Customers expect digital experiences from restaurants, not just food
Digital technology isn’t just transforming the way people work and play, it’s also changing the way they eat. Modern restaurant customers are tech-savvy and hyper connected. Their first point of contact with a restaurant won’t happen at a physical storefront, but online. Unless restaurants evolve to meet the dramatic changes in customer behaviors and expectations brought on by the rise of digital technology, brands will struggle to find success in the current market landscape where people don’t just demand great food and in-store experiences, but digital experiences as well. Digital experiences need to be omnichannel (app, website, kiosk, chatbot, point-of-sale, drive-thru, social media, etc).
Digital Transformation pays dividends
Perhaps two of the most popular digitally-driven success stories in the restaurant and food service industry is that of Starbucks and Dominos. Both are excellent examples of traditional restaurant brands adapting to the seismic shifts in the consumer landscape brought on by the rise of online commerce. By embracing digital technology as a critical differentiator and driver of business success, they continue to command the loyalty of their customers and increase their market share, at the expense of many other restaurant brands who are digital laggards.
Since J. Patrick Doyle assumed the role of CEO of Domino’s Pizza in 2010, it’s been difficult to think of the brand as just a pizza restaurant chain, often referring to itself as a technology-driven eCommerce company as well. 60% of its total sales now come in through digital channels, with almost two-thirds of that taking place over mobile devices. Since 2008, the company’s digital transformation helped it capture $2.47 billion in revenue in 2016 resulting in a 15x increase in stock price to $195.28 a share. With the critical role, digital technology has played in its success, Domino’s continues to adopt the latest technologies including voice-led devices such as Amazon Alexa and Google Assistant to deliver innovative and superior customer experiences.
Starbucks’ strong track record of technology-led innovations makes it ever more difficult to tell whether they’re a food and beverage company or a technology company. With the adoption of consumer centric digital strategies, such as digital rewards programs and app-based purchasing, the company has seen over 25% of its total transactions shifted to mobile payments while enjoying an 18% year-on-year growth rate of its branded mobile app. The company now aims to further extend its digital initiatives by partnering with popular brands such as Spotify, Lyft, and the New York Times and giving customers the ability to use digital loyalty points as currency.
The astronomical success of both these brands tells a simple story: capturing the next generation of customers will depend on the ability of traditional restaurant brands to embrace digital as a fundamental component of their business.
Embracing Digital Omni-Channel Experiences
In order to succeed in the new market landscape, restaurant brands need to radically modernize their customer experiences. Brands need to think beyond in-store experiences and embrace digital channels when connecting with customers. Capturing customer loyalty depends on delivering a seamless experience across all channels.
But delivering delightful digital experiences isn’t just about engaging customers. It’s also about enabling them to effortlessly engage the brands that they love. Careful attention and management to a restaurant’s online presence, whether it’s just the searchability of physical branches or the contents of its menu, can pay a dividend in terms of sustaining customer loyalty and encouraging walk-ins. Direct online channels where customers can provide feedback or pose inquiries additionally contribute to the accessibility of the brand.
Traditional customer engagement strategies can be made all the more compelling by leveraging digital technology to enhance its mechanics and execution. Loyalty programs built into apps can enhance customer loyalty by streamlining points tracking and redemption to the point of effortlessness while app-based or online ordering could increase sales by simple virtue of increased accessibility.
Most of all, digital channels enable brands to really understand their customers and deliver tailored rewards, offers, and personalized service. Imagine a vegan customer no longer receiving an offer for a meat lover’s pizza or a repeat customer being seated at their favorite table and served their favorite drink without having to wait.
Amplifying Word of Mouth through social channels
Extending engagement strategies to digital social channels also allow brands to drive sales and capture new customers by tapping into word of mouth from loyal customers. Check-in features and (implicit and explicit) referral programs can dramatically accelerate the reach of word of mouth. At the same time, digital technology enables brands to more easily find ways to incentivize these kinds of behavior.
Finally, as social becomes increasingly digital, brands can leverage a direct channel of communication with their customers to gather critical feedback and build meaningful conversations with them to maintain the reputation of their brand. By listening to customer conversations online, whether it is on social networks or online review platforms, brands can enhance customer loyalty by rewarding favorable reviews with redeemable gifts while reassuring poor ones that their voice is heard, potentially winning them back. By leveraging digital channels, businesses can not only participate in conversations about their brands but lead them by actively and responsively engaging their customers.
The Punchh Advantage
When making the shift to digital, brands don’t need to go in alone. By partnering with a trusted third party software-as-a-service platform, brands can start executing their digital strategies without having to develop the technology required in-house.
Punchh has been successfully building partnerships with restaurant brands that enable them to deliver digital experiences to customers and drive top-line growth.
Brands working with Punchh have observed that their most loyal customers are also most likely to download and engage with them using a mobile app. By opening up this digital channel, brands are seeing a 25-48% increase in visit frequency, a 10-20% increase in average spend, and a 10-25% lift offer redemption rates among their guests.
Additionally, these guests are providing up to 3-4 time more reviews about their experience using the app versus using Yelp and are much more likely to respond to in-app Surveys. Customers love to engage with brands one-on-one and Punchh enables brands to immediately respond to guest feedback, building lasting personal relationships with them.
In forthcoming blogs, we will dive into the specifics of how to create digital experiences, how to choose the best technology solutions, and what best practices to follow.
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