By: Jake McKenzie, Chief Executive Officer
Marketing is rarely an exact science, and people are rarely good at spotting the opportunities for improvement. We are irrational humans, and the demands on Chief Marketing Officers are nearly infinite, especially in a fast-moving category like quick-service restaurants (QSR). This pace leads to natural sources of inefficiencies in how marketing is executed. These inefficiencies can be difficult to detect, as they can be hidden by successes or because they are common in the industry, leading those CMO’s to get caught in the “conventional wisdom” trap of marketing, or simply being inefficient because of the fast-changing nature of consumer preferences and media consumption. Below, we review the top 10 most common mistakes in QSR marketing from the point of view of psychology-driven marketing.
Failing to define where your growth is coming from (marketing inertia)
Everyone is seeking annual growth in same store sales, generally targeting a few percentage points of growth each year for established locations. Most marketers take their goals and immediately launch into tactical planning, ranging from price increases to LTO strategies to drive higher average receipts. However, this plan or strategy omits the critical step of defining exactly where NEW sales will come from. However, there are two core categories to answer this question (depending on the maturity of the business): getting into the rotation for new customers (conquest) and coming up in the meal rotation of existing customers more frequently (frequency). Both are valid growth strategies, yet each requires strategic thinking for methodology, establishment of associated key performance indicators (KPIs) and, most critically, marketing alignment.
Misunderstanding what drives customer behavior change
A strong argument could be made that this should be #1 on the list as most marketers (in any category) don’t understand what really drives customer behavior. The common QSR executives’ answers to this question generally revolve around two common (and misguided) guesses – price and new items. The notion that price is a strong driver of behavior change has been long since debunked. Twice in the last 10 years, the Nobel Prize in Economics has been awarded to Psychologists (weird, right?) for proving that consumers don’t use price and other rational drivers as a major decision criteria (unless it’s a “major” change, such as adding a dollar menu), even though consumers will self-report that they do change on surveys. Similarly, the notion of having “new” products can be successful, but it provides diminishing returns fairly quickly as many new items are considered only AFTER a consumer has chosen where to eat. What does drive the most behavioral change? The answer is happily dull – it is simply how your offerings fit into their life (your brand), and when your brand occurs to them (your media). Therefore, a renewed focus on these items drives far higher returns.
Failing to answer “why you”
The number one way to affect consumer selection of your QSR brand is how your offering fits into their life at a specific moment in time. If a consumer is feeling indulgent, a great burger and fries may to the trick. If they are in a hurry, speed becomes the issue. Kids to feed, who has popular kid options, toys, and maybe a play area? Many brands, even very mature ones, have spent very little time in trying to answer this question in an optimal way, even though this question is the very essence of what a brand is and is the major driver of consumer choice. Yet, when done properly, the results can be astounding. For instance, consider the growth of Arby’s when they realized they should be focused not on “roast beef” but on “meat indulgence.” The results were massive, sustained growth.
Having a misguided LTO Strategy
Let’s start with the obvious – having new products can be an effective way to drive growth in transactions as well as higher margins. However, there are two common mistakes with LTOs. First – LTOs should be an example of, and extension of, the brand (the “why you”) in the mind of the consumer. A favorite example is when Taco Bell launched a sloppy joe type of product called “The beefer” in a strategy to combat the rising popularity of burger places. Suffice it to say, its growth didn’t last as it wasn’t a good example of the brand. The second most common LTO issue is the over-reliance on LTOs as a marketing strategy. Some brands have come to use LTO promotion as their sole marketing message, forgoing or ignoring a core brand message. The result is a consistently declining return, AKA the law of diminishing returns.
Poor media planning
For many QSRs, media strategy is often separate from the growth strategy and/or the creative strategy. “Hey, go buy some cheap TV, and we’ll figure out what to run on it later.” The natural results is a wildly inefficient media strategy. Brands often over-rely on outlets that provide reach (such as TV) or frequency (such as digital), rather than a balance of each to support the growth strategy. Additionally, the media plan often doesn’t reflect the growth strategy – you need to bring in new customers, yet you keep buying the same inventory and just talking to your core user, rather than supporting the focus on the creative message. In short, media gets treated as if it is not part of the core growth strategy and is secondary to messaging. Given the large dollars put into media, this is a costly mistake.
