Evolution of the Digital QSR Customer Experience

Opinion

Mike Romeri, CEO

On March 25, McDonald’s announced its acquisition of Dynamic Yield, “a leader in personalization and decision-logic technology.” According to this announcement, McDonald’s unexpected investment was made so the company could roll out the pilot programs undertaken with Dynamic Yield in 2018 to:

“… utilize this decision technology to provide an even more personalized customer experience by varying outdoor digital Drive-Thru menu displays to show food based on time of day, weather, current restaurant traffic, and trending menu items. The decision technology can also instantly suggest and display additional items to a customer’s order based on their current selections.”

A2Go anticipates that McDonald’s first objective in this transformation will be achieved by implementing a QSR-specific, digital, customer-experience platform that over time expands to include a family of real-time applications that work together synchronously to deliver an increasingly convenient, personalized, customer-centered, Quick-Service Restaurant purchase experience. These digital capabilities will enable QSRs to communicate more effectively with their customers and will inevitably change how marketing is applied to acquire new customers, to retain customers, and to gain a greater share of the available wallet of targeted customers.

As Gartner points out in one of its research reports, over time, many of the current, brand-marketing objectives and campaign investments will be redirected to digital channels, where campaign objectives can be achieved more consistently and more effectively by focusing more specifically on current customers and likely prospects. Early-adopting QSR brands can create a competitive advantage by accelerating the adoption of this new business model in the short term. Within a few years, however, all QSR brands will view a highly capable, digital, customer-experience platform as an essential requirement to maintain parity with competing brands. But only the early-adopting companies will enjoy a significant competitive advantage as the later-adopting companies play catch up.

With these Gartner trends and insights in mind, and the purchase price of Dynamic Yield, we believe that McDonald’s has a long-term strategic goal in mind: to apply ever more sophisticated decision-technology in the future in innovative ways to attract increasingly savvy, digital customers, who themselves are investing in decision technology of their own.

Gartner believes that consumers will become increasingly reliant on Virtual Private Assistants (VPAs) in purchasing decisions. There will come a point when traditional brand-marketing techniques designed to attract customers on an emotional level will diminish in relevance as consumers increasingly delegate product discovery, recommendations, and selections to VPAs. Gartner foresees an evolution that culminates with seller agents negotiating with consumer VPAs algorithmically to attract and retain individual customers’ business.

The downside to this approach to marketing is that, once consumers consider VPAs as indispensable, brand marketers can no longer rely primarily on making emotional connections with consumers through advertising. But, with more advances, sellers’ agents will be able to issue offers and respond to requests from VPAs using algorithms that can assess both tangible and intangible needs, thereby disrupting conventional marketing approaches.

Gartner’s view of the future rests on the assumptions that consumers will trust their VPAs’ ability to know what they want and how they want it customized to their preferences and personal specifications.

We believe that the trend toward high-powered VPAs that significantly inform or make shopping decisions is inevitable. Likewise, companies will have to develop their own algorithmic-directed agent applications to compete for business effectively under this new shopping paradigm. It would be hard to believe that the QSR industry would avoid this trend.

We therefore envision an evolution of the digital customer experience within the QSR industry along these lines.

· Stage 1: Digital enablement of relatively simple microapps aimed at optimizing the sales process for current customers across both cashier-directed and fully digital QSR sales channels (i.e., kiosks, online ordering, and app-based mobile ordering).

· Stage 2: The extension of the digital QSR cross-sell platform to include a full complement of customer-experience microapps, including health, loyalty, and both proximity and recovery offers (to encourage repeat visits).

· Stage 3: Drawing on the insights gained during Stage 2, we anticipate that the QSR industry will develop an initial, VPA-friendly, marketing platform that engages consumers who rely on their VPAs to make purchase recommendations and purchase decisions.

· Stage 4: The industry will create and evolve a suite of marketing microapps that negotiate effectively with VPAs to position individual QSR brands and products as a preferred choice for consumers with VPA-codified preferences aligning well with each brand’s targeted consumers. Why microapps? Because they are focused on individual decisions and can be deployed and revised quickly in alignment with fast-changing consumer preferences.

Note: Gartner Research Report ID: G00369257, published September 20, 2018, is the source for this trend analysis and its implications for the QSR industry.