How Constellation Brands’ Direct-to-Customer Tech Delivers Economic Impact across Business Portfolio
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Editor’s note: Today we’re hearing from Ryan Mason, Director, Head of DTC Growth & Strategy, at alcoholic beverage firm, Constellation Brands on the company’s shift to Direct-to-Consumer (DTC) sales and how Google Cloud’s powerful technology stack helped with this transformation.
It’s no secret that consumer businesses have been up-ended in a lasting manner after 18 months of the pandemic. Consumers have been forced to shop differently over the past year – and as a result, they’ve evolved to be more comfortable with online spending and have grown to expect a certain level of convenience. While the e-commerce share of consumer sales has grown steadily over the past decade, the pandemic was the catalyst for the famous “10 years of growth in 3 months” which many argue is here to stay.
Facing this reality head-on, we placed a new emphasis on Direct-to-Consumer (DTC) with our acquisition of Empathy Wines, a DTC-native wine brand that sells directly to consumers via e-commerce. To accelerate our innovation in the DTC space, we added headcount and new functions to the existing Empathy team and empowered the newly-minted DTC group to apply their digital commerce operating model across the rest of the wine and spirits portfolio, which includes Robert Mondavi Winery, Meiomi Wines, The Prisoner Wine Company, High West Whiskey, and more.
One pandemic and one year later, DTC sales have surged in the wine and spirits category with Constellation positioned as a leader armed with a unique and powerful cloud technology stack, best-in-class e-commerce user experiences, modernized fulfillment solutions, and data-driven growth marketing.
Benefits of Going DTC
A report from McKinsey estimates that the strategic business shift to DTC has been accelerated by two years because of the pandemic and argues that consumer brands that want to thrive will need to aim for a 20% DTC business or higher, which is already taking shape in the market: Nike’s direct digital channels are on track to make up 21.5% of the total business by the end of 2021, up from 15.5% in the last fiscal year, and Adidas is aiming for 50% DTC by 2025. But outside of the clear revenue upside, the auxiliary benefits of going DTC are robust.
For Constellation Brands, each of these four pillars ring true, and our shift toward DTC is as much about margin accretion and revenue mix management as it is about consumer insights and data. The added complexities of the alcohol space add wrinkles to our DTC approach and manifest in many areas like consumer shopping preference, shipping and logistics hurdles, and more. In order to win share early and continue to lead the category, we recognized the need to harness the immense amount of first-party data to power impactful and actionable insights.
Our DTC technology architecture has fostered a value chain that is completely digitized: website traffic, marketing expenditures, tasting room transactions, e-commerce transactions, logistics and fulfillment events, cost of goods sold (COGS) and margin profiles, etc. are recorded and stored in a data warehouse in real time. For the first time, at any given moment, we can easily and deterministically answer complex business questions like “what is the age and gender distribution of my customers from Los Angeles who have purchased SKU X from Brand.com Y in the last 6 months? What is the cohort net promoter score? Did that increase after we introduced same-day shipping in this zip code? By how much?”
The ability to answer these questions and understand the root causes allows us to stay nimble with product offerings and iterate marketing strategies at the speed of consumer preference. Further, it enables us to optimize our omnichannel presence in the same manner by leaning on DTC consumer insights to develop valuable strategies with key wholesale distribution partners and 3-Tier eCommerce partners like Drizly and Instacart. At its core, Constellation’s DTC practice is designed to be the consumer-centric “tip-of-the-spear” responsible for generating insights from which all sales channels, including wholesale, can benefit.
Constellation’s DTC technology approach prioritizes consumer-centricity and insights generation
We have taken a modern approach to building a digital commerce technology stack, leveraging a hub-and-spoke model built around Shopify Plus and other key emergent technology providers like email provider Klaviyo, loyalty platform Yotpo, Net Promoter Score measurer Delighted, Customer Service module Gorgias, payments processor Stripe, event reservations platform Tock, and many more. For digital marketing and analytics, we use Google Cloud and Google Marketing Platform, which includes products like Analytics 360, Tag Manager 360, and Search Ads 360.