Bad media buying
Most marketers think they are getting a good “deal” on their media costs, at least until they have it reviewed or audited. Buying spot/local media is tedious and involves a lot of repetitive work, leading to inefficiencies to creep in following an effort to “just get it done.” It is not uncommon for brands to find that they are able to save 15-25% buying the same spot media using more disciplined buyers. In addition to overpaying, there is often insufficient thought given to cover stores efficiently and evenly. Instead of looking at each store’s trade area (the few mile radius that most business comes from), they tend to look at the DMA as a whole. Unless you have location saturation in a DMA, the results tend to be that some stores get well-covered and others not-so-much, which has a linear effect on sales. For instance, brands shouldn’t be surprised when isolated stores, that don’t get sufficient media weight, struggle with sales and growth because TV was “just too expensive” for this single location. The opposite is true as well – a broadcast TV strategy to support a few locations in a DMA is highly inefficient. Furthermore, there are more sophisticated ways to support stores in low-penetration markets – they simply take better thinking and buying. This inefficiency leads to lost sales.
Neglected reputation management
We know, with certainty, two things about customer reviews. The first is that your stores are getting reviewed online, in lots of places, every day. The second is that other customers will use these reviews. Therefore, how they are handled by the brand will help determine where consumers eat. Google conveniently puts these reviews into the search results for locations, yet many brands continue to stick their head in the sand and pretend that they don’t exist since they are challenging to organize and manage. However, there are many tools, services, and agencies that can turn this pain point into an advantage, adding clear growth in the process.
Boring social media content
Consumers do not follow brands online just to see daily pictures of your product. They are on social media to be entertained. Brands that develop a personality and extend that personality into their social media drive far higher margins and growth rates than those that simply have a fresh-out-of-school rookie “figuring it out.” It’s your core audience that follows you, giving you the ability to drive sales without spending additional media dollars. Wendy’s has done such as exceptional job of this, that they are looked to for responses on topics well outside of Wendy’s food and have driven large growths from their best-in-class social media strategies.
Having no “buzz”
For nearly all major businesses in the US, public relations is a cornerstone for their growth strategy. It’s free media AND it has higher credibility since it appears to be coming from a 3rd party, yet many QSRs neglect this outlet. There is a plethora of ways to take advantage of this from truly earned media and stunts (like IHOP becoming IHOB briefly), cause marketing, tapping into national events (Rita’s Italian Ice got major national coverage on the calendar’s 1st day of spring), and supporting local market initiatives and sponsorships. All these drive growth and have a huge return on investments.
In-store marketing neglect
Most marketers recognize that in-store marketing presents some grand opportunities for marketing. However, many of the focus areas for the marketing department extend just to LTO’s, since they are core to the monthly marketing strategy. Often neglected, however, is everything else. From the brand story opportunities, additional marketing touch points (such as the snarky messages Taco Bell added to sauce packets), to the actual customer service, there are innumerable opportunities for marketing to help drive growth. It’s notable that Chick-fil-a has gained a very loyal customer following and additional buzz from the politeness cues from their counter employees. Given that there are no media costs for these efforts, the returns can be substantial.
This strategy is by no means an exhaustive list of issues, but the general idea is for QSR brands to take a step back and evaluate what they are doing at each stage and work to increase effectiveness. In the age of quick CMO turnover and an unlimited amount of areas to focus on, this can be challenging. While the challenge is real, sustainable growth is achievable with an evaluation of some basic marketing areas and the selection of great partners that understand the psychology of growth. Marketing is rarely an exact science, and people are rarely good at spotting the opportunities for improvement. We are irrational humans, and the demands on Chief Marketing Officers are nearly infinite, especially in a fast-moving category like quick-service restaurants (QSR). This pace leads to natural sources of inefficiencies in how marketing is executed. These inefficiencies can be difficult to detect, as they can be hidden by successes or because they are common in the industry, leading those CMO’s to get caught in the “conventional wisdom” trap of marketing, or simply being inefficient because of the fast-changing nature of consumer preferences and media consumption. Below, we review the top 10 most common mistakes in QSR marketing from the point of view of psychology-driven marketing.