Technology has been something of a lifesaver for many companies over the past 18 months or so, but there is an underlying problem that lurks behind the scenes which could prove to be detrimental to the future success of hospitality companies.
During the pandemic there has been a surge in the adoption of digital-based solutions including those from the major home delivery providers – online booking tools and order-and-pay applications that have given hospitality businesses the ability to service their consumers across channels and in a frictionless way.
These tools have been great for businesses desperate to generate any sort of revenue during incredibly uncertain times with stop-start lockdowns, periods of limited trading hours and myriad other restrictions. But there is a price to be paid for many of these applications. I’m not talking about the 30% the delivery companies charge or the chunky fees the booking firms take per cover – I’m talking about the loss of the relationship with the customer.
The providers of these solutions invariably seat themselves firmly between the operator and the customer, thereby eliminating the vital link between the two parties. This cuts off the flow of valuable customer data to the pub/restaurant and deprives it of using this information to accrue knowledge and build its business on the back of the insights that can be gained.
This is certainly recognised by Richard Allison, chief executive of Domino’s Pizza, who says that by handling its own delivery the company has maintained control over its data, which has proven to be a fundamental differentiator of the business: He said: “It’s incredibly important to us. When a customer orders from us we know their name, email, phone, home address and can learn and grow our business from this. We don’t want to share this with an outside party or for them to sell it on.”
From such data, the customer experience on the website can be tailored to the individual based on their previous behaviour. The valuable opportunity to upsell and offer them additional items to complement their meal is obvious. This data also enables companies to build profiles of their core customer types and use social media to attract similar groups of individuals.
It is this very data that many of the digital tool providers fail to share with their hospitality clients. It is clearly in the interest of these providers to retain this information as they can then keep the operators in the dark about their customer base. This ensures they remain reliant on the tech providers to bring in customers – for a fee, of course. There is much to learn from the hotel industry, where the many booking platforms including Booking.com, Trivago and TripAdvisor now control the customer relationship.
The importance of ownership of such data is apparent in the retail sector, where Tesco has put its recent strong performance down to its Clubcard loyalty scheme – relaunched last year – and which is underpinned by the rich data it holds on its shoppers. The tool is recognised for giving away rewards, but its fundamental value is in the insights the data provides the business. It is no coincidence that over the years, the buoyant periods for the group have been when it has placed Clubcard at the heart of its strategy.
It is also pretty instructive that Asda has finally launched a loyalty scheme – that is initially being trialled in 16 stores – and that McDonald’s has stated it will introduce its MyMcDonald’s Rewards scheme into the UK next year after its US launch in October swiftly attracted 12m members. Such schemes highlight how the relationships with customers, based on the data that companies hold, is becoming increasingly important as it allows them to directly – and crucially, with intelligence – interact with their customers.
As hospitality companies increasingly operate across a growing number of digital touchpoints, the value of data and the relationship with customers will become ever more valuable and a vital differentiator. They must, therefore, take great care to ensure they are not stymied by the data-hungry intermediaries’ intent on owning the customer.
Glynn Davis, editor of Retail Insider
This piece was originally published on Propel Info where Glynn Davis writes a regular Friday opinion piece. Retail Insider would like to thank Propel for allowing the reproduction of this column.