To help gather, organize, and store all of the inbound data from the ecosystem, we partnered with SoundCommerce, a data processing platform for eCommerce businesses. Together with SoundCommerce, we are able to automate data ingestion from all endpoints into a central data warehouse in Google BigQuery. With BigQuery, our data team is able to break data silos and quickly analyze large volumes of data that help unlock actionable insights about our business. BigQuery itself allows for out-of-the-box predictive analytics using SQL via BigQuery ML, and a key differentiator for us is that all Google Marketing Platform data is natively accessible for analysis within BigQuery.
But data possession only addresses half of the opportunity: we needed a powerful and modern business intelligence platform to help make sense of the vast amounts of data flowing into the system. Core to the search was to find a partner that approached BI in a way that fit with our future-looking strategy.
Our DTC team relies on the accurate measurement of variable metrics like Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), Churn, and Net Promoter Score (NPS) as a bellwether of the health of the business and monitoring these figures on a daily basis is paramount to success. To enable us to keep an accurate pulse on strategic KPIs, we considered several incumbent BI platforms. Ultimately we selected Google Cloud’s Looker for a range of benefits that separated it from the rest of the pack.
From a vision perspective, in this particular case we felt Looker was most aligned with our belief that better decisions are made when everyone has access to accurate, up-to-date information. Looker allows us to realize that vision by surfacing data in a simple web-based interface that empowers everyone to take action with real-time data on critical commercial activities. Furthermore, Looker’s ability to automate and distribute formatted modules to a myriad of stakeholders on a regular cadence increases data literacy and business performance transparency.
From a product perspective, we chose Looker for it’s cloud offering, web-based interface, and centralized, agile modeling layer that creates a trusted environment for all users to confidently interact with data — without any actual data extraction. While other BI tools have centralized semantic layers that require skilled IT resources, we’ve experienced that those can lead to bottlenecks and limited agility. With Looker’s semantic layer, LookML, our BI Team, led by Peter Donald, can easily build upon their SQL knowledge to add both a high degree of control as well as flexibility to our data model. The fully browser-based development environment allows the data team to rapidly develop, test, and deploy code and is backed by robust and seamless Git source code management.
In parallel, LookML empowers business users to collaborate without the need for advanced SQL knowledge. Our data team curates interactive data experiences with Looker to help scale access and adoption. Business users can explore ad hoc analysis, create dashboards, and develop custom data experiences in the web-based environment to get the answers they need without relying on IT resources each time they have a new question, while also maintaining the confidence that the underlying data will always be accurate. This helps us meet our primary goal of providing all businesses users with the data access they need to monitor the pulse of key metrics in near real-time.
Impact and future of DTC BI at Constellation
In short order, taking a modern and integrated approach to the DTC technology stack has delivered economic impact across the portfolio, helping our team understand and combat customer churn, increase conversion rates, and optimize the customer acquisition cost (CAC) and customer lifetime value (CLV) ratios. Perhaps most important is the benefit it can provide to the customer base. Mining customer data and consumer behavior generates data into what our customers are seeking, giving us insights to supply more, or less of it. For example, observing sales velocity and conversion rates by SKU or by region can help us better understand changes in customer taste profiles and fluctuations in demand, providing the foundation for a more powerful innovation pipeline and more effective sales and distribution tactics in wholesale. Our team has also been an early pilot tester for Looker’s new integration with Customer Match, which contributes to the virtuous cycle between data insight and data activation. In the future, our plan is to leverage this cycle to amplify the impact of Google Ads across Search, Shopping, and YouTube placements for the wine and spirits portfolio.
The operational impact of Looker is also substantial: our team estimates that the number of hours needed to reach critical business decisions has been reduced by nearly 60%, boosting productivity and accelerating the daily operating rhythm. A thoughtfully curated technology stack together with a modern BI solution allows us to stay at the vanguard of the industry. While the DTC sales channel is not designed to surpass the core business of wholesale for Constellation in terms of size, the approach enables unparalleled insights and measurement abilities that will pay dividends for the entire business for years to come.
