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5 Benefits a Company Gets with Business Intelligence On Board
So why is business intelligence important? Business analysts often say that the main advantage of a BI solution is “eliminating guesswork from your business processes”. This becomes possible because business intelligence is used to analyze data and present actionable insights to stimulate informed decision making within an enterprise.
We employ our experience in BI implementation services to explain what advantages a company can get leveraging business intelligence. To add practicality, we’ll show how these major benefits of business intelligence are rocked by Starbucks, an early BI adopter and savvy user of data-driven business analytics.
Benefit 1. Understanding customers and tuning the company’s offering accordingly
BI tools enable companies to process customer data from multiple sources and create a 360-degree customer profile. As one of the goals of business intelligence is to present business-critical data in an easy-to-understand manner, companies can clearly understand their customers’ needs and behavior. As a result, they are empowered to tune their offering accordingly and deliver top-notch products and services.
Launching new product lines
Starbucks used BI to analyze industry reports about at-home beverage consumption and data about how customers order products while in a Starbucks shop. The company employed this info to create K-Cups and bottled beverages to sell in grocery stores. This let the company prevent customers from using other coffee brands at home.
Defining store locations
Since 2008, Starbucks has used Atlas, BI mapping software, to locate their new stores. The platform allows the company to estimate the economic viability of a new store location by evaluating massive amounts of data, such as area population density, average income of the residents, traffic patterns and proximity to other Starbucks locations. Thus, the company opens stores exactly where customers need them, which boosts sales without hurting the business in other locations.
Benefit 2. Boosting sales and marketing activities
With BI solutions, companies take a closer look at multidimensional retail data (from transactions to social media) to forecast customer needs and define sales and marketing activities to meet the demand.
Anticipating customer demand
Using predictive analytics, Starbucks successfully beefs up sales with analytics-powered in-store digital boards. The boards display items based on time of the day, weather, social trends and more: for example, breakfast items in the morning, hot drinks in colder weather, holiday specialties, dairy-free alternatives, etc. Such a data-driven approach allows Starbucks to entice customers with a more appealing offering.
Customizing order suggestions
Starbucks’ mobile app with more than 16 million active users presents the wealth of data on customers’ purchasing habits. To make use of that data correctly, the company uses a reinforcement learning platform to offer customers tailor-made order suggestions based on their popular selections, order history and the inventory of a local store. Through providing such personalized experience for customers, the company boosts both customer loyalty and sales.
Benefit 3. Optimizing back-end operations
A BI solution can analyze data to advance a company’s internal business processes, such as order management, scheduling, staffing, inventory management, and supply chain management.
Staffing and staff scheduling in a smart way
Due to staff scheduling optimization, it takes about three minutes from the time when a Starbucks customer gets in line until the order is delivered – regardless of the part of the day they come in. BI tools help store managers constantly monitor store performance against labor efforts to identify how well the store is doing with the current staff. With these tools, managers can optimize the work by growing or downsizing staff and rescheduling some duties (cleaning work areas, coffee machines, etc.) to perform them in quiet periods or after hours. That way, baristas are not overloaded and have the time for small talk with a customer or, for example, drawing a balloon on a cup for a birthday person. Such personalized approach increases customer satisfaction, which lies in the heart of the company’s customer-centric policy.
Optimizing supply chain management
Starbucks’ supply chain has no room for waste and inefficiency due to the centralized BI practice. BI software enables on-demand access to constantly updated information on stock inventory, transport scheduling and storage capacity. Based on real-time reports, the company manages to react with agility to, for example, poor quality of raw products by finding alternative suppliers while maintaining competitive prices.
Benefit 4. Keeping a close eye on the competition
As a part of a BI solution, benchmarking delivers practical insights on how to outperform competitors. Competitive analysis allows continuously improving a company’s performance.
Finding new ways of service delivery
Competitive benchmarking empowered Starbucks to uncover the need to reconfigure their third place strategy, which presupposed stores that provide both take-away and eat-in options. Following in the footsteps of McDonald’s, Luckin Coffee and other competitors, Starbucks launched food delivery service and opened pick-up only stores. The company’s efforts seem to be working: they managed to reach customers beyond those who already include Starbucks as part of their morning or afternoon routine.
And this all leads to – Benefit 5. Revenue increase and cost reduction
Businesses effectively employing BI software earn more by analyzing customers and their demands, boosting marketing and sales activities, optimizing business-supporting operations and benchmarking.
As for Starbucks, successfully employed BI and data analytics practices empower them not only to attract customers, consequently boosting the volume of sales, but also to follow the ever-changing consumers’ behavior to the extent that few companies have yet been able to accomplish.
How to gain from BI?
ScienceSoft can help you leverage the BI benefits that Starbucks and many other companies already enjoy. Turn to our BI consultants as a first step to introducing a BI solution to your business.