CBAP · Question #418
An insurance company wants to increase sales by 15% and customer retention by 10% within 1 calendar year. Various strategies to achieve this were considered and a restructure to the existing pricing m
The correct answer is C. Key performance indicators. Key performance indicators are the correct tool for tracking progress toward specific, quantifiable business goals such as a 15% sales increase and 10% retention improvement within a defined timeframe.
Question
An insurance company wants to increase sales by 15% and customer retention by 10% within 1 calendar year. Various strategies to achieve this were considered and a restructure to the existing pricing model is selected to help achieve these goals. A business analyst (BA) works with stakeholders such as actuaries, product specialists, sales staff, risk managers, and underwriters who agree to applying varying levels of discounts to customers based on:
- Total annual premium the customer has with the company (Financial worth)
- Time with the insurance company (Loyalty)
Various financial models are considered but the stakeholders agree that an initial applicable discount is determined based on the customer's overall premium:
The percentage of the maximum possible discount available to the customer is adjusted based on time with the company:
Which technique would the BA use to validate the desired outcomes?
Options
- ABusiness model canvas
- BDecision analysis
- CKey performance indicators
- DUse cases
How the community answered
(42 responses)- A5% (2)
- B14% (6)
- C79% (33)
- D2% (1)
Why each option
Key performance indicators are the correct tool for tracking progress toward specific, quantifiable business goals such as a 15% sales increase and 10% retention improvement within a defined timeframe.
A business model canvas is a strategic visualization tool used to design or describe a business model holistically, not to measure performance against specific numeric targets over time.
Decision analysis is used to evaluate and select among competing alternatives under uncertainty, not to monitor ongoing performance against pre-defined goals.
Key performance indicators (KPIs) are quantifiable measures tied directly to business objectives, making them ideal for monitoring whether the new pricing model is delivering the targeted 15% sales increase and 10% customer retention improvement. KPIs allow stakeholders to track progress continuously over the 1-year window and trigger corrective action if the discount model is not producing the expected results. They directly link the pricing change initiative to measurable business outcomes.
Use cases capture functional system requirements from a user-interaction perspective, not business performance metrics or goal attainment progress.
Concept tested: Key performance indicators for business goal tracking
Source: https://www.iiba.org/career-resources/a-business-analysis-body-of-knowledge/
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