This Chart, from Home Depot, Dramatically Demonstrates the Power of a Cloud Data Warehouse
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The Home Depot (THD) is the world’s largest home-improvement chain, growing to more than 2,200 stores and 700,000 products in four decades. Much of that success was driven through the analysis of data. This included developing sales forecasts, replenishing inventory through the supply chain network, and providing timely performance scorecards.
However, to compete in today’s business world, THD has taken this data-driven approach to an entirely new level of success on Google Cloud, providing capabilities not practical on legacy technologies.
The pressures of contemporary growth that drove much of the work are familiar to many businesses. In addition to everything it was doing, THD needed to better integrate the complexities in its related businesses, like tool rental and home services. It needed to better empower teams, including a fast-growing data analysis staff and store associates with mobile computing devices. It wanted to better use online commerce and artificial intelligence to meet customer needs, while maintaining better security.
Even before addressing these new challenges, THD’s existing on-premises data warehouse was under stress as more data was required for analytics and data analysts were utilizing the data with increasingly complex use cases. This drove rapid growth of the data warehouse, but also created constant challenges for the team in managing priorities, performance, and cost.
In order to add capacity to the environment, it was a major planning, architecture, and testing effort. In one case, adding on-premises capacity took six months of planning and a three-day service outage. Within a year, capacity was again scarce, impacting performance and ability to execute all the reporting and analytics workloads required. The capacity refresh cycles were shrinking, and the expecations for data were growing. There had to be a better way.
Still, THD did not take its move to the cloud lightly. A large-scale enterprise data warehouse migration involves tremendous effort among people, process, and technology. After careful consideration, THD chose Google Cloud’s BigQuery for its cloud enterprise data warehouse.
BigQuery, a scalable serverless data warehouse, was better on cost, infrastructure agility, and analytics capability, driving better insights with improved performance. There are no service interruptions when capacity is added, and that capacity can be added within a week (and soon same day). It doesn’t require complex system administration, and its standard SQL support means people can easily ramp up quickly. Valuable BigQuery products like Identity and Access Management meant THD could create many separate Google Cloud projects, while ensuring that different teams weren’t interfering with each other or accessing protected data.
THD also utilizes BigQuery’s flat-rate monthly pricing model that allows teams to budget their capacity based on need and provides billing predictability. The capacity not being used by a given project is available for enterprise use. This ensures no surprises when the monthly bill arrives and provides all analytical users access to significant computing power.
While THD’s legacy data warehouse contained 450 terabytes of data, the BigQuery enterprise data warehouse has over 15 petabytes. That means better decision-making by utilizing new datasets like website clickstream data and by analyzing additional years of data.
As for performance, look at this chart:
With the cloud EDW migration complete, and the legacy on-premises data warehouse retired, analysts now execute more complex and demanding workloads that they would not have been able to complete before, such as utilizing Datalab for orchestrating analytics through Python Notebooks, utilizing BigQuery ML for machine learning directly against the BigQuery data (no movement of large datasets), and AutoML to help determine the best model for predictions.
Additionally, engineers at THD have adapted BigQuery to monitor, analyze, and act on application performance data across all its stores and warehouses in real time, something that was not practical in the on-premises system.
With over 600 projects that THD now has on Google Cloud, the BigQuery story is just one of the many ways that Google Cloud is working with THD to deliver meaningful business results, every day.
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Everything You Need to Know About Google Cloud ML Engine 101
Machine learning is all around us today. But data scientists and IT teams tasked with creating models have a hard time bringing together the right mix of ingredients—from data, infrastructure, tools, and APIs—to do their jobs effectively.
Google’s Cloud ML Engine eases many of the challenges data scientists and IT teams face. It’s a managed service that allows businesses to build and deploy their own models using any type or any size of data.
With Google’s Cloud ML Engine, data scientists can create models for training and prediction. And it provides APIs for these two building blocks.
