What merchants should consider when deploying new technology

26. September 2017.

As retailers and restaurants consider whether to deploy new consumer offerings such as a loyalty program, branded app or mobile payments, executives must consider whether such efforts help them acquire more customers to eventually get them into storefronts more often while coaxing them to spend more money.

Jayson Tipp, former senior vice president of strategy and chief development officer of Papa Murphy’s International, calls this approach the three levers of a consumer-focused strategy.

Tipp, who gave the opening keynote Monday at the fourth annual Mobile CX Summit in Philadelphia, acknowledges leaders will need to have hard conversations to determine whether such efforts will lead to a significant return on investment.

“It’s not ‘automagic,'” Tipp told summit attendees about the word he uses to describe the struggle merchants face in this situation. “You don’t make investments that automatically work.”

That being said, the list of success stories, particularly in the restaurant industry, is a short one.

Tipp rattled off names from the list such as Domino’s, Chipotle, Starbucks, Subway and Panera.

“The list is short because the investment is high,” Tipp said. “It costs tens of millions of dollars.

“[And] it’s not clear today if that price tag is being paid for quickly [from customer spend].”

Tipp cited a few examples of the money companies are spending in tech upgrades:

  • Popeye’s invested $2 million in 2016.
  • Chipotle reported a recent $10 million investment.
  • Panera said it spent some $42 million on its Panera 2.0 technology platform.
  • Starbucks invested an astounding $450 million in technology between 2015 and 2016.

Tipp singled out Domino’s as one company that doesn’t hide its success when it comes to its tech investments.

“Domino’s is very clear in their strategy,” he said. “They are every clear that their investments are driving more spend And they are thinking about where they make their investments.”

Domino’s was one of the first major restaurant chains to invest in technology seven years ago. Part of that investment includes the chain’s customers having the ability to order a pizza from almost any internet-connected device. Domino’s managed to create that technology in-house as well.

“Domino’s is more of a tech company than a pizza company these days,” Tipp said.

Finally, Tipp reminded attendees that even a mid-sized restaurant chain can benefit from technology investments. You don’t need to be a Domino’s or Panera to experience success.

“The opportunity for a mid-market could be as much as $400 million as they implement digital tech,” he said. “All of this leads to conversation that start with, ‘we should have.’

“We should have a loyalty program. We should have a mobile app.”

But when thinking about such options, Tipp advised attendees to keep the three levers of a consumer-focused strategy at the forefront of the conversation:

  • Does this effort help us acquire more customers?
  • Does this effort help us increase visit frequency?
  • Does this effort help us prompt higher spending?

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