How to use Hex Insights for root cause analysis
Great analysis captures not only trends, but also the drivers underpinning those trends. That’s hard. It takes experience, technical skills, opinions, and more.
At Differential, we tackle this problem by breaking growth into behavioral metrics. We do this through an analytical technique called decomposition (a type of root cause analysis). For instance, if we are trying to understand rated theo growth, we are interested in how much growth is driven by changes in ADT versus changes in the number of unique customers or in visit frequency.
Simply knowing how the metrics changed doesn’t tell us how much each change is worth—and that’s what decomposition does. (See about Decomposition Analysis below)
Hex Insights—our license-free Gen AI analytical tool—provides access to tools like decomposition out of the box. Check it out.
About Decomposition Analysis
For instance, let’s consider a fictitious casino where theo win YTD is down 11% or -$7.3m with the following metrics.
Example KPIs
The implications are different for each of the behaviors. Where should we focus? That is what a decomposition analysis tells us. In the above example, of the $7.3m decline:
-$5.3m is driven by the $26 reduction in ADT
-$3.9m is the result of the 2K person softness in the number of unique active patrons
Partially offset by the strength in which drover +$1.7m
We typically think of a key driver analysis as a bridge reconciling growth between two periods and this is often visualized in a waterfall chat.
Hex Insights does decomposition analysis out-of-the-box (see screen capture below).
Returning to our fictitious casino, these results are curious: often when we have a pull-back in unique patrons, ADT will actually increase as the business becomes more concentrated among avid gamblers, but this is not the case. A good example of this dynamic is the period immediately following COVID. Hex is opinionated and recommends the most insightful areas to probe (see below).
Root Cause / Decomposition analysis is but one of the tools Hex Insights can access. We have converted dozens of proven, road-tested casino specific analytical approaches into a repository which the Hex Insights LLM can utilize, merge, and augment. This is the first such repository in the world. Give it a try live.
We'll keep updating this blog - writing about capabilities and reasoning, not drop-downs and functionality. Keep an eye out: the next post covers trends, time-series analysis, and change points.
