Canada’s No. 1 casual dining chain is embarking on a transformation around guest loyalty. This year, 350-unit Boston Pizza celebrates its 50th anniversary and, as a part of its next growth phase, is reevaluating what drives visitation and frequency for its 40 million annual guests. Having recently completed extensive market research around guest loyalty, Boston Pizza is shifting resources away from traditional points-based loyalty, toward creating experiences instead. A key component of the new loyalty strategy will be technology. Boston Pizza’s VP of marketing Alex Green talks to HT about the research findings, the company’s transformation in loyalty, and what it’s like for a marketing executive to jump head-first into technology strategy.
HT: Boston Pizza conducted extensive research on guest loyalty and, based on the findings, is changing its strategy. What was
Boston Pizza’s approach to loyalty before?
AG: For the past 20 years, Boston Pizza (www.bostonpizza.com) participated in a coalition loyalty partner program to offer guests a point-based incentive for every visit. It equated to about 20 percent of our marketing spend. As we started to really pull back and assess the core motivators and value drivers in casual dining, it started to become very clear that the key things that drive our guests’ visitation, frequency, and spend were largely around food and restaurant attributes. Although we could be highly differentiated with a points-based program, it was of lower impact than food and service. Yet it was consuming a large portion of our marketing investment. It became clear that we could better leverage those dollars to add more value for our guests.
HT: What did you learn about guest loyalty from the research?
AG: We found that, at a very core level, it’s still about food and service. As marketers, we’re constantly pitched on new technology and ways to communicate with guests, to deliver and track offers, and to incentivize behavior. We’re seeing increasing budgets pushed into those areas. When we got to the heart of what our guests value, it was those same things that are at the heart of why and how you create a restaurant: food, service and atmosphere.
For me, loyalty became a shift from earn-and-burn to finding ways to add value to those core experiences. It became about seeing digital technology as an enabler versus a channel to create more targeted discounting. That was the first reset. As a marketer, you go through all of this research, and then it ladders up to something that’s so simple. There’s a reason why it’s called the food service industry –because it’s around food and service.
HT: Do you think that restaurants in general should look to change their approach to guest loyalty?
AG: It all depends on how you approach loyalty. I believe that if you define loyalty within the parameters of earn-and-burn, then yes, it needs to be redefined. The true value that brands and restaurant companies provide that fit under the umbrella of loyalty haven’t fundamentally changed, but new technology and the ability to track incentives has made us overly focused on loyalty as an earn-and-burn framework to promote repeat business and incremental spend.
HT: Was it at all frustrating, to conduct this extensive research, and be led back to something that is, as you note, so simple?
AG: No — in fact, this kind of outtake is liberating. A significant portion of our marketing spend was going against earn-and-burn loyalty. Meanwhile, there are all of these opportunities around new ways to drive loyalty, but we needed funding to go down that road. It’s liberating to shift focus away from targeted discounting, to reinvesting back in the experience. This gives you the direction and assurance you want to go after an ambitious technology infrastructure, and to create new experiential elements. And now you know that you’re delivering against what guests tell you drives value.
There was one other outtake from the research that was also interesting. Within the casual dining segment, Boston Pizza has broad appeal. So to continue to build momentum behind our brand, we need to make sure we’re connecting with a very wide audience and delivering relevant messaging and experiences. Overall, our previous loyalty programs pulled a significant percent of spend against a relatively select loyal base. We were taking a group that was already loyal to Boston Pizza and trying to influence them to spend a little bit more. This was potentially pulling our investments away from improving the experience for wider audiences. This was also about broadening our appeal rather than focusing on a select segment of our customer base.
HT: How are you using this insight to change Boston Pizza’s
approach to marketing and loyalty?
AG: We’re now road-mapping our technology and infrastructure investments to improve the guests’ experiences around food and service. At a very basic level, we’ve looked at our existing infrastructure to identify where the gaps are as they compare to a prioritized list of where we think we can add the most value. For example, Boston Pizza has a very healthy take-out and delivery offering. Since inception, we’ve known that take-out and delivery relies on convenience-based ordering, so now we’re looking at how we can create better online and mobile ordering experiences, including building digital apps, to further improve convenience.
HT: What can you tell us about how Boston Pizza is evolving its infrastructure to support this new direction?
AG: We know we want to get to a single view of the guest across all touch points, including online and in-restaurant. We’re working through the solution architecture that will allow us to establish a single view of the guest, and then link that to different transactions across our touch points — this is a key priority. We’re also assessing and improving our ability to facilitate actual transactions through our digital channels, including both online and mobile. As we look to improve these, we’ll also look to improve our tracking and analytics. Then we’ll use that data to support our CRM and communications, so that we can manage, deliver, and track targeted offers and incentives across all of those touch points. There will still be an element to the program focused on offers and redemption, but it’s only one part of a more progressive digital infrastructure.
HT: What criteria did Boston Pizza use to select the technology partners that will build out its digital infrastructure?
AG: We developed a relatively specific list of criteria for our partners. Obviously, we wanted a cost-effective solution; and one that enabled the short-term functionality and features we’d need, but that was also robust enough to support more complex initiatives in the future. We wanted an open versus closed solution to maintain control over customer data, and to be able to evolve and scale over time with limited customization needed. We also wanted established partners with experience in the casual dining space, and we wanted proven integration with some of our existing systems.
Based on all of that, the key partners we’re working with are Paytronix (www.paytronix.com) for our loyalty engine — they have great experience integrating into our existing (www.positouch.com) POSitouch point of sale. For online transactions and e-commerce, we’re working with Onosys (www.onosys.com), and have been for about five years. We’re also engaging with branding and CRM strategy agencies that we have yet to disclose.
HT: As a marketer, you now collaborate closely with Boston Pizza’s IT team. This is an objective that IT executives are also under pressure to unlock. How are you learning to work more closely with your technology counterparts, and what advice can you offer others on this path?
AG: Marketers are extremely passionate about guests and the guest experience, and how to add value to that experience. The challenge sometimes in bridging the gap is that technology teams have that same passion for the technology, the solution, the programming, and the architecture. The number one thing is to establish consistent dialogue around how technology can create these new experiences for guests, and how it can allow marketers to do what they’re already doing, but in a more impactful and progressive way. You could hold the mirror up to marketing for us to build that confidence, too.
You definitely need common language and understanding. Start with the guest experience and use that as your focal point, and then work back to define the requirements you’ll use to assess different solutions. We worked together, in terms of marketing and IT, as we defined what we wanted future guest experiences to look like. But it goes beyond just that — it’s the entire management team at Boston Pizza: integration between marketing, IT, operations, and training and development; this has been a priority for all of us. It’s a very collaborative process and is very open — sharing new ideas, articles, and reference points to create more consistent dialogue and a shared pool of understanding.
HT: Boston Pizza’s experience is a great case study in the overlap between marketing and technology. Across industries, these teams will become increasingly overlapped. Gartner, for example, anticipates that by 2017 CMOs will spend more on IT than CIOs. How do you respond to that prediction?
AG: As a marketer, when I see that quote, it keeps me up at night. The demand on marketers to become increasingly IT savvy is very different than what we’ve done in the past. Ultimately, it’s a massive opportunity for marketing and IT. The overall investment in technology will continue to increase, so the real challenge is how these two areas of the business can work together to capitalize on new solutions. Although the influence is shifting, the skill set required to effectively allocate those dollars is still co-owned by marketing and information technology. It’s a huge opportunity not only for the organization, but also for marketing and IT professionals — to define ways these teams can work together to capitalize on new solutions. The companies that can move faster and smarter will reap the benefits.