Data analysts, how to build a performance analysis model?

In reality, many students' performance analysis is not smooth. Some just count the KPI every day, and some are simply used as a tool by others. If it is good, they will sing praises, and if it is not good, they will find excuses, which is completely useless. The author of the following article explains how to do performance analysis well. Let's take a look.

Performance analysis is the most important part of data analysis and is also the easiest to see results. Performance is the baton for the business department's actions and is what the leaders in the company care about most. If data analysis wants to attract the attention of leaders and drive business development, the fastest way to assist leaders in decision-making is through performance analysis.

However, in reality, many students do not do performance analysis well. Some just count the KPI every day, and some are simply used as a tool by others. If the performance is good, they will sing praises, and if the performance is not good, they will find excuses, which is completely useless. So how to do performance analysis well? Today, let's explain it systematically.

1. Common Mistakes in Performance Analysis There are three common schools of thought in performance analysis

1. Disassemble the delivery flow

More common in sales departments.

• The department leader throws down a target, such as "achieving a small goal of 100 million yuan"
• HR made a big banner with yellow characters on a red background and hung it on the office wall: "Everyone accelerate to 100 million, no matter your life, only performance!"
• Data analysts divide the 100 million into each person
• All in! Just do it!

Is this school of thought useful? Obviously not! This school of thought is the most widely used in the workplace, and is also the most widely criticized (as shown in the figure below).

2. Comprehensive Assessment Flow

More common in the operations department.

• At the beginning, the banner of "performance should be evaluated comprehensively, comprehensively and scientifically" was raised.
• There are a lot of evaluation indicators: DAU, conversion rate, average order value, satisfaction, and you can include them all.
• There are a lot of evaluation methods: AB test, natural growth rate, inactive growth rate, all of them can be used.
• Then start calculating! Which algorithm will give the best benefit? Which one should I use? Thank you.

Is this school of thought useful? It works well when the performance is good, and everyone turns a blind eye to it. But when the performance is poor, no matter how much you talk, if the main indicators are not met, it is poor! Finally, get out of here...

3. Look at the stream again

More common in product departments.

• "Let's do an AB test and see" is their motto
• What is the purpose of "running an AB test"? There are always big slogans, such as "improving experience" and "optimizing efficiency"
• As for how to quantify the slogan, we don’t have any goals in advance.
• In short, "you should try AB test" and calculate all kinds of indicators.
• Finally, report whichever indicator has improved the most, Oyeah!

This school of thought is what data analysts fear the most, because the analysis process is quite annoying! And the results of the analysis are not fixed, it all depends on the mood of the boss (as shown in the figure below).

Objectively speaking, if a company can achieve any one of the above three points, it is already quite good.

Other worse ones include:

• There is no quantifiable performance
• Performance target values ​​can be changed at will
• All they know is to pump up the blood and impose fancy punishments

I will not give examples one by one.

So, how to improve the above problems?

2. Ideas for building a performance analysis model

In essence, performance is the most powerful whip to drive business. But because it is a whip, it must be used with caution.

• If you are too rigid, you will force the frontline to rebel, only focusing on the results regardless of the cost.
• Being too lenient will encourage frontline fraud and try to cover up the truth.
• Simply whipping without providing methods will not only fail to restore performance, but also lead to public resentment.

This characteristic of needing to strike a balance requires that when setting performance goals, feasibility and rationality must be fully considered, so as to avoid the dilemma of "using all scientific methods to justify snap decisions."

Based on this, it is necessary to:

• Focus on a few core indicators
• Distinguish between aggressive indicators and protective indicators
• Combining goals and methods
• Monitoring results are synchronized with monitoring execution

Only in this way can performance goals be accurately set.

The specific operation is carried out in four steps.

1. Derive the main performance indicators

The derivation of main performance indicators follows three principles:

1. The main performance indicators must be derived from the overall strategy, which is the key to ensuring the implementation of core goals.
2. For the main performance indicators, generally the more the better (rather than just not less than XX), so that there will be driving force.
3. The number of main performance indicators should be streamlined. Too many large goals will inevitably lead to the dispersion of resources.

Because the overall strategy of many companies is actually a language description, such as "strive for a new round of financing" or "strive to be the first in the industry", the derivation process is actually the process of converting the language description into a mathematical description (as shown in the figure below).

2. Supplementary performance indicators

After the main indicator is determined, each department needs to undertake the sub-indicator. Due to the characteristics of departmental work, it is impossible for all departments to undertake the same indicator. Therefore, there are differences in the division of labor between departments in the implementation of the strategy. Therefore, the division of labor and indicator division should be carried out according to the positioning of each department in the strategy, which can effectively reduce the wrangling in the later stage (as shown in the figure below).

When accepting tasks, each department can add sub-indicators according to the nature of its work. Adding sub-indicators is generally: no less than XXX and other guarantee indicators. The purpose of adding sub-indicators is mainly to prevent the execution department from messing around and doing things that only care about quantity and not quality (as shown in the figure below).

3. Develop implementation strategies based on the gap between goals and current status

With the main indicators and sub-indicators, each department can formulate a department-level overall strategy based on the gap between the target and the current situation. The overall strategy is mainly to solve the problem of only cracking the whip but not providing methods. Although it is impossible to provide a specific solution, when setting goals, it is necessary to provide the three most needed things for the solution: funds, manpower, and technology.

As subordinates, what they fear is not that their superiors give them tasks, but that their superiors only give them tasks without any supporting support . Therefore, at the beginning, it is necessary to fully evaluate the execution capabilities of each department. And it is necessary to use the benchmarking method to conduct a hierarchical analysis of the execution capabilities of each department and distinguish the upper and lower limits of the capabilities of high-quality/low-quality business lines (as shown in the figure below).

With these supports, we can further distinguish whether to achieve the goal by increasing capital investment, improving technology, or increasing manpower to adopt the human sea tactics. Doing so will not only make the specified performance goals more feasible, but also provide important clues for subsequent performance tracking: whether key resources are in place.

If the key resources are not in place, it is useless to demand that the front line improve their execution capabilities.

If the key resources are in place but the goal still cannot be achieved, then see if it is a problem of execution or strategy.

4. Monitor execution progress & performance achievement

With sufficient preparation in the early stage, you can follow the instructions and monitor the execution effect during execution. Since sufficient work has been done in the early stage, it is very easy to monitor in the later stage. It is also very worry-free and labor-saving to analyze the performance achievement (as shown in the figure below).

3. Deeper Issues Behind Performance Analysis

Some students may be curious, since there is an ideal method, why are many companies still in a mess?

Because of the following four steps, each step tests different abilities:

1. What is being examined is the ability of the management team. The management team must have data-based thinking and data-based management capabilities. If they still stay at the past level of "drawing big pictures", "shouting slogans" and "pumping blood", they will not be able to do it.
2. What is being examined is the integrity of the management. The management must be willing to take responsibility, rather than trying to fish in troubled waters and shirk responsibility.
3. What is examined is the ability of the execution department. You need to have a sufficient analysis and accumulation of your current situation, possible methods, and industry practices in order to evaluate how many resources are needed and what needs to be done to succeed.
4. What we are investigating is the working atmosphere of the company. If the atmosphere is good, everyone will take the initiative to solve problems, and it will be easier to analyze them clearly. If they like to quarrel...

Because performance involves the distribution of benefits, there are many human interference factors, and it is normal for problems to occur. Students just need to combine their own company situation and try their best to do a better job. The number of students who can access high-level information may be limited, but most students can at least do the third step well, that is: based on their own department, evaluate clearly what the benchmark is and what the ROI level is.

Author: Down-to-earth Teacher Chen

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