Nikhil Kothari, Senior Staff Software Engineer, Google Cloud, breaks down Google’s Cloud ML Engine. He shows you how to use it as a service, so that data scientists can focus on data and on building models instead of managing infrastructure.
AirAsia Leverages Google Cloud to Enhance Pricing, Revenue, and Customer Experience
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With Google Cloud, AirAsia is now a “data first” business that can capture, analyze, and report on rising volumes of data to address complex problems and increase revenue streams. The airline is also using AI-powered chatbots to streamline internal operations and provide a faster, more efficient service.
Google Cloud results
- Increases employee survey response rates by 30% and improved safety, scheduling, and employee orientation
- Enables movement towards a zero trust security model while reducing administration load on IT team
- Increases business agility by deploying faster and more frequently
Become a digital airline powered by data and machine learning
AirAsia’s vision is simple: allow everyone to fly. Founded in 2001, the airline and sister company AirAsia X have grown to service 150+ destinations in 25 markets, using 274 aircraft to operate 11,000+ weekly flights from 23 hubs across the region. While the airline is known as a provider of low-cost airfares to locations across Asia, this is only one part of its value proposition. AirAsia also aims to deliver innovative, personalized products and services that meet the needs of each of its passengers.
Technology is key to AirAsia’s success and, with strong support from Group Chief Executive Officer Tony Fernandes, in 2016 the airline began a five-year program to become a data-first business and a digital airline.
“We wanted to better ensure we were using data correctly to become more agile, efficient, and customer oriented,” says Lye Kong Wei, Chief of Data Science, Group Head at AirAsia.
AirAsia needed technologies and services that could capture, process, analyze, and report on data, while delivering value for money and meeting its speed and availability requirements. The airline also wanted to minimize infrastructure management and system administration demands on its technology team.
Google Cloud the best fit
AirAsia realized only a cloud service could meet its needs and began evaluating the market. The airline then conducted a proof of concept and found Google Cloud was the best fit for its business. It was already familiar with Google Cloud, having deployed Google Workspace collaboration and productivity applications to its workforce in all countries except China. According to Kong Wei, products such as Forms, Docs, Sheets, and Gmail delivered a considerable improvement in collaboration between various departments, as well as streamlining and automating a range of processes.
The business was particularly excited by the potential of the BigQuery analytics data warehouse to power its digital transformation. “We knew data was a big part of making decisions in the future,” says Kong Wei. “So we needed a platform that could scale to meet our growing appetite for it. Google Cloud—in particular BigQuery—was ideal for this task.”
The AirAsia technology team was impressed by the ease and flexibility with which it could extract, transform, and load customer data from its systems, websites, and mobile applications into BigQuery for analysis. Data, reports, and dashboards were delivered and visualized through Looker Studio.
BigQuery also scaled seamlessly to support data growth and, as a managed service, required minimal administration from the airline’s technology team. “In addition, with BigQuery, we could process queries and requests much faster than previously and tackle more complex problems,” says Kong Wei. “As a result, we could be more innovative about realizing opportunities,” he adds, citing the benefits of being able to view and understand historical measures of booking curves—a measure of how long it took customers to book before a flight. This improves the airline’s ability to manage revenues.
A broad ecosystem
BigQuery and Looker Studio are just two components of a broad ecosystem—powered largely by Google Cloud services—deployed by AirAsia. Pub/Sub provides a scalable message queue that enables AirAsia developers to integrate systems hosted on Google Cloud or externally. Apache Airflow enables the business to create, schedule, and monitor workflows, while Cloud Composer manages the dependencies of PHP and related libraries. App Engine allows AirAsia personnel to develop and host web applications. “Thanks to App Engine, we’ve easily been able to create new applications, services, and APIs powered by the data we have been collecting,” says Kong Wei.
AirAsia is also running the middleware for its APIs in a managed Google Kubernetes Engine environment for increased scalability, resource optimization, and reliability, while Cloud Storage provides storage for data from a range of systems and sources. Dataflow enables the business to transform and process data in stream and batch modes from its website search page as customers look for flights.
