Restaurant Briefing: The Big Deal About Big Data
“Big data is the most important trend of our time,” declares Mike Lukianoff, Principal, Czar Metrics. He adds that it’s not just a trend about data, or even technology. It’s about how information is gathered, shared, and used – including by businesses. Mike and other data experts/consultants to the restaurant industry see this revolution ultimately transforming the way that restaurants understand their customers and interact with them.
The trend isn’t just about data to be sure, but data – and lots of it – is at the foundation. Data now stream around us – from computers and mobile phones, sensors and systems in TVs and cars, transactions, buildings, transportation systems and manufacturing, social media exchanges – really, from almost everything and everyone. The amount of data is so vast and exponentially growing (since 2002 it has increased 27,000x) and its creation so fast (90% in the last two years) that it boggles the mind. In fact, that’s one of the definitions of “big data” – it’s not comprehensible by humans. Data scientists are finding more efficient ways to capture and process the enormity of it all, but what is happening is more than a technical revolution; it’s a business revolution. Disparate data from multiple sources can be, and is, turned into actionable information. A number of business intelligence firms are connecting the digital dots – helping companies, including restaurants, harness data about customers to guide menu and pricing decisions, select sites, execute personalized marketing programs, and provide experiences to guests based on past interactions and preferences.
“The digital revolution has come to brick-and-mortar businesses and no industry has the potential to lead and benefit more than the restaurant industry.” – Mike Lukianoff, Principal, Czar Metrics
Mike cautions that data by itself is nothing – it needs to be transformed into useful information – and that bigger amounts of it aren’t necessarily better. “What’s important is the quality of the data and the analytics behind it. Ultimately, you have to be able to use it.” Sameer Mungur, Founder and CEO, Zipscene, agrees. “We are moving into a world where there is so much available data, but you have to determine what data is relevant and be able to unlock it. That’s how you leverage it to understand your customers – what motivates them to dine with you and what they want when they do – and to make decisions about your business.”
Both Zipscene and Czar Metrics do that heavy lifting – mining, analyzing, and helping restaurant clients act on data. They collect data from third-party sources such as social media profiles and interactions, the use of mobile apps and websites, demographics, etc. – along with data more within a restaurant’s reach such as transaction history (including time of day, day of week, etc.), digital promotions, coupon/offer redemptions, reservations history, email lists, loyalty programs and clubs, online ordering, guest satisfaction surveys, etc. Zipscene not only aggregates the data into one place, but the data is matched to individuals to create customer profiles. Every transaction, both online and on premise, is then tracked and analyzed to enrich those profiles, which can be used to deliver relevant, personalized offers (emails, push text notifications, etc.) at the right time and place and through the right channels – and to deliver customer experiences that are meaningful.
Relevancy of communications is the marketing goal. “Messaging to customers has to be in the context of what’s relevant to them, at the point of decision making,” says Todd Michaud, Founder & CEO, Power Thinking Media. Relevancy is also a way to transition from the offer-based messaging that Todd says plagues the restaurant industry, a point echoed by Sameer. “Many of our customers want to get away from discounting, which can be done by speaking to guests on a level that motivates them other than price.” It’s work, yes, but “the laziest thing in marketing is marketing on price alone,” adds Mike. “The sweet spot is when marketing isn’t just about promotion, but about meeting a need.”
How much work? All three experts emphasize that restaurants can start small before going big with data. “You don’t have to leap to one-to-one marketing,” says Mike, who advises restaurateurs to start by getting into the mindset of using what’s already available to them, making the most of the simplest data. “The reality is that you already know something about your customers – when they are hungry or thirsty, their genders, ages, what they order when they dine, how frequently they dine. Build a customer database populated with information like this and then use it to draw customers back in. If you’re not effectively employing data you already have, then you’re not ready for the next big wave.” Sameer also sees the benefits that can come from taking baby steps. “Start by putting customers into certain buckets based on what you know about them – you are going to come up with clusters that are driving sales. Then design a marketing campaign that speaks to them. Even if you just segment customers based on their order history, for example, and do an email promotion based on that, you’ll see the click-through rates go through the roof.”
“It sounds overwhelming to understand every customer, but it’s really not with the right tools.”– Sameer Mungur, Founder and CEO, Zipscene
The amount of data will only continue to grow, something that many find overwhelming – including consumers, by whom incorrectly targeted or blanketed communications are increasingly ignored or met with disdain, says Mike. “A lot of business people I talk to are frightened by data – how to get it and manage it,” says Todd. “But it’s really not as big and scary as they would think. And there are plenty of providers who can help. The reality is that targeted customer communications are going to drive sales. If your competitors get there first, maintain relevancy, and your customers defect, it’s hard to get them back. I really think it’s a land grab.”
Mike predicts that while larger companies are the first to adopt big data tools, evolving technologies will level the playing field for smaller businesses, such as fine dining restaurants. “Fine dining has been in tune with individual customers’ likes and dislikes for years – not because they had the technology but because they have the instincts. These tools may even give them the edge.” Sameer adds, “The restaurant industry as a whole has always had a strong focus on customer experience. Imagine having tools that will help.”