• Prachi Patil

Brewing Data With Coffee - Starbucks

Starbucks investments in customer-centric innovations have helped them identify their sweet spot and achieve a competitive advantage. Starbucks willingness to adapt and invest in its digital technology has placed them at the forefront of applying data and analytics to create and capture enormous value for both customers and the company.

Starbucks uses on DeepBrew (AI based tools) to keep operations efficient, free up time for partners, engage customers, and improve sales.




There are three main entities where the value is created and captured:


1. Operations: Massive data is analyzed to carefully identify the new coffee store locations. With the help of AI tools company can design store planning models considering various parameters like population, income levels, traffic, competitor presence, etc. It also helps them to predict economic factors like revenue, profits, etc. The AI tools further help to optimize store labor allocations and help manage inventory within the stores.



2. Customers: Starbucks Digital Flywheel program creates tremendous value for customers and helps the firm in capturing the value. There were almost 19 million loyalty program users in early 2020. Understanding customers buying patterns and knowing in advance individual customer order preferences allows Starbucks to provide a “radically personalized” and warm experience to customers. With the help of AI, Starbucks customers are presented thoughtful, personalized choices based on their preferences, weather, and times of the day on the Starbucks app or the drive-thru menu. This helps customers to make quick choices and eases the customer buying experience.


3. Partners: Maintaining good customer throughput is critical for a store’s success. If a machine breaks down, it can significantly disrupt a store’s operations. The conventional approach of data and machine parameters collection, repairs required, etc. is very time-consuming. Starbucks AI tools help in predictive maintenance and forecasting failures of expresso machines. The new range of expresso machines is equipped with sensors. Every shot of espresso is logged and analyzed centrally to assess potential areas for tuning and maintenance. This Internet of Things (IoT) technology is combined with Deep Brew to give a prediction of which machines need maintenance when.


Starbucks Deep Brew is a fine example of leveraging AI and Analytics to improve efficiency and provide personalized services to create great customer experiences.


#artificalintelligence #digitalstrategy


Sources:

https://stories.starbucks.com/stories/2020/how-starbucks-plans-to-use-technology-to-nurture-the-human-spirit/

https://digital.hbs.edu/platform-digit/submission/brewing-with-a-dash-of-data-and-analytics-starbucks/

https://www.youtube.com/watch?v=XxK1PyaF1bw