How Starbucks is Using AI to Build Stronger Customer Relationships
When we think about AI, things like self-driving cars or robotic process automation usually come to mind. However, since AI technology is all around us, we should not be surprised to see it in places like our local Starbucks. In fact, AI is a win-win solution that helps Starbucks build stronger relationships with its customers while making the ordering process a lot more convenient. Let’s Take a look at how Starbucks is using AI in its coffee shops and why it is helping them drive business growth.
Implementing AI Into the Ordering Process
Whenever you open up Netflix, Amazon, Spotify, or any other AI-powered website, you are offered some recommendations based on your previous viewing, listening, or shopping experience. What if the same concept was applied to ordering your favorite coffee beverages? This is exactly what Starbucks is doing with its new “Deep Brew” initiative. The machine learning algorithms used by Starbucks also take into account things like the weather, time of day, store inventory, popularity, and community preferences. This allows Starbucks to customize the ordering process and also helps undecided customers choose a beverage faster by showing them what other guests prefer.
Since the AI system pulls all kinds of information from various sources, it needs to be able to find the right information and use it to calculate the best suggestion. To make all of the data understandable to the machines, a lot of entity and text annotation will need to be done to train the system. The way it works is that certain notes and metadata are added to the important words or phrases so that when feeding it into machine learning-based language algorithms, it can understand the situation and give accurate results in real-life. This is also helping Starbucks automate some back-office processes like inventory management and preventive maintenance to make sure all of the espresso machines are working correctly.
Where Does the Training Data Come From?
Starbucks has a very popular mobile app that is used by 25.2 million people. This is a treasure trove of data that can be used to train machine learning algorithms and generate recommendations. In fact, given the vast amount of data this app collects, it would be impossible for a single person or even an entire team to make sense of it all. From this standpoint, AI is the only solution that allows Starbucks and other companies to extract all kinds of insights from the data it collects. However, the types of data annotation that we described earlier would still be required to train such a system
How is This Helping Starbucks Drive Growth?
Starbucks likes to position itself as a “third place” customers visit between work and home. The ongoing pandemic caused them to increase the pace of automation, to include things like the contactless pickup and mobile pickup. This is important for urban areas since space is very limited and if you can decrease the size of your store’s footprint you will be in a better position to open up more locations and increase revenue. All of the automation that is possible thanks to AI allowed Starbucks to open up more walkthrough locations in places like Manhattan and other densely populated areas since the coffee shop itself is a lot smaller and fewer employees are required.
All of the AI personalization that we described a little bit earlier will go a long way towards winning over prospective customers. By increasing the convenience of the walkthrough locations, Starbucks is hoping that this will fuel exponential growth since they have very ambitious plans of adding 800 new stores every year to reach 16,000 company-owned locations by 2023. This is also helping Starbucks weather the storm in terms of all the lost business caused by the pandemic. They understand that people will be hesitant to return to drinking coffee inside the cafes, so they needed a viable alternative to drive business growth. AI opens the door for new business opportunities by offering customers more conveniences that other coffee shops cannot offer.
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January 4th, 2021Mindy News Blog