Root Cause Analysis (RCA)

Root Cause Analysis (RCA) Using Lumenore Ask Me

This use case demonstrates how to perform a Root Cause Analysis (RCA) using Lumenore’s AI-powered conversational analytics tool, Ask Me. Whether you’re a business analyst or a decision-maker, this step-by-step guide helps you identify the reasons behind performance dips and take targeted action.

To illustrate this, we’ll explore a real scenario from a Retail superstore, using their sales data to investigate why sales dropped across a region during a specific period.

How to do it?

Step 1: Framing the Problem

We started by asking a simple question in the Ask Me interface:

“Show sales by region”

To understand the reason behind the low sales, we triggered Lumenore’s RCA workflow by asking:

“Why sales low in South?”

Step 2: Guided RCA Workflow

The AI assistant launched an automated RCA process structured into four logical steps:

• Pick Date & Frequency – We chose “Order Date” as the time field and set the frequency to “Quarterly.”

Note: “AI will automatically suggest the most relevant date and frequency columns labeled ‘AUTO’ based on historical patterns and user preferences.

• Change Analysis – Tracked its change in sales quarter-over-quarter.
• Top Contributors – Identified which segments and factors contributed most to the decline.
• Drill-down – The AI suggested filters (like product, categories, customers, or channels) to explore deeper.

Step 3: Change Analysis

After selecting the time range, we noticed a sharp sales drop from Q1 to Q2-2024:

• Q1-2024 Sales: $118.9K
• Q2-2024 Sales: $72.1K

Note: To change the period, type the required time. The RCA analysis will automatically update to reflect the new date range.

Top contributing factors for the sales drop between Q1 & Q2-2024:

Interpretation

• Grant Thornton’s inactivity alone explains 21% of the sales drop. Losing such key customers can have a major impact.
• Technology category, medium-priority orders, and social media channels were key contributors to the drop.
• North Carolina’s steep decline (79%) shows potential regional issues.
• Machines underperformed severely — from $12.4K to just $423.

Step 4: Deep Dive on Key Filters

By filtering specifically for Category: Technology, we found:

• Sales in Q1–2024: $49.3K
• Sales in Q2–2024: $18.4K
• Total drop: –$30.9K (a decline of over 60%)

Factors Contributing to the drop in sales:

Interpretation

• Grant Thornton (a key customer) made no purchases in Q2–2024. That alone explains a big part of the revenue drop.
• Other drops occurred across key channels, customer segments, and high-ticket items like Machines.
• The fall wasn’t due to just one issue, its multi-dimensional, affecting logistics, customer type, channel, and geography.

Next, filter on Subcategory: Machines.

• Sales in Q1–2024: $12.4K
• Sales in Q2–2024: $423.9
• Total drop in sales: Over $11.9K

Factors Contributing to the Drop 

Interpretation

The sales drop was mainly because:

• A key customer (Grant Thornton) stopped buying.
• Sales through the Coupan site and using Same Day shipping were eliminated.
• The Corporate segment and North Carolina contributed heavily to sales in Q1, but not in Q2.

Filter: Compare with other measures

• Sales in Q1–2024: $12.4K
• Sales in Q2–2024: $423.9
• Change: -$12K+ (a 96.6%+ drop)

Step 6: Supporting Metrics & Correlation

Key KPIs

1. Shipping Cost Impact

• • Total Shipping Cost dropped: from $180K → $79K (down ~56%)
  • Average Shipping Cost per Order & Item also dropped by ~54%
  • Shipping Cost to Sales Ratio fell by 49%

Why this matters:

• • A sharp drop in shipping cost usually means fewer orders shipped, which directly impacts sales.
  • If fewer customers placed orders or opted for cheaper/slower shipping, it could suggest:
    • Less demand
    • Delivery/logistics issues
    • Change in customer preference (e.g., Same Day shipping fell to $0)

Conclusion: Lower shipping activity = lower product movement = lower sales.

2. Profit Impact

• • Net Profit dropped: $201K → $90K (down ~55%)
  • Overall Profit dropped: $204K → $91K

Why this matters:

• • Profit drop reflects either fewer sales, reduced margins, or both.
  • Lower profit means:
    • Fewer high-margin products sold
    • Possible increase in operational costs
    • Customer churn or fewer large deals

Conclusion: Declining profit shows business health is weakening alongside revenue.

3. Discounted Sales Impact

• • Discounted Sales dropped: $1.67M → $750K (down ~55%)
  • Discounts per order also dropped significantly

Why this matters:

• • In Q1–2024, discounting was a key sales driver.
  • Fewer discounts in Q2 may have:
    • Reduced purchase incentives
    • Made products less appealing to price-sensitive buyers
    • Caused drop in conversion, especially from channels like “Coupon Sites”

Conclusion: No discounts = fewer purchases, especially from deal-driven segments.

Summary

Interpretation:

• All critical sales and profit metrics dropped by 50–55%.
• Discounts, orders, and shipping costs all fell significantly.
• Strong correlation (0.81) shows that as these measures fell, so did sales.

Impact on Overall Sales

1. Strong Correlation (0.81): Suggests this is a key driver of sales performance.
2. Lower Discounts = Lower Incentives: May have discouraged customers from placing orders (especially price-sensitive ones).
3. Volume Decline: A drop in discounted sales often mirrors a decline in total order volume, especially if discounts are standard practice in Q2.

Conclusion: What Caused the Sales Drop?

• Loss of a key customer (Grant Thornton)
• Reduced shipping and logistical activity
• Less discounting, fewer incentives for price-sensitive buyers
• Sharp drop in Machines and Technology category
• Weak channel and regional performance

Business Recommendations

• Re-engage high-value customers through outreach
• Relaunch discount-based campaigns (esp. in Coupon channels)
• Diversify customer base and channels to reduce dependency
• Audit North Carolina and improve logistics performance
• Monitor discount trends and align with customer behavior