CASE STUDY CHAPTER 6 : INTERACTIVE SESSION: ORGANIZATIONS

Business Intelligence Helps the Cincinnati Zoo Know Its Customers

            Founded in 1873, the Cincinnati Zoo & Botanical Garden is one of the world’s top-rated zoological institutions, and the second oldest zoo in the United States. It is also one of the nation’s most popular attractions, a Top 10 Zagat-rated Zoo, and a Parents Magazine Top Zoo for Children. The zoo’s 71 acre site is home to more than 500 animal and 3,000 plant species. About 1.2 million people visit this zoo each year.

            Although the Zoo is a non-profit organization partially subsidized by Hamilton County, more than from fundraising efforts, the remainder coming from tax support, admissions fees, food, and gifts. To increase revenue and improve performance, the Zoo’s senior management team embarked on a comprehensive review of its operations. The review found that management had limited knowledge and understanding of what actually happening in the Zoo on a day-to-day basis, other than how many people visited every day and the zoo’s total revenue.

            Who is coming to the Zoo? How often do they come? What do they do and what do the buy? Management had no idea. Each of the Zoo’s four income  streams- admissions, membership, retail and food service- had different point- of- sale platforms, and the food service business, which brings in $4 million a year, still relied on manual cash registers. Management had to sift through paper receipts just to understand daily sales totals.

            The Zoo had compiled a spreadsheet that collected visitors’ ZIP codes, hoping to use the data for geographic and demographic analysis. If the data could be combined with insight into visitor activity at the Zoo – what attractions they visited, what they ate and drank, and what they bought at the gift shops – the information would be extremely valuable for guiding marketing.

To achieve this, however, the Zoo needed to change its information systems to focus more on analytics and data management. The Zoo replaced its four legacy point of sale systems with a single platform - Galaxy POS from Gateway Ticketing Systems. It then enlisted IBM and BrightStar Partners (a consulting firm partnering with IBM) to build a centralised data warehouse and implement IBM Cognos Business Intelligence to provide real-time analytics and reporting.

Like all outdoor attractions, the zoo’s business is highly weather-dependent. On rainy days, attendance falls off sharply, often leaving the Zoo overstaffed and overstocked. If the weather is unusually hot, sales of certain items such as ice cream and bottled water are likely to rise, and the Zoo may run out of these items.

The Zoo now feeds weather forecast data from the U.S National Oceanic and Atmospheric Administration (NOAA) Website into its business intelligence system. By comparing current forecasts to historic attendance and sales data during similar weather conditions, the Zoo is able to make more accurate decisions about labor scheduling and inventory planning.

As visitors scan their membership cards at the Zoo’s entrance, exit, attractions, restaurants, and stores, or use the Zoo’s Loyalty Rewards card, the Zoo’s system captures these data and analyses them to determine usage and spending patterns down to the individual customer level. This information helps the Zoo segment visitors based on their spending and visitation behaviors and use this information to target marketing and promotions specifically for each customer segment.

One customer segment the Zoo identified consisted of people who spent nothing other than the price of admission during their visit. If each of these people spent $20 on their next visit to the Zoo, the Zoo would take in an extra $260,000, which is almost 1 percent of its entire budget. The Zoo used its customer information to devise a direct mail marketing campaign in which this type of visitor would be offered a discount for some of the Zoo’s restaurants and gift shops. Loyal customers are also rewarded with targeted marketing and recognition programs.

Instead of sending a special offer to its entire mailing list, the Zoo is able to tailor campaigns more precisely to smaller group of people, increasing its chances of identifying the people who were most likely to respond to its mailings. More targeted marketing helped the Zoo cut $40,000 from its annual marketing budget.

Management had observed that food sales tend to tail off significantly after 3 PM each day, and started closing some of the Zoo’s food outlets at that time. But more detailed data analysis showed that a big spike in soft-serve ice cream sales occurs during the last hour before the Zoo closes. As a result, the Zoo’s soft-serve ice cream outlets are open for the entire day.

The Zoo’s ‘Beer Hut’ concession features six different brands, which are typically rotated based on sales volume and the seasons. With IBM analytics, management can now instantly identify which beer is selling best, on what day, and at what time to make sure inventory meets demand. Previously, it took seven to 14 days to get this information, which required hiring part-time staff to sift through register tapes.

The Zoo’s ability to make better decisions about operations has led to dramatic improvements in sales. Six months after deploying its business intelligence solution, the Zoo achieved a 30.7 percent increase in food sales, and a 5.9 percent increase in retail sales compared to the same period a year earlier.  

                                                      

        Question 1.     What people, organization, and technology factors were behind Cincinnati Zoo losing opportunities to increase revenue?

