How Big Data Technologies Are Revolutionizing Restaurant Marketing
A typical restaurant has a wealth of customer data that can't easily be leveraged. But the world is changing.
Since taking over as CEO of Fishbowl in late 2014, I have met with a number of our clients to understand the challenges facing restaurant CEOs, CMOs, and CIOs, and one trend really stood out. Restaurant marketers have a lot of data about their guests, but they have a hard time leveraging it to get a detailed picture of them. They don’t really know who their guests are.
The data can be overwhelming. A typical restaurant will have a point of sales system containing payment-, check-, and item-level detail about all their guests, potentially a loyalty program with data about those enrolled, and email metrics from all of their campaigns. Restaurants will also have access to public data sources like their Twitter and Yelp pages, which contain information about the guest experience and brand sentiment. But the data points live in silos—restaurateurs cannot easily combine these data sources to develop insights that could be used for more effective marketing or better decision making.
On the technical side, there is much complexity. These data sources are in different formats. POS data is structured, email data is unstructured, and Twitter data is streaming. Restaurants with multiple locations and multi-year data could easily have a terabyte of data—not a massive amount, if you are Google and Amazon, but not easily reviewed in tools that a restaurant marketer is likely to have. Research firms like Gartner and Forrester call this “Big Data,” which comprises of any combination of datasets with large volume (terabytes to petabytes), variety (structured and unstructured), and velocity (streaming data like Twitter). For restaurants the second “V”—variety—is the biggest challenge.
There are also financial challenges. The technology offered in recent years to analyze “Big Data” is expensive. Data warehousing applications, like those sold by Oracle or Teradata, cost close to seven figures and are not geared toward the restaurant industry. But the good news is that the data world is changing. Restaurants can take advantage of their data with the next generation of analytical tools built by the great Internet pioneers—Google, Yahoo, and Amazon. These companies once had the same “Big Data” problems, but fortunately for us, they solved them by developing an open source software framework that eliminates the complexity of aggregating and analyzing silos of data. This framework is called Hadoop—after the toy elephant of the creator’s son.
At Fishbowl, we saw the power of Hadoop and recognized that we could leverage it to help restaurant marketers solve their data problems and gain better insights into their guests. What we did was to integrate Hadoop into our flagship marketing platform so that guest analytics is the foundation of all of our marketing solutions. What does this mean for our clients? Well, here are some case studies:
For one client, we used analytics to maximize campaign performance by segmenting their guests into frequency, recency, and spend cohorts. Guests with high frequency received an offer for a free beverage if they spent a certain amount or more, while high spending guests received a “thank you for your loyalty” message. As a result, open rates increased across the board.
For a different casual dine client, we combined transactional information with demographic and psychographic data to geo-target a direct mail campaign. We were able to show the client who their best guests are, based on purchase behavior and where they live. As a result, the client is using direct mail cost-effectively by targeting high-return geographic areas.
For another client, we used analytics for a site selection decision. The key to site selection is to identify a location with a high density of “best guests,” but far enough away from existing stores to avoid cannibalization. Using demographic and psychographic information with geo-targeting, we were able to show the client that their intended location would not be a good choice. The revenue impact of this decision alone was 10 times their investment in analytics.
There is no question that restaurant marketing is about to undergo a transformation, just as it has in the retail, e-commerce, and hospitality industries. Successful marketers will need the power of analytics to learn who their guests really are. Consequently, they will make not only better marketing decisions, but also better decisions about strategy, revenue management, and even real estate choices. It sounds daunting, but there’s never been a more exciting time to be a restaurant marketer.
The opinions of contributors are their own. Publication of their writing does not imply endorsement by FSR magazine or Journalistic Inc.