Case Study: Oberweis Dairy

Milkmen, glass bottles, door-to-door service.

In some ways, not much has changed at Oberweis Dairy, Inc. from its founding at the turn of the last century. Milk is still procured from local dairy farms. Dairy products are additive-free. Milk is delivered in glass bottles to customers’ doorsteps, although nowadays Oberweis uses refrigerated trucks rather than horse-drawn milk carts.

In other ways, everything is changing at the nearly 100-year-old company.

What started as an Illinois farmer selling his surplus milk to neighbors in 1915 is now an analytics-savvy company with revenues approaching $100 million. Oberweis Dairy has three distribution channels: home delivery, with thousands of customers; retail, with 47 corporate and franchise stores; and wholesale, to regional and national grocery chains like Target. In 2012, the company began looking to expand from its Midwestern roots to the Eastern Seaboard.

At Oberweis, the usual approach to regional expansion was to bring together operations executives to figure out the best configuration for these resources. This time was different.

This time, CEO Joe Oberweis brought to the strategy table an executive with just three years’ experience at the company, Bruce Bedford, vice president of marketing analytics and consumer insights. He had been brought on board in 2009 to inject some analytical thinking into the family-run company. However, he was a relatively unknown figure to the operations executives. According to Bedford, on the day of the strategy meeting:

The CEO invited a large number of operational decision makers — literally, people who manage the company’s drivers and transfer centers. When I got to the meeting I said, “Hey, there are some things I’d like you to consider beyond just operations. I’d like you to think about our customers, particularly the customers that we currently have, who are great candidates for our service. And then let’s also evaluate customers that we’ve spent a lot of money to acquire in the past, that didn’t ultimately turn out to be great customers.”

Bedford took the team through his analysis of Oberweis’s target customer segments using data sets based on community-level demographic information. Contrary to the company’s conventional wisdom, he had discovered that the so-called Beamer and Birkenstock group — liberal, high-income, BMW-driving, established couples living leisurely lifestyles — weren’t a good fit for Oberweis’s high-end retail dairy products. Analytics essentially shattered the company’s preconceived notions about its target market.