The factors of losing opportunities to increase revenue are the management and the systems of Cincinnati Zoo itself.  This is because the management had limited knowledge and understanding of what was actually happen in the Zoo om daily basis. They also did not know what was the total revenue and the amount of people came to the Zoo every day. The system that the embedded now is out of date, because they are using different system for different department, which is different point-of-sale platforms. Other than that, they are still relied on manual cash registers, so the management had to sift through paper receipts to understand daily sales total.

       Question 2.     Why was replacing legacy point-of-sale systems and implementing a data warehouse essential to an information system solution?

         Replacing legacy point-of-sale systems and implementing a data warehouse because point-of-sale system are not synchronise and centralise because they had different point-of-sale, so it’s hard to identify and analysis the revenue for each day, the amount of visitor came to the zoo. Data warehouse make it much easier to provide secure access to this management. Data warehouse is all in one, the ability of receiving data from many different sources, meaning any system in Cincinnati Zoo can contribute data of the visitors.

       Question 3.  Describe the types of information gleaned from data mining that helped the Zoo better understand visitor behavior.

Firstly, Business Intelligence, Zoo needed to focus more on analytics and data management. The Zoo replaced its four legacy point of sale systems with a single platform. It enlisted IBM and BrightStar partners to build a centralized data warehouse and improvement IBM Cognos Business Intelligence to provide real time analytics and reporting. Secondly, high velocity automated decision making. The zoo now feeds weather forecast data from U.S National Oceanic and Atmospheric Administration (NOAA) website into its business intelligence system. By comparing current forecast to historic attendance and sales data during similar weather condition, the zoo is able to make more accurate decision about labor scheduling and inventory planning. In addition, zoo’s loyalty reward card, the zoo’s system captures this data and analyzes them to determine usage and spending patterns down to the individual customer level. This information helps the zoo segment visitors based on their spending and visitation behaviors and use this information to target marketing and promotion specifically for each customer segments.

Question 4.  How did the Cincinnati Zoo benefit from business intelligence? How did it enhance operational performance and decision making?

          Cincinnati Zoo enhances operational performance the operation by providing real-time analytics and reporting. Besides, the Zoo make more accurate decisions about labor scheduling and inventory planning by feed weather forecast data from U.S. national Oceanic and Atmospheric Administration (NOAA) Websites to comparing current forecasts to historic attendance and sales data during similar weather conditions.

            The Zoo use the information to achieve target marketing and promotions through use the Zoo’s Loyalty Reward card. The Zoo give rewarded to loyal customer to achieve targeted marketing and recognition programs. The Zoo’s soft-serve ice cream outlets are open for the entire day to achieve their income. Their use IBM analytics to identify which beer is selling best, on what day, and what time to make sure inventory meets demand which is previously take long time and required hiring part-time staff to sift through register tapes.

            The Cincinnati Zoo benefit from business intelligence is an operation has led to dramatic improvements in sales. Besides, the Zoo achieve a 30.7 percent increase in food sales, and a 5.9 percent increase in retail sales compared to the same period a year earlier.   

            The Zoo making decision to change information systems that aimed to focus more on analytics and data management. The Zoo replaced four legacy points of sales systems with a single platform like Galaxy POS from Gateway Ticketing Systems, enlisted IBM and BrightStar Partners.

                                             

            Question 5. The Zoo’s management recently stated that it might have to ask for more revenue from taxes in order to provide the same level of quality and service in the future. How might business intelligence be used to prevent this from happening?

            Business intelligence can be used to prevent Zoo’s management from ask for more revenue from taxes in order to provide the same level of quality and service in the future. By using business intelligence, Zoo’s management was sending a special offer to its entire mailing list to tailor campaigns more precisely to smaller group of people. So, it can increase the chances of identifying the people who were most likely to respond to their mailings.

            Besides that, by using business intelligence, Zoo’s management also get more detailed data analysis of a big spike in soft-serve ice cream sales. The detailed data analysis showed that a big spike in soft-serve ice cream sales occurs during the last hour before the Zoo closes. As a result, the Zoo’s soft-serve ice cream outlets are open for the entire day.

            Business intelligence help Zoo’s management make some IBM analytics. With the result of IBM analytics, management can now instantly identify which beer is selling best, on what day, and at what time to make sure inventory meets demand. Its help Zoo’s management get the information in a short period of time without required hiring part-time staff to sift through register tapes.

            Conclusion, with using business intelligence, it improve the Zoo’s ability to make better decisions about operations has led to dramatic improvements in sales. So, in the future, Zoo’s management can get more revenue from taxes in order to provide the same level of quality and service.