Wednesday, March 12, 2008

Costco - Operational BI in Action

We were recently at our neighbourhood Costco on our bi-weekly expedition to buy bulk and ran into a situation where a very simple application of operational Business Intelligence was successful with me and my wife.

We were standing in line at the checkout when a Costco employee came up to upsell us their Executive membership. Normally we aren't interested in paying more for a membership, especially when we already pay $50 a year. The executive membership is another $50 a year for a total of $100. However, on this day we were feeling charitable so thought we would give him a chance.

First of all, he scanned our current card. After scanning our card he was able to show us that if we spend the extra $50 to upgrade the membership we would save at least $65 a year! This would pay for itself! Now, lets think about the BI process in the background:
  • Rep scans our current membership card on his handheld / wireless device
  • Last year's purchases are accessed online, and then a formula is applied to determine the rebate we would of gotten if we had the membership last year
  • Rep lets us know the savings and is able to sign us up for the Executive Membership on the spot!

As BI goes more mainstream and is embedded in more applications, we will see many other examples of Operational BI in action as consumers. How many memberships has Costco been able to get because of this? Probably a lot considering their is always a line up for the checkouts!

Until next time,


1 comment:

Trigger said...

This is a great example, Mark. Particularly when merged with an upsell marketing technique, Operational BI is very powerful (coincidentally, we went for this too!!). It demonstrate how easy an upsell is when the information presented is a "no-brainer" (spend $50 to get $65 back? Who wouldn't?). Can you imagine how incredible it would be if a Tech could be in someone's home on a service call, and be able to advise them on how much they would save if they bundled more services in real time? Every CSR would want to be a Tech, because that would be where all the sales would be!

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