Digitizing customer loyalty is the way forward for foodservice heading into 2021.
By Tom Nightingale
2020 and the COVID-19 pandemic have taken a toll on the foodservice industry in several ways, and one key aspect has been the loss of what we might call “the personal touch.” With indoor dining having been largely closed – particularly in Canada’s large metropolitan areas – for much of the year, operators and businesses have had to adapt to retain customer loyalty.
Takeout and delivery offerings have dominated the landscape in recent months with traditional dining increasingly off the menu. That has included everything from simple online expansion to shifts to the developing ghost kitchen concept, in which a restaurant essentially abandons all thought of indoor seating and refocuses their operations around purely pickup and delivery orders.
One of the particular challenges seen in the foodservice industry in 2020 is that establishments are suffering badly from the lack of public trade and tourism. The result is that the ability to identify and engage with a brand’s best customers, and to gain better insights into what type of customers are attracted and what they look for, is vital. The incentives of knowing who your customers are have never been bigger, and capitalizing on that knowledge is imperative.
It would be remiss to look at this purely in the context of COVID-19, however. The move to off-premises consumption is just one facet of a wider trend that had been present before the pandemic, albeit understandably accelerated by it: the increased digitization of operations. That can also come in the form of centralizing the employee side of things in a digital app, but on the consumer-facing front, it’s an increasingly important adjustment when it comes to retaining not only the number of consumers but the top-quality customers that are vital for success.
Monetizing customer loyalty
Miya Knights, head of industry insights at SaaS technology and marketing company Eagle Eye, says that if the industry doesn’t wise up, operators face getting left behind.
“A lot of your midsized food and beverage chains, right down to your smaller operators, have pivoted to delivery,” says Knights. “But the issue with that is that you don’t necessarily own the customer relationship. Delivery might facilitate a short-term pivot to maintain sales and turnover but those retailers that have thought about this longer-term know the value is in not just being able to keep trading online but also gaining some value from the insights they glean about customers from those online transactions. Knowing your best customers and targeting them is key, as they’re more likely to make up a large proportion of your revenue.”
Eagle Eye specializes in creating digital connections that enable personalized performance marketing in real time through coupons, customer loyalty, apps, subscriptions, and gift services. Its current customer base includes the Loblaws group in Canada, Southeastern Grocers in the U.S., and a variety of businesses in the United Kingdom including leading supermarkets and foodservice giants like Burger King UK, Pizza Express, Greggs bakery, and Pret a Manger.
“Eagle Eye is the transactional layer for any non-monetary interactions for consumers – points, rewards, promos, discounts, offers,” explains Knights. The crux of their modus operandi is facilitating retailers’ engagement with customers and offers of incentives or rewards for shopping with that brand.
The core appeal and ultimate aim? To monetize the retention of customer loyalty. Increasing digitization of operations provides the opportunity to gain and use more knowledge of who an operation’s customers are – specifically, who your best customers are – and to serve them better. “Loyal customers want to be treated better than a one-time, cash-paying anonymous customer,” notes Knights. “They want to be recognized and thanked for their loyalty and their business.”
Laying the groundwork for success
While Loblaws focuses mainly on grocery and retail, there are lessons to be learned for foodservice operations from Eagle Eye’s relationship with them. The company helped Loblaws merge its customer loyalty program with Shoppers Drug Mart to form the now renowned PC Optimum points-based program. It’s a useful case study in how retailers are pushing out to partners to extend the value of loyalty schemes and also exploiting subscriptions and their audiences to increase the value to customers of being part of their programs.
Loyalty schemes have historically been a tool for low-value, high-volume transaction environments like groceries. But the acceleration of the shift to digital through the pandemic has seen many more business become much more interested – out of necessity or otherwise – in exploiting the digital connection with their customers. “For operators and retailers who don’t necessarily have the high transaction volume business of a grocer, using a subscription scheme and getting a customer to identify themselves in return for the value of that subscriptions has become very popular,” notes Knights.
There are more benefits than just retaining loyal customers and maintaining or increasing revenues. Digital tools offer operators the knowledge of not only what’s being bought in-store, but when, where, and by whom. That allows businesses to provide customers with customizable offers that they can be confident will appeal to them, thus providing further incentive for those patrons to return time after time. “It’s not just driving sales through promos, it’s gaining additional insight and value and using that to drive better business decisions,” as Knights puts it. “That’s really the bottom line: getting to know your customers better and getting to know them more directly.”
A persistent trend
Examples of a similar approach have already been seen in Canadian foodservice. General Assembly Pizza recently looked to lead the field by offering a unique pizza subscription service largely aimed at loyal customers, and the idea of digitally reconnecting with customers is likely to gather steam as the pandemic continues into 2021.
“I think the common trend is knowing what, where, when, and who, so that you can know the why,” says Knights. “The more the industry embraces digital and, increasingly, mobile, the more interest we’ll see from retailers, operators, and brands to harness that from a connection POV.”
Things are fundamentally changing because the industry has reached a tipping point. Like it or not, digital is the future, from the emphasis on takeout and delivery to streamlining operations to customer retention, to contactless and touchless technology. Knights notes the U.S. grocery market saw 10 years of growth in eCommerce penetration within a few months of the pandemic.
And it’s not going away anytime soon.
“A lot of people who go into a pub or a restaurant are still going to look for a QR code for the menu after all this is over,” says Knights. “We’re just going to get more and more used to doing things on our phone or doing things digitally from home. The minute customers enter a digital engagement with a brand or venue, they want something from it. It would be hugely remiss of brands not to make the most of this opportunity.”