How to develop data strategy from scratch
As digital restaurant sales increase and consumers gain access to restaurants through branded websites or third-party platforms, operators can now collect more diner data than ever before. However, gleaning insights from this information is easier said than done, especially for independent restaurants whose technology spending may be limited as inflation and wage growth erode the bottom line.
“Very often, third-party data aggregators sell data for millions of dollars, and small and medium-sized businesses probably can’t afford that. … Start with your own data,” Asha Samal, director of data and artificial intelligence at Namer at NCR, said during an NRA show panel.
Small businesses can fall into the trap of assuming they can’t learn from their pool of data without a powerful processing system, but there are steps any restaurant can take to reap the financial benefits of data, experts at the National Restaurant Association said Show in Chicago last May.
“Don’t wait until you have a million dollars to spend [data strategy]. You don’t have to have 100 tech vendors on your payroll to do something with data,” said Dan Gertsacov, angel investor in restaurant technology and a Focus Brands graduate student. “Start with what you have, and what you have is a lot. Today’s point-of-sales systems, especially mobile ones that are in the cloud, have a lot of data.”
Experts say restaurants should consider who their target audience is and what assets are needed to drive repeat visits, increased spending, and customer acquisition.
“You want to think about three things: What are the people, processes and tools that I need to… fulfill the strategy that I have put in place?” Katie Kirschner, vice president and global lead of hospitality consulting at NCR, said the panel of the NRA Show.
Know your diner base
When assessing customer characteristics, restaurants should examine the demographic and psychographic identifiers of top customers that can be collected through a loyalty program’s point of sale, said Gertsacov, who also worked at a major McDonald’s franchise group.
For example, although McDonald’s top customers are adults, the company found its best customers by examining a unique motivation in this demographic. This prompted the Golden Arches to target adults who want to do something good for their children, Gertsacov said, leading to specific marketing opportunities.
In South America, for example, McDonald’s ran a campaign where customers could sign up for the chain’s loyalty program and sign up their child for a chance to run on the soccer field with Lionel Messi, a famous Argentine soccer player, Gertsacov said. As a result of the campaign, 75,000 parents signed up for MyMcDonald’s Rewards, giving McDonald’s better access to data on its top customers, he said.
It’s important to know how often your best customers interact with your brand, he said, and to find marketing and culinary opportunities to drive traffic.
In the case of indulgence concepts such as the Cinnabon from Focus Brands, for example, a customer is only allowed to visit once a year. To double that frequency, Cinnabon has shrunk the size of its signature soft pretzel offering into a “Cinnabites” option of pretzel pieces, Gertsacov said. Guests found the smaller pieces less elaborate than the traditional pretzel and therefore a product they could eat more often.
However, there are several ways to gain more customer insight and engagement, Gertsacov said.
“Maybe you don’t just want clicks, you want impressions too. Maybe you don’t just want impressions. … You might want these consumers to share [something on social media]. It’s really a virtuous cycle where you start gaining more and more insight into your data strategy and your marketing strategy,” he said.
The next step? Invest in AB testing via cellphone SMS and email to learn what motivates your best guests, whether it’s discounts, experiences or new menu items, he said.
Know your staffing and technology needs
Even if a restaurant isn’t digitally robust, it’s crucial to digitize information about customer behavior so as not to drown in unprocessed data, Kirschner said.
“Technology will allow you to go from good to great…if you pursue [data] manually because you are small and using an Excel spreadsheet, or you can automate [data collection] even on a small level.”
An internal customer data platform doesn’t have to be complicated, Gertsacov said. But technology-enabled follow-up — and processing — should be a priority whenever a restaurant business rolls out an initiative, launches a new strategy or makes a change in leadership, Kirschner said.
“You need a CDP – a customer data platform. This could be a Google Doc with a list of all your customers but you have to be able to host and also protect your customers’ information. That’s the starting point,” Gertsacov said. “Then there are many ways to get email, marketing, promotions and loyalty that also provide that information. …You need to continuously clean your data (to make sure there are no duplicates).”
Gertsacov compares data strategy to driving a car in his executive presentations.
“Everyone’s focused on ‘I want a car like a sports car that can go from zero to 60’ or ‘I want to make sure it’s safe.’ But the first question is who will drive the car?” he said. “You can get a Ferrari or a Lamborghini, but if you don’t know how to operate a shifter, it doesn’t matter.”
The “driver” of a restaurant’s data strategy doesn’t have to be a data scientist either, Gertsacov said. But it’s important that the person overseeing this department has strong analytical and storytelling skills to explain what the data means.
Strategy can start small
To avoid analytics paralysis when processing data, restaurants should remember that “perfect is the enemy of good” and that small steps can still produce strong results, Gertsacov said.
For example, a handy data tactic for a restaurant of any size is to learn what its top menu items actually are, rather than relying on assumptions. In Latin America, McDonald’s defined what its best-selling ice cream was and listed it under “Most Popular” on its menu. That designation triggered a 40% increase in sales, he said.
But it’s important for restaurants to make sure they don’t overwhelm their guests with data collection tactics, he said.
“Every time you add another [question] field you lose people who would have answered the basics. …Ask for the basics and then give people a reason to share more,” he said.
For example, when consumers sign up for McDonald’s loyalty program, the chain offers a reward where the customer can try the next burger innovation if they fill out additional information, Gertsacov said.
“People are looking for those signals and social proof. They can influence people’s decisions,” Gertsacov said