Business analysis: how to gain insight into business pain points

In business analysis, how can we effectively understand business pain points? How can we output high-quality analysis reports? In response to this problem, the author of this article provides four steps to break through. Let's take a look.

"When doing business analysis, you need to have insight into business pain points, not just list the indicators and achievement data!" This is what many companies require of data analysts. But what does it mean to have insight into business pain points? Let's explain it systematically today.

1. Wrong Demonstration

When it comes to "insight into pain points", many people instinctively list the target achievement rates, and then write "Department A's sales are seriously below target this month!" Some people will do a breakdown (as shown in the figure below) and say, "Because Department A does not have enough new users, it is recommended to increase the number of new users!" This can be considered as insight into the pain points.

This is indeed a pain point, but the problem is that it is nonsense, as if Department A does not want to increase the number of new users. This is just a superficial discussion of the results without discussing the business process, and it cannot touch the real pain point.

Others thought: Since we want to understand the business process, we might as well call the branch office/business department to ask. However, it would be better if we didn’t call. Once we called, we heard two completely different voices (as shown in the following figure):

So the question is: who do you believe? Once you choose to believe in one side, the other side will spare no effort to question and attack your data results. Once you choose a side, no one cares about your objectivity and scientificity.

So, what to do?

2. Ideas to break the impasse

From the error demonstration we can see that:

1. Current situation 1: It is not enough to just list the results indicators, you need to go deep into the business
2. Trouble 2: Don’t just listen to what the business says, you need a systematic analysis model
3. Quantifying business processes is key and may require collecting more data

The business pain points that people often talk about include multiple factors such as external environment, product quality, sales strategy, business execution, etc. If you want to sort out the clues, you need to do it step by step from macro to micro. At this time, the analysis framework can be divided into these four steps (as shown in the figure below).

1. Step 1: Macro-level problem identification

There is a fixed framework for macro-environment analysis (as shown in the figure below). Among the four factors, the impact of upstream is the easiest to confirm. You can judge whether costs are rising through supplier quotations + procurement bidding. Policy factors often do not fluctuate drastically in the short term and are easier to exclude.

The trouble is the factors of consumers and competitors. These two factors are often entangled together. It is difficult to judge whether consumers generally have no demand or competitors have snatched away the demand. It is also difficult to obtain accurate data of competitors. Therefore, it is necessary to make judgments based on multiple data sources, such as third-party company reports, brand rankings/reference sales given by e-commerce platforms, and some gray methods.

It is important to note that the analysis of macro issues requires independent output of results. Before any analysis is conducted, a judgment should be made and approved by management. This will block the opportunity for subsequent blame shifting. If it is really judged that there is a major problem in the macro environment, the whole company will work together to find a solution, rather than letting a department face it alone.

2. Step 2: Product Problem Identification

Note: Product problems are often mixed with price, promotion, market positioning, etc. For example, although our product quality is poor, the price is very, very low, and it can still sell well. In order to find the real problem, the hardware quality of the product is generally discussed separately from the price, promotion, publicity, etc. of the product. First, ensure that there is a clear positioning on the hardware, and then look at the strategy.

Here we need to collect information from multiple aspects:

1. Product development/commodity management colleagues provide professional judgment
2. Collect complaints, repairs and other information from customer service and after-sales to assist in judgment
3. Combine user surveys of R&D/marketing departments to understand users’ real needs

It is only after verification from multiple aspects that a conclusion can be drawn, and in particular, it is important to avoid "self-satisfaction with functions": manufacturers think that a function has a good selling point, but in fact users do not like it.

3. Step 3: Identification of strategic issues

Strategic issues involve price, promotion, channel, promotion method and other aspects. Unlike products that are rarely changed once they are finalized, strategies are often adjusted, and there are often innovations in specific promotion forms. Therefore, if you want to analyze whether there is a problem with the strategy, you need to make a clear quantitative description of the strategy. Here you can use the people-goods-field model, for example:

1. The strategic direction is: expansion, maintenance, contraction
2. The strategic focus is: channels, customers, and products
3. In terms of promotion channels: number of channels, number of delivery times, delivery form
4. On customers: topics that attract customers, marketing methods, and marketing efforts
5. In terms of products: focus on functional advantages and price advantages

Under the same strategy, there are often a series of specific implementation activities, and each activity will be slightly different. Therefore, when compiling an analysis table, it is necessary to focus on the same goal and record the evolution and actual results of previous activities in the business, so that it is easier to analyze whether the strategy is not working or the execution is not in place.

Strategic issues are generally discussed before business execution. If the wrong channel is chosen, or the preferential scheme offered is obviously weaker than that of competitors, it will be difficult for the front line to sell products no matter how hard they try.

4. Step 4: Business Problem Identification

When analyzing business execution, the best way is to use benchmark analysis. By setting a benchmark and comparing it with the benchmark to find the gap, you can effectively avoid doubts such as "If you can do it, then do it. If you can't do it, don't bother."

It should be noted that:

1. The benchmark itself should not be based on "performance", but should comprehensively assess factors such as revenue, cost, and collection, to avoid excessive focus on one indicator at the expense of other indicators.
2. Benchmarks should be divided into different levels. Benchmarks should be selected from all business lines, and each business line should find its own small benchmark. This will make it easier for the front line to "learn from the people around them" and achieve gradual iteration.
3. The key is the replicability of the benchmark. If the benchmark is only successful in a specific time period and requires specific resources, it is not a replicable benchmark. If the benchmark is only excellent in the short term and cannot be sustained in the long term, then the strategy must be rethought.

Only when the benchmark is highly replicable will the business side be advised to copy the benchmark practices.

• If you find that the benchmark can only be successful in a specific time period and the window period has been missed, you need to suggest that the business department organize a discussion and find new countermeasures for the current situation.
• If it is found that the benchmark requires special resources (people with special attributes, special geographical locations, etc.) to succeed, it is necessary to advise the business department to re-evaluate the input-output situation and allocate investment to obtain high-quality resources.
• If you find that the benchmark was successful by chance and is difficult to replicate continuously, you need to go back to the strategic level and consider whether to create a stable benchmark; or use the horse racing model and place multiple bets to see which business will succeed.

In short, it is impossible to "want the horse to run and not eat grass at the same time". If you just keep saying "work as hard as you can until you die", then you should simply not do any analysis. It is this kind of detailed analysis that reflects the value of business analysis.

3. Summary

To summarize, in order to output high-quality analysis reports, people who do business analysis cannot just look at profit, revenue, and cost statements, and cannot just calculate year-on-year, month-on-month, KPI completion ratio, and time progress ratio.

First: it is necessary to collect extensive external information and understand the market trend;

Secondly: You need to collaborate with product/marketing/operations colleagues to understand specific strategies;

Again: It is necessary to classify and grade the front-line, set benchmarks, and deconstruct benchmark practices.

In this way, when you encounter a problem, you can judge in order:

1. Is it a macro problem?
2. Is there something wrong with the product/strategy?
3. Is there really a problem with the front-line execution?

Author: Down-to-earth Teacher Chen

WeChat public account: Down-to-earth Teacher Chen (ID: gh_abf29df6ada8)