Faster deployment and testing
The stability of Google Cloud service means AirAsia has a reliable base from which to launch new products and features. “If we have consistent reliability from our core systems—and Google Cloud incorporates monitoring tools such Cloud Monitoring that enable us to identify issues quickly—developers and product engineers can focus on turning ideas into reality,” says Kong Wei. “With a minimal number of people involved, we can very quickly transform an idea or thought process into a deliverable. Prior to Google Cloud, bringing those ideas to fruition would have been impossible.”
Robust security
AirAsia is also relying on Security Health Analytics, a product that integrates with Security Command Center, to identify misconfigurations and compliance violations in its Google Cloud resources and take action. Security Health Analytics ensures the airline’s budgets go to keeping customers’ travel costs low rather than recovering from security breaches.
The product enables AirAsia to check that resources are configured properly and are compliant with CIS benchmarks as its critical workloads run in Google Kubernetes Engine and App Engine.
“Being able to go to the new Security Health Analytics dashboard eliminates the guesswork of what we have running and if it is secure,” says Muhammad Faeez Bin Azmi, Information Security and Automation Solution Architect. “Now anyone on our team, even non-security professionals, can go to this dashboard and see a list of the misconfigured assets and compliance violations across all of our Google Cloud resources. We can also see the severity of misconfigurations, which helps us prioritize our response.”
“Security Health Analytics has really helped us reduce the amount of time we spend trying to figure out what’s wrong with our resources. It’s allowed us to use our time more effectively to identify and resolve more security issues than we could before.”
A new identity solution
AirAsia had also used a legacy on-premises directory for many years. However, as the company grew and expanded to new markets and regions, it had to manage multiple servers across a number of on-premises data centers and the public cloud, which proved costly and time-consuming.
Its Allstars—the airline’s name for its employees—needed to easily access a number of legacy on-premises apps in addition to a growing number of SaaS apps. As a business, it also needed a more seamless integration between its HR system of record and its identity solution for user provisioning and life cycle management. Solving these challenges with its existing on-premises directory was simply not feasible.
AirAsia brought up its identity concerns with the Google Cloud team, and after a number of conversations, decided to deploy Cloud Identity, Google’s cloud-based Identity and Access Management solution, to help address the identity challenges it was facing.
The airline chose Cloud Identity for a number of reasons—first, it was eager to move to the cloud as quickly as possible. Moving identity management to the cloud was a key enabler of this and the airline’s broader digital transformation. Managing identities from the cloud also enabled the airline to have a single identity and set of credentials for each employee, which they could use to access all the applications they need to be productive, both in the cloud and on-premises.
In addition, deploying Cloud Identity was a key step towards enabling the zero trust security model, which the airline felt was the best approach to strengthen its security posture and fight modern threats. Cloud Identity also integrated seamlessly with its existing technologies, which include not only Google Cloud products like Google Workspace and Chrome OS but also third-party tools like Citrix, Papercut, and others.
And finally, Cloud Identity offered significant cost and resource savings. With Cloud Identity in place, AirAsia’s IT department could spend less time worrying about managing multiple on-premises directory servers and and could instead focus on delivering value to Allstar employees.
Machine learning employed to increase ancillary revenue
In March 2018, AirAsia established the groundwork to use machine learning to optimize pricing for a range of services and began by using AI Platform to sort and predict demand for ancillary services such as baggage, seats, and meals. “By using AI Platform, we can sort based on data about history to predict the future,” says Kong Wei.
Dialogflow in wide use
With Google Cloud well established within the business, AirAsia is using Dialogflow, a voice and conversational interface development suite (and one of the core components of Contact Center AI) that enables businesses to create engaging AI powered voice- and text-based interfaces such as chatbots and voice apps—to streamline operations and reduce costs
“Tony Fernandes, our Group Chief Executive Officer, motivated us to create a range of metrics that would enable us to respond more quickly and efficiently to customers,” says Yuashini Vellasamy, Product Manager at AirAsia.
