What Is a Driver Tree?
A driver tree breaks a numerical outcome (revenue, profit, retention, cost, etc.) into the specific factors that influence it.
It helps you move from “What happened?” to “Why did it happen?” in a quantifiable, testable way.
While issue trees break down problems, driver trees break down metrics.
Why Driver Trees Matter in Consulting
- Shows the exact levers that affect a metric
- Helps identify which drivers matter most
- Makes analysis faster and more focused
- Turns vague problems into measurable components
- Helps prioritize which areas can create the biggest impact
Driver trees are the backbone of financial modeling, growth analysis, and performance diagnosis.
How to Build a Driver Tree (Step-by-Step)
1. Start with the metric you want to understand
Example: Revenue
Write it at the top.
2. Break it into its mathematical components
This is the “equation level.”
Example:
Revenue = Price × Volume
3. Break each component into deeper drivers
This becomes the next layer.
Example under Volume:
- Number of customers
- Purchases per customer
- Units per purchase
Each of these can be broken further.
4. Continue until the drivers are actionable
Stop when every branch leads to something you can measure and change.
Example under Number of customers:
- New customer acquisition
- Customer churn
- Reactivated customers
Now you can analyze each with real data.
5. Quantify each driver
Fill in data for each node:
- What % changed?
- What contributed most to the final outcome?
- Which driver explains 80% of the movement?
This transforms the tree from a diagram → into a tool for insight.
Types of Driver Trees
1. Performance Driver Trees (Most common)
For KPIs such as:
- Revenue
- Profit
- CAC
- LTV
- Churn
- AOV
- Productivity
These help you understand what moved the number.
2. Strategic Driver Trees
Used to understand levers for future improvement:
- What drives revenue growth?
- What drives retention?
- What drives cost efficiency?
These help you decide where to invest.
Mini Example
Metric: Conversion Rate
Driver Tree:
- Visitors
– Traffic quality
– Source mix
– Page relevance - Conversion Funnel Steps
– Landing page clicks
– Add to cart
– Checkout starts
– Successful payments
Each step has its own drivers.
This makes it clear exactly where the drop-off is happening.
How Driver Trees Help in Real Consulting Work
- Identify the real reasons behind revenue or profit change
- Find the biggest contributor using quick math
- Focus the team on the highest-impact lever
- Make recommendations backed by numbers
- Structure analysis during due diligence and growth strategy
- Build storylines for slides (“Revenue decline was driven by X, not Y”)
Driver trees make your analysis sharp, clear, and quantitative.
Where Driver Trees Are Commonly Used
- Growth strategy
- Pricing strategy
- Market diagnostics
- Cost reduction
- Operational efficiency
- Marketing funnel analysis
- Unit economics
- Case interviews