Use Big Data, Analytics and Artificial Intelligence to Increase Performance


Not only does Starbucks roam mounds of coffee beans to satiate its delusional fans, but they also have mounds of data that they leverage in a number of ways to improve the customer experience and their business. With 90 million transactions per week at 25,000 stores worldwide, the coffee giant is in many ways at the forefront of using big data and artificial intelligence to help direct marketing, sales and business decisions.

Starbucks Rewards and mobile app

When Starbucks launched their rewards program and mobile app, they dramatically increased the data they collected that they were able to use to know their customers and extract insight into their buying habits. The mobile application has more than 17 million and the reward program has 13 million active users. On their own, these users create an overwhelming amount of data about what, where and when they buy coffee and complementary products that can be overlaid with other data including weather, holidays and special promotions. These are some of the ways Starbucks uses the data it collects.

Personalize the Starbucks experience

Members of the Rewards Program and Mobile App allow Starbucks to collect a lot of information about their coffee buying habits, from their favorite drinks to the time they usually order. So even when people visit a “new” Starbucks store, that store’s point of sale system is able to identify the customer through their smartphone and give the barista their preferred order. Plus, based on ordering preferences, the app will suggest new products (and treats) that customers might be interested in trying. This information is fed by the company digital flywheel program, a cloud-based artificial intelligence engine that is able to recommend food and drink to customers who didn’t even know it, but wanted to try something new. It’s so sophisticated that the recommendations will change based on what makes the most sense depending on today’s weather, whether it’s a holiday or a weekday, and where you are.

Targeted and personalized marketing

The same information that helps Starbucks suggest new products to try also helps the company send personalized offers and discounts that go far beyond a special anniversary discount. Plus, a personalized email is sent to any customer who hasn’t recently visited a Starbucks with enticing offers – built from that individual’s purchase history – to re-engage them.

Virtual barista

My Starbucks Barista through the Starbucks mobile app, allows you to place an order by voice command or by messaging to a virtual barista using behind-the-scenes artificial intelligence algorithms. Since there are so many nuances in an individual order, it’s quite a feat for an artificial intelligence engine to provide a seamless customer experience.

Determine new store locations

It is common knowledge that a good location is essential for success in retail. The Starbucks Market Planning Team doesn’t rely on intuition to determine where stores should be located, but harnesses the power of data intelligence through Atlas, a mapping and business intelligence tool developed by Esri. This tool evaluates massive amounts of data, such as proximity to other Starbucks locations, demographics, traffic patterns, and more, before recommending a new store location. This system even predicts the impact on other Starbucks locations in the region if a new store were to open. Even though it feels like there’s a Starbucks on every corner (and some so close together that you’d imagine they would cannibalize each other’s sales), rest assured that data told them to build it.

Expansion of products in grocery stores

When the business decided to expand and offer Starbucks products that customers could buy in grocery stores and enjoy at home, they turned to data to determine which products they should offer. He combined the data he had from his stores on how customers ordered their drinks and combined that information with other industry reports on home consumption to create their grocery lines. From pumpkin spice caffe latte K-cups to iced coffee with no milk or added flavors, Starbucks’ data-driven approach to expanding production is a smart business.

Menu updates

Some Starbucks locations serve alcohol, but the company decided which ones would offer “Starbucks Nights” based on which areas the data reported had the highest alcohol consumption to support the success of the update. from the menu. The data also results in special limited-offer menu items depending on what’s going on at that time. In one example, when Memphis, Tennessee was experiencing a heat wave, Starbucks started a local Frappucino promotion to get people to beat the heat! And, although there is 87,000 drink combinations available at Starbucks, they continue to monitor which drinks are selling the best to keep making menu changes.

So, the next time you need your coffee fix, take a moment to appreciate all the ways that data and artificial intelligence is at work behind the scenes guiding your Starbucks experience (and to keep you coming back. for more !)


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