points you may have to tackle before being able to discover and explore all the data you need. e.g., your data sits in silos, you don’t know if the company even has certain data that you are looking for and you don’t know who to talk to about it, etc. It may take several days to discover and get access to all the data you need before you can start exploring it.
Once you’ve located and gained access to all the data you need, you will want to figure out the best way to start exploring and preparing the data for your analysis. Depending how centralized all the data is and what BI or Data Science tools it is accessible from, you may be able to start working with it right away or may have to go to the lengths of creating extracts from multiple systems and stitching everything together offline in excel or another tool.
In most organizations, depending on the degree of data silos and collaboration between teams, iterations between step 3 (Determine the Analysis method) and step 4 (Data Discovery and Preparation) can often consume a significant portion of your overall turnaround time for answering the business question.
5. Perform the Analysis
At this stage, you’re ready to take your final dataset and analyse it so you can start looking for answers to your business question. How you’ll do this will depend on the analysis method chosen and the relevant tools you have access to. You may want to use a business intelligence (BI) tool such as Tableau or Looker or a Data Science tool such as Jupyter Notebook for deeper statistical analysis or both. Your ability to seamlessly connect your final dataset to multiple tools will drive efficiency and reduce time to insights for agile data-driven decision making.
As you interpret data — or if the analysis hits a dead end — you may discover that you need to reconsider your earlier steps. You may need to rethink how data was collected and prepared, if any key factors were overlooked, or even revisit the applicability of your original framework to this specific business question.
Once again, the agility with which you can iterate between step 3 to step 5, will be driven by the degree of data silos, ability to collaborate and access to tools to work with the data.
6. Share Findings and Make Recommendations
Well done! If your data analysis holds up to the questions and hypotheses put forth in the earlier steps, you’re getting close to sharing your findings with business decision-makers. It’s now time to find a way to represent your findings in a consumable format.
If you are using a BI tool, you’ll have the ability to create dashboards with sophisticated visualization options that are easy-to-use and share. If not, you may need to create your own visualizations such as charts, graphs, maps, or other graphics in a presentation tool like Microsoft PowerPoint or Google Slides.
Regardless of what tool you use, it is critical to keep in mind the audience for your report so that you can provide relevant context and appropriate level of detail before making your recommendation. Depending on the role and level within the organization of your audience, you may need to make tradeoffs between technical depth of your analysis and strategic implications of the results and recommendations. While you may want to share specific details about the models, data prep, etc. the leader of your analytics team, you may want to only abstract out the key findings, implications and recommendations for the business decision-maker. Always keep in mind who you are presenting to and what is it that matters most to them.
Bringing it all together
While it is important to be able to answer business questions with data in the most comprehensive manner possible with actionable results and recommendations, it is just as or even more important to do so with extreme agility in today’s fast-changing business world. However, that is often not the case. Analytics professionals spend way too much time trying to find, access and prepare the data they need for the analysis, while working within data and organizational silos and in the absence of formal analytics knowledge management and collaboration. We haven’t talked about analytics knowledge management in this article, but you can read about it in-depth in our post about why analytics knowledge management matters.
At Neebo, we believe that analysts and data scientists should be able to answer business questions promptly and with ease to drive impactful business decisions. We do this by taking the hassle out of dealing with data silos, while enabling productive collaboration within and across analytics teams and with AI-based analytics knowledge management. Learn more about how you can go from data to insights faster than ever by scheduling a demo.