How Real-Time Business Intelligence Pumps up the Volume for Sales

CIO — You're the subject of much interest when you walk into a Virgin Megastore. Every 15 minutes, Virgin updates stores on what customers do—buy, browse or both—so that staff can adjust their selling strategies.

For example, tipped by data showing that foot traffic lags compared to yesterday, a store manager can direct staff into the aisles to chat up sale items or maybe move discount CDs close to a hot-seller to promote impulse buys.

"Business intelligence can happen at all levels of the organization, not just with business analysts or executives with dashboards," says Robert Fort, CIO of Virgin Entertainment Group. Virgin deployed a home-grown system, Crescendo, to replace the manual reporting effort that didn't provide reports as often, or in as much detail. Being able to respond to or anticipate customer behavior translates directly into sales, Fort says. The key, though, is making sure staff can run their own reports.

Data from Everywhere

A new album typically does half its sales within two weeks of release, Fort notes. But before Virgin deployed its BI system (which is built mainly using Microsoft products), store managers only received reports of the prior day's or week's traffic and sales figures. There were no historical comparisons and nothing resembling real-time information. "What could you act on, really?" he asks.

Employees from various departments spent 330 man hours per month producing those reports, too, like "slaves doing Access queries," he says.

Now Virgin combines current and historical store data with information from headquarters to stream a picture of what's happening on the retail floor. ShopperTrak's automated traffic counter monitors who comes and goes. SAP's Traversity point-of-sale software generates purchasing data to analyze against JDA Software's inventory and merchandising information. Staff at Virgin's 10 U.S. Megastores access their Crescendo reports in Excel, via a Microsoft SharePoint Web portal run out of Virgin's Los Angeles headquarters.

Virgin piloted the system in 2004 and has added features slowly. But several additions last year enhanced the system's value, Fort says. For example, Crescendo's metrics now include average dollars per sale, sales compared to plan and the rate at which browsers "convert" to buyers, which Virgin infers by comparing traffic to sales numbers. Inventory counts show what's available to put on shelves and, if merchandise must be sent from a distribution center, when it will arrive. A heat map color-codes how genres are selling. Crescendo is also now accessible to more people: buyers who order replenishments, for example, and financial managers who monitor sales campaigns.

A sour economy hurts many retailers, Fort says, "so it's all important for us to convert every person coming in to a sale."

Eighteen weeks after rolling out the enhancements, Virgin benchmarked sales store by store, normalizing for seasonality. Result: an $8 million lift. (Parent Virgin Group won't divulge Virgin Entertainment's revenues.) Fort won't say how much the system cost. However, he adds, if just 20 percent of the extra profit from those new sales is due to BI, the system has paid for itself in 15 weeks.