Milkshakes, Burgers, and Analytical Rigor: How a Dairy Business Triggered New Growth

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When the first That Burger Joint opened in Skokie, Illinois, last October, there was plenty of local chatter about how yet another Five Guys–inspired venue had moved to town.

For others, That Burger Joint represented the long-awaited wedding of one of the Midwest’s most savored milk shakes and two all-beef patties.

There’s little question that the addition of a burger chain constitutes a new operating wing for Oberweis Group Inc. of North Aurora, Illinois — a family-owned company that has for the past 86 years kept its offerings largely confined to the footprint of a dairy enterprise.

However, the launch of TBJ says far more about Oberweis and a newfound confidence behind its business decision-making than it does about opportunities in the burger business. This confidence can be traced to a business strategy that has intrepidly embraced analytics technologies as it sharpened its focus on customer retention.

downloadThe results speak for themselves, according to Oberweis CEO and president Joe Oberweis.

“It’s not by any stretch easy to grow — and we have every possible challenge that any company can have — but after years and years of focus and effort, we’re finally beginning to see growth across the board,” says Oberweis, whose 1,000-employee firm incorporates a wholesale distribution business, 48 retail shops, and a six-state home delivery network.

“Our difficult years were 2007, 2008, when our home delivery business was declining and commodity costs were out of control,” begins Oberweis. “Frankly, we went through a time when it was difficult to get new customers — we had to figure out how to navigate around that.”

Part of what the dairy firm had to navigate around were large voids in information around its customer acquisition and retention strategies, particularly as they related to its home delivery service.

According to Oberweis, the downturn in some ways helped the firm by enlarging the pool of available sales talent and allowing the dairy business to access experienced talent despite the fact that the company could offer its job candidates little or no information when it came to compensation expectations.

“Today, we have a track record where we can say, ‘Here’s what you can expect to make,’ but at the time we were blind, and there were all these voids as far as us being able to determine how the compensation method should work,” says Oberweis.

Still, the biggest information voids were around the delivery service’s customer behaviors. To better assess the firm’s customer retention challenges, Oberweis enlisted the services of Bruce Bedford, a consultant, who would later join the firm full-time as vice president of marketing analytics.

Bedford began measuring customer retention rates within the home delivery business in order to isolate the factors that may have contributed to some of the recent customer attrition. Bedford’s efforts to measure customer behaviors brought forth new data insights for the firm to leverage, and led Oberweis to adopt a data analytics technology from SAS, of Cary, North Carolina.

“This was more than people knowing what to do or how to respond. It was technology supporting that knowledge,” says Bedford, who would help Oberweis employees leverage the data insights across the firm. “Without analytics, it’s really more of a guessing game than it is a science, and what we’re trying to do is create a scientific approach.”

Bedford credits just such an approach with having brought forth a strategic insight related to how the company was promoting its services: “What we discovered was that by virtue of the way we were promoting the home delivery service, we were leading certain customers to come in and then leave fairly quickly. He says that subsequently, the company modified its promotional approach by making more “future value” available for customers to claim — thus extending their retention. As a result, the firm’s one-year retention rate tripled.

Another area where analytics has assisted Oberweis is inside its retail shops, where a number of years ago the firm tested four different menu boards within a subset of its stores. In addition to reducing service times, the firm’s objective was to discover whether it could improve the profit-per-transaction by the way a menu board guided patrons through its options.

“One menu design in particular stuck out, and while not invoking a price increase at all, we have been able to increase the revenue and profit per ticket in a statistically significant way,” explains Bedford, who says that certain menu selections enjoyed 80 percent growth via the newly designed menus.

Without question, Oberweis’s new burger customers will find no less thought and analytical rigor behind their menu items, too.

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