It is almost impossible to do good for humanity without proper data
However, it wasn’t always easy to navigate for Starbucks: the Great Recession of 2007-2009 left the company in tatters with stores closed and employees laid off en masse. When former CEO Howard Schultz returned to take the coffee reins, he appointed Starbucks’ first chief technology officer and launched a whole new corporate philosophy. A data science division was created to analyze the huge influx of information from Starbucks customers, which could amount to 100 million transactions per week.
With the distilled insights, Starbucks could match customers with their favorite or likely to be favorite beverages based on factors such as their habits and tastes, weather, time of day or vacation around the corner, never mind. store they choose to visit. An East Coast college student would get suggestions near Halloween that are totally different from what a Silicon Valley businessman would get in the summer. In fact, the total number of drink combinations at Starbucks is close to… 87,000. That’s a lot of caffeine. A heat wave in Memphis, Tennessee prompted Starbucks to offer customers frozen treats just in time to cool off. Thanks to the data, Starbucks also knows that 43% of tea drinkers reject sugar and 25% of coffee drinkers say no to milk, which has helped them develop two additional K-cup lines. Another surprising fact: Starbucks discovered that many of its customers favored their stores solely because of their clean and functional bathrooms, which increased the importance of this infrastructure measure for Starbucks managers.
This customer-centric ethos is what brought back Starbucks’ success just two years after Howard Schultz took over the cafe. Now Starbucks is firmly positioned as the world’s number one chain with 30,000 stores and growing revenue each year, reaching nearly $30 billion in 2021. Even in 2020 when traffic plummeted due to the pandemic , an excellent experience further encouraged customers to spend even more on each order. What’s unique about Starbucks is the way it reconciles two seemingly contradictory phenomena: (1) From a customer’s perspective, Starbucks is as familiar and accommodating as a neighborhood family coffeehouse. (2), Starbucks is both an F&B brand and a massive tech company in its own right. The customer-centric philosophy is one thing, what helps achieve (1) is (2), or more specifically, how Starbucks handles customer data. Neither cold nor impersonal, it’s technology that brings Starbucks closer to customers. It is one of the best examples of Big Data in action.
As someone who has been in the trenches of Big Data for nearly a decade, I have realized that the toughest challenge in data collection comes from mass protests. The main reason, as I can see, is that people think data collection only benefits the “big guys” while they suffer the indignity of privacy invasion, much like the sheep that have been shorn and then skinned. It’s true: time and time again, companies have crossed borders. A legendary case that was cited in “The Power of Habit” by Charles Duhigg: Target knew a teenage customer was pregnant from her purchase history of unscented lotion and prenatal supplements and sent her vouchers for baby stuff, which sent her dad, who didn’t even know she had a boyfriend, into a tailspin. Recently, a well-known Chinese hotpot chain also ran into trouble for collecting data on customers’ eating habits as well as their appearance. And Facebook has been known for years to be the target of anti-protection groups.
Of course, things are never as clear cut as they seem, but I’m sure of two facts: First, right now you can’t escape data collection, whether you like it or not, unless never go out, never buy or sell things online, never use a credit card, and never go online. It would take nearly 100% off-network life to prevent your data from being logged. Second, Big Data, when properly applied, would benefit people as well as businesses. In reality, it is almost impossible to do any good for humanity without proper data. Protecting forests, preventing oil spills, predicting earthquakes, calculating electricity consumption, monitoring the effects of Covid-19, combating terrorism, producing films for online platforms, etc., all of this requires data. If the data is not accurate, outdated or insufficient, the decisions made are likely to be wrong, useless and even catastrophic. That’s why I think we shouldn’t ask ourselves if we should use Big Data, but how. My answer is very simple: put people first, always. This is also what I often say to our customers: if you consider the well-being, happiness, joy and health of your customers as your priority, you are on the right track!
Using people’s data for their benefit is no longer a new idea for many verticals, from private to public. Purdue University uses data to predict which students are most likely to drop out and facilitate intervention, reducing the dropout rate by 21%. Ysbyty Gwynedd Hospital uses data collection and machine learning to monitor multiple patients at the same time without a nurse, reducing cardiac arrests by 86%. The FDA uses big data to quickly identify toxic foodborne illnesses and keep contaminated foods out of circulation. Next-generation farmers upload crop photos to help each other spot weeds and pests. Not even 24 hours after the 2013 Boston Marathon bombing, the FBI accumulated 10 tetrabytes of data from various sources, including 480,000 CCTV images, to locate and apprehend the perpetrators.
There are many other examples in the developed world. In Vietnam, Big Data is also becoming more and more popular. I’ve noticed a positive trend: many companies, large and small, long-established and new, are increasingly focusing on sustainable growth and customer experience. Instead of looking for unorthodox strategies, they now focus on listening to their customers. It’s a big change in mentality and business philosophy. Of course, this requires Big Data.
Guardian, the global retailer of beauty and personal care products, is a prime example. In our interviews, Guardian Vietnam CEO Le Huynh Phuong Thuc always emphasizes the paramount importance of customers. For her, the customer experience always comes first. He must get better and better. Big Data has therefore become its solution of choice. When we analyzed data from some Guardian stores in Vietnam, we realized that many customers liked to linger in the makeup department but left without buying. On the other hand, the Skincare section, long considered a strategic category, did not attract as many customers as expected. Further investigation revealed that while many were interested in makeup, they either lacked the skill or the confidence to apply it. And if the Skincare products are excellent in themselves, the layout did them a disservice: the lighting was too weak, the aisles too close together, the location not optimal. With this information, Guardian assigned more beauty consultants and placed more product testers in the Makeup section, and updated the layout of the Skincare section. Subsequently, customers of these stores reported spending significantly more time shopping there.
Of course, the end does not always justify the means. Even if it is for the good of customers, data collection needs laws and rules to protect not only customers but also businesses. Guardian Vietnam, for example, always encrypts customer data and unfailingly complies with global data protection standards. Regulations such as GDPR, which have long been considered the gold standard for data protection and privacy, set great precedents for Vietnamese companies and legislators while participating in Industry 4.0. Big Data providers in Vietnam should be especially careful if playing in the big leagues is their goal.
In any case, a resource as powerful as Big Data must be treated with caution and responsibility. But I firmly believe that as the world becomes flatter and the technological expertise of local businesses becomes closer and closer to that of our overseas friends, Big Data will play a greater role in the welfare of the Vietnamese people. I’m willing to bet that our nation’s progress largely depends on how we use this gold mine over the next 10 years.
*Do Trung Thong is a serial tech entrepreneur and data scientist. He is the founder and president of the AI & Computer Vision technology company Palexy. The opinions expressed are his own.