Burger with extra data?
Buying a burger surely represents the height of the ‘old economy’ where your patronage of the outlet – or Quick Service Restaurant (QSR) as they are known – is pretty much a hit or miss affair. You may like the product, the price, the brand or the experience or a combination of all these. Or maybe it’s just the one nearest to you. Your transaction is usually friendly and they may even write your name on a coffee cup but fundamentally it is anonymous. You leave happy or unhappy, you may come back or perhaps you never will. The brand typically does not know and more generally knows precious little about you. The point is that the only relationship the QSR brand has with you is tantalisingly delicate, managed by a combination of above the line advertising, promotions and the fleeting time you spend in-store.
The data economy is fundamentally changing this and creating significant new opportunities for QSR brands. And it needs to. The industry is under threat like never before. New entrants are appearing all the time. The booming coffee shop industry is increasingly entering their space by offering food, as are retailers anxious to encourage greater dwell time among their customers. The industry has an image problem as it is increasingly seen as a source of poor health in the population just at a time when food trends are heading towards a wider range of flavours, healthier options, locally sourced and crafted in an artisanal way. QSR brands have responded strongly, launching new menu items, fresh store layouts and more intelligent, emotionally based advertising. All of these are clearly important but the position of established players is under serious threat. In 2014 McDonald’s’ annual net income dropped 15% to $4.7bn – one of the worst years in the company’s history.
So what can established brands do? Of course they can reinvent themselves to adapt to changing market tastes; it can be a difficult balancing act to move quickly enough whilst at the same time not alienating the core customer base. But one area where established brands need to focus on is the emerging data economy; when Uber are launching their own fast-food offer you know the time has come to more radically reinvent the QSR. This is part of a broader move away towards a data mediated economy where ubiquitous technology is offering new opportunities for brands to reinvent their engagement with customers. Here are a few ways in which this is starting to happen for the QSR category.
Mobile apps: Starbucks’ app has shown the way in which mobile ordering and indeed payment has fundamentally changed customers’ relationship with the brand. This is really table stakes for any QSR brand that wants to build an ongoing relationship with their customers; it is a fundamental building block on the road to ‘servitization’ where the proposition shifts from selling products to selling ‘product-service systems ‘. For example, Subway’s app allows their customers to locate the nearest store, create their sandwich or salad and save their favorite orders. Surely this fundamentally shifts the nature of the conversation.
Personalisation: Once there is a way to engage with the customer more directly, it is possible to start allowing much greater personalisation of the offer. Some QSR brands such as Chipotle Mexican Grill have always offered this in-store whilst others, such as McDonalds are rolling their TasteCrafted approach to personalising burgers. But the real opportunity is when it comes to personalising promotions. McDonalds for instance recently launched an app featuring mobile-only offers and the option to favourite foods in order to personalise coupons. These can also be targeted based on factors such as the customer’s birthday, location and weather. Giving your customers what they want – indeed precisely what they want – is surely not only a great relationship build for brands but a great source of understanding of customer desires.
Reward schemes: Once tired emblems of a different era, reward schemes are enjoying a resurgence in popularity. As digital becomes a much more flexible tool, able to respond in a much more intimate way to personal preferences and behaviours, they are a means of maintaining much more fluid and engaged relationship with customers. Indeed, a recent survey reported the rather astonishing finding that loyalty-program members visit a restaurant 82 percent of the time because of the value of the reward. Starbucks is perhaps the best example of a great loyalty scheme, with over 8 million active users. The success looks due, in no small part, to the way it properly integrates the loyalty scheme with payment, in-store digital experiences and their mobile app. It is worth noting that Byron Sharp’s influential perspective here is that these sorts of schemes do not work – they simply cater to the already loyal. The point is that the world has perhaps changed since he researched his book – he has a point but digital is looking like it might be a game changer.
Social: Once customers are engaging with the brand digitally, it is a small step to encourage them to use social media – which has further potential to drive traffic and business to the brand. A great example of this is Dominos ‘Pizza Legends’, an online portal that encourages their customers to design their own pizza using a selection of bases, sauces, and toppings. Each ‘Pizza Legend’ is used to create a short animated video that is shareable on Facebook and Twitter.
Transparency: Last but by no means least, consumers are expecting a greater understanding of the provenance and sustainability of the food that they buy. There is an increasing demand for information about the health and ethical implications of the food they consume. KFC, for example, has responded to this by devoting a large amount of space on their website talking about nutritional value of their food through to responsible sourcing of their ingredients. Digital channels are becoming important in giving increasingly vocal consumers easy access to this type of information, and indeed it provides QSR brands with an opportunity to engage in a meaningful way with their customers.
QSR brands can, if they choose, remain in the category of the market where transactions are anonymous and their relationships with consumers mediated purely by a combination of advertising, promotions and in-store experiences. However, there is also potential for a richer and deeper engagement that allows brands to better understand their customer base and respond in ways that moves their brand along.
However, as brands see the opportunities for the way in which data can transform their business, it is essential not to lose sight of the role of the consumer in all of this. Do they actually want this level of engagement? Why do consumers eagerly take-up some loyalty schemes whilst others, apparently identical, fail spectacularly? Have privacy concerns got the potential to derail plans? Care needs to be taken to ensure that the scale of investment is done with the consumer in mind at all times.
Nevertheless, it is clear that established QSR brands are struggling. The market wants change and new entrants are shaking things up. The data economy gives established brands the opportunity to reinvent themselves but the promise of this will only get delivered by brands going on a journey hand in hand with consumers.
