BI Drives Big Benefits For Oberweis Dairy
By Matt Pillar, chief editor
March 2016 Innovative Retail Technologies
The application of sophisticated analytics in several departments breathes new life into a nearly century-old regional retailer.
Oberweis Dairy might be the most business intelligence (BI)-savvy retailer you’ve never heard of. The Midwestern chain of 42 dairy stores sells a variety of freshly prepared ice cream treats along with milk and other fresh, perishable foods, which it also sells wholesale through local and national grocery chains. Oberweis also operates a chain of restaurants, and, perhaps most interestingly, it operates a six-state home delivery network that harkens back to its roots; the company started out in 1927 delivering milk to its customers’ doorsteps via horse-drawn wagons.
Back in 2009, it was the long-coming demise of that nearly century-old home delivery business model that prompted the company to infuse a healthy dose of cutting-edge BI into its tech stack. That’s when the retailer brought Bruce Bedford on board as VP of marketing analytics and consumer insights. “When I joined the company, I was charged with helping Oberweis address the significant attrition in our home delivery business,” says Bedford. It was an admittedly tough task. Retail was not only being hit hard by the Great Recession, the company’s primary method of home delivery customer acquisition—telemarketing—was getting pinched hard by federal regulation. Bedford first had to help the company find a way to stop the bleeding, then work on filling the sales funnel.
Bedford had a leg up on the challenge: a mind for data. He ran an analytics agency prior to joining Oberweis, and, from his perspective, the solution to the retailer’s woes could be revealed by data. First, he analyzed the company’s promotion plans. “I discovered that there was a statistically strong link between certain promotions and customer longevity. By identifying what was driving attrition, we were also able to identify the promotions that drove loyalty,” he says. “That was our first foray into analytics, and it’s blossomed to other business units from there.”
To fully exploit the analytics opportunity, Bedford turned to the business intelligence vendor community for help. After evaluating several of the major BI software providers and some more boutique analytics offerings, his company decided on and deployed a suite of applications from SAS. “Their offering was the most complete we found, and I was familiar with the technical aspects of their applications. From tech support to data integration tools, SAS scored the highest in the evaluation of our needs,” says Bedford.
Multidisciplinary Benefits From Business Intelligence
With analytics from SAS, Oberweis was able to move its home delivery business through survival mode and beyond. “We improved the retention of our customer base 30 percent just by making relatively minor tweaks to promotions,” says Bedford. “Now we’re in full-scale growth mode. Analytics plugged the hole in the bucket, and now it’s adding to the top of the bucket by helping us scientifically determine the best ways to reach prospects through direct mail efforts. We test creative marketing pieces to see what works, and we use analytics to get to the right houses that have long-term retention potential.”
Once the company got a handle on its home delivery attrition problem, Bedford says the company’s analytics package was extended to other areas of the business. Data analytics helped the company redesign the menu boards in its restaurants, which resulted in a 20 percent reduction in time-to-service and improved ticket-level profitability. “We determined that the layout of our menu boards was the root cause of service delay during the busy summer months, and we verified that analytically,” says Bedford. The effort resulted in a menu board that drives customers more quickly to both what they want and the more profitable items on the menu, which improved customer service and profitability. In its dairy retail business, Oberweis uses SAS analytics to drive contests to get store associates excited about selling. In year one, a SAS-driven contest resulted in a 25 percent increase in eggnog sales, which Bedford says paved the way for several other sales contests that have borne similar results. And in addition to data feeds from its ERP systems, SAS even takes in data from the National Oceanic and Atmospheric Administration to help the company predict and prepare for ice cream sales. “Analytics helped us realize that temperature isn’t the sole driver of seasonal ice cream sales; dew point plays a pivotal role. We’ve been able to model that, when it’s extremely humid and uncomfortable, sales can actually fall off .”
Picking The Right Battles For BI
With such a powerful multidisciplinary tool in its hands, Bedford admits that Oberweis has to exercise caution when identifying which challenges to tackle. “Determining where to apply our analytics tools comes down to leadership. We have a robust strategic planning process that we update annually and modify quarterly. That process guides the work we do, and a good part of it is informed by SAS.” Bedford calls it an iterative process; his team presents data derived from BI tools in strategic planning meetings, and through that process a list of strategic imperatives that will utilize SAS to solve or address is produced. “For example, we’re involved in decisions around geographic expansion, such as where we’ll build out our next home delivery distribution center and where we’ll open our next dairy store. Those decisions are based on analytics and modeling, and they take full advantage of the mapping tools we have,” says Bedford. “I sometimes sit back and think about where we were with Excel compared to where we are now, and it’s pretty remarkable.”