Your Business Is Irrelevant And IT Wants To Help

Franchisee Columnist Todd Michaud has spent the last 16 years trying to fight IT issues, with the last six years focused on franchisee IT issues. He is currently responsible for IT at Focus Brands (Cinnabon, Carvel, Schlotzsky’s and Moe’s Southwestern Grill).

About 98 percent of all retailers are irrelevant. In my world, it's about restaurants. And in today's over-marketed hyper-competitive environment, it all comes down to the "moment of truth"--when the thought "I'm hungry, where should I go to lunch?" enters a consumer's mind. If your brand is not relevant at that very instant, then you will not get the sale.

The consumer will satisfy her craving someplace else. What boggles my mind is why more retailers aren't using technology to help them win this battle of mindshare.

Long before the term customer relationship management was bastardized to secretly mean salesforce automation, many companies had the vision of an IT system that would help them manage and maximize the relationship they have with their customers. The idea of being relevant is a complex equation that means a lot of different things to a lot of different people. Because no one really knows the secret formula to being relevant, my goal as an IT leader is to create systems that will help my business partners answer questions they don't yet know to ask.

There are three major components to building an effective strategy for managing your relevance with your customers: Customer Profiles, Business Intelligence, and Marketing Data. Each of these components is directly supported by technology and, when combined, they can create a system that is much greater than the sum of its parts.

The concept is quite simple:

  1. Figure out what your customers need and/or want.
  2. Figure out what your business needs.
  3. Figure out the best methods that achieve both 1 and 2.

First you have to know a little something about your consumers themselves. It might be something as simple as a gift-card number or as detailed as a full demographic/psychographic breakout. Some brands believe they must have a full customer profile, while others may gather only an e-mail address as their customer profile. Although I think it is safe to say that "more is better," I still believe that even a single piece of identifying information is useful enough to use.

Next you have to understand your business. You have to know what the important triggers are for your business. For example, is obtaining a new customer more valuable than getting a "light" customer to visit you more often? What market basket represents the most profitable transaction? What is the impact of geography on your business? What are the competitive pressures?

Then you need to be fully aware of your marketing efforts. What promotions have worked well? Which communication vehicles have shown the greatest ROI? What combination of brand marketing and local store marketing produces the greatest results?

The key is to bring this information together in a meaningful way that can help you drive the business. Many companies have a business intelligence system that tells them about their product mix, same-store sales and customer counts. Fewer have a database of consumers that represents a history of their engagement with the brand (both online and in the store). Fewer still have a database repository for tracking all their marketing efforts in a concise way. A very, very small number of chains actually use all three sets of data to deliver value to the brand. I have spoken with several people about this topic recently, and mostly people are concerned about their ability to track customer information and create a profile. Many brands do not have a loyalty system or any way of tracking their consumers' behavior. In today's world, loyalty programs are mostly commonplace. I encourage companies to seriously evaluate such programs as an option moving forward. The information that can be gathered is enormous when compared to the cost of implementing such an approach.

But if you will not have access to loyalty data any time soon, I recommend the following approach to at least get a sample of data about your consumers. This option may wet your appetite for a more robust loyalty system in the future.

If you have a gift-card program, go to Twitter and Facebook and identify some of your largest "brand fans." Find people who go out of their way to talk about your brand in a positive light. Maybe you will find some folks who started a Group about your brand on Facebook, or maybe you will find someone who has given you multiple positive reviews on Twitter. Tell these people how excited you are about how they have been supporting the brand and that you want to send them a gift card as a thank you. Send them a $50 gift card and then as a surprise, include ten $10 gift cards for their friends. Each card must be activated (registered) online.

Next, track the spend of your "promoters" and their friends. Try to identify those friends on Facebook and see if you can start to document the promoters' social graph. Try to identify the consumers who have the biggest impact on your business. Figure out how to best engage with the promoters and then ask them how you should go about engaging with other customers to gain more information about them.

If you have a database that helps you better understand your customers' wants and needs and if you have a database that tells you about your business' wants and needs, the "magic" is bringing the two together via marketing. When you start to track the marketing messages that are associated with certain communication vehicles and then tie that information in with the consumer and business information, the impact can be huge. When this happens, you can start answering questions like:

  • What is the customer count impact when I send a 15 percent off coupon to my "light" users over Twitter?
  • What is the impact on the average check when I execute a Free Standing Insert in an area where my location has been open less than a year?
  • How many Facebook fans are we adding as a result of a 5 second tag at the end of our television spots? Are these fans proving to be more profitable than non-fans?
  • Is it more profitable for me to turn a "light" user into a "medium" user or to get "heavy" users to spend 10 percent more each visit?

I know some of you are reading this column and saying, "Todd, that is just not feasible. Our brand has millions of customers and millions of transactions a year. A system like you are describing is just not scalable!"

I must respectfully disagree. I firmly believe the response "That's not scalable!" is the battle cry of the lazy. Tell me it would be too expensive; tell me it would be to complex. But don't tell me it is not scalable. Plenty of companies do things of much larger scale than this every day. It can be done; you just have to put forth the effort.

What do you think? Love it or hate it, I'd love to gain some additional perspectives. Leave a comment, or E-mail me at [email protected].