This resulted in the initial deployment of Dialogflow in AirAsia’s operational areas, from crew scheduling to internal business tasks.
With Dialogflow, AirAsia is able to provide pilots, crew, catering, and other teams with flight times, capacity and any other relevant information about their assignments. Another bot accepts medical certificates and updates from pilots and crew members unable to make rostered assignments and switches those assignments to other pilots and crews. “This improves our on-time performance and operational efficiency, as we are able to optimize the creation of crew schedules,” says Vellasamy.
AirAsia also uses Dialogflow to power a “safety bot” for airport ground staff. “We tried a lot of tools to encourage staff to advise us when they saw a safety issue—but employee usage was low,” says Vellasamy. “However, when we set up the safety bot, which asks users just four questions about an issue they have observed, we saw an increase in employee interaction, which helps ensure proper safety measures.
Beyond crew optimization and overall safety, AirAsia’s HR department in Asia uses a Dialogflow-powered bot to run a post-orientation engagement program for new employees. The bot follows up with employees about issues from parking to AirAsia’s onboarding buddy program, saving HR employees time from scheduling one-on-one meetings. Dialogflow also powered an employee satisfaction survey of 3,000 team members, resulting in a 30% increase in response rate compared to the previous year.
One of Dialogflow’s benefits is its language coverage, which the airline’s marketing team uses to target customers and prospects across a region with diverse languages and cultures. “For weekly campaigns and promotions, our sales and marketing teams simply update the campaign materials and the changes are reflected automatically in Dialogflow and consequently to users,” says Vellasamy. “This enables us to quickly scale and reach our customers globally.”
An upward trajectory
AirAsia is poised to reap further benefits from Google Cloud as its deployment matures. “On the data side, we’re more advanced, while on the application and programming side we have a long way to go,” says Kong Wei. “We’re on a trajectory upwards—we’re looking at a lot of new ideas and how to embrace and deploy them so we can further our data-first and digital airline agendas.”
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Accelerating Insights with the Health Analytics Platform
The healthcare industry is beset with a data challenge, specifically clinical data, and challenges around the proliferation of EHR instances and ancillary clinical systems.
In this video, Vivian Neilley, Solution Architect, Google Cloud and Marianne Slight, Product Manager, Google Cloud discuss how some of these challenges can be overcome with the Health Analytics Platform.
The Health Analytics Platform enables companies who have healthcare data in multiple sources on their own infrastructure to harmonize data across systems, monitor analytics, and create compelling visualizations that enable easier decision-making.
This new product suite allows for healthcare and life science organizations to manage data pipelines and run advanced analytics on managed infrastructure with interactive UIs and health data-aware features.
The Health Analytics Platform provides and end-to-end solution, from ingestion of data to harmonization to a common data model, to dashboard visualizations and machine learning.
Whether organizations leverage a data lake or are utilizing a full data warehouse approach, the platform gives users the flexibility to meet customers where they are today. This session will demonstrate how to leverage the health analytics platform to accelerate time to insights in a healthcare or life sciences organization.
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Sure, machine learning is becoming a business imperative, but how does it work in practice—and what are the benefits for IT managers?
That’s the subject of a new step-by-step guide to solving business and IT problems with artificial intelligence and ML, based on insights gathered by IDG Research Services.
Its publication comes at a time when technology departments face growing pressure to embrace these emerging technologies, yet many have questions about how to get started.
It has real-life examples such as the health services company that used ML to reduce support ticket-resolution time from 48 minutes to six.
In another section, a financial services VP explains that cloud-based ML services enable his company to avoid spending money on computing resources that sit idle.
The guide also includes concrete tips for new ML adopters. For example, a real-estate CIO recommends the use of third-party tools that rely on AI and ML technologies, while a financial services VP highlights the challenge and potential of incorporating unstructured data into ML initiatives.
Download the guide now!
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