The world largest coffee shop has a loyalty program, My Starbuck Rewards, consisting of 6 million registered customers. With 25% of all transactions made by these customers, a massive amount of data is collected on an annual basis. Taking into account that Starbucks offers 87.000 possible drinking combinations across the globe, has almost 21.000 stores in 62 countries, has approximately 160.000 employees worldwide, serves almost 4 billion cups of coffee annually and had $ 13.3 billion net revenue in 2012 it may be clear that Starbucks creates a lot of data.
One of the benefits of so much data combined with the large customer retention program is that Starbucks is able to identify customers and link them with what products they buy where and when. Identifying and understanding the complete product purchasing behaviour could result in a lot of insights, but until recently Starbucks was not able to link purchases made in other channels. Since it has expanded its loyalty program to grocery stores a flood of new data enters the organisation. The detailed profile information of their customers can be used to better target its advertising.
Unfortunately, the CEO of Starbucks, Howard Schultz, does not give much about all that data. So it is up to Joe LaCugna, director of analytics and business intelligence at Starbucks, to create an analytics community at Starbucks as mentioned by Kate Kaye on AdAge.com. And he is working hard to achieve that. Already half of the 6 million customers in the loyalty program have been analysed and profiled. Of those 3 million customers, Starbucks knows who they are and how they differ from others.
This data is used to deliver targeted advertising and discounts directly to the mobile devices of its customers. However, do not expect as a loyal customer that you will receive such a discount; Starbucks is not afraid of losing them so they are not willing to give them a discount. Instead, the discounts are sent towards customers whose buying behaviour shows that they may not be returning soon.
All that data is used to at least make the lives of the store managers a bit easier. In the past they used to provide 300 reports to its managers on a regular basis in order to evaluate and improve their stores. Thanks to all the data, this has been brought down to 11 most important key performance indicators, including cleanliness of stores or customer satisfaction, which can be downloaded by the managers.
Of course, taking into account the massive amounts of data that is created with 4 billion cups of coffee sold annually, what Starbucks actually does with big data is still relatively limited. Although turning disloyal customers into loyal customers is an interesting twist to putting big data to use. Starbucks might ‘grind’ a lot of data; unfortunately it has not been able to put that data into all the valuable insights that are possible and to reap all the benefits from it.