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Data-Driven Marketing for Restaurants: The Business Case

Marketing segmentationThere’s a massive change underway as best practices from retail and e-commerce find their way into the restaurant industry. These industries were the first to harness data in pursuit of better connecting with their customers and tracking the ROI of their marketing dollars, and they continue to see the benefits of the investment. Sixty-three percent of marketers reported that their spending on data-driven marketing and advertising grew over the last year.

Now, best-in-class restaurant brands are adopting data-driven marketing – marketing informed by the analysis of guest data– and seeing success. Seventy-seven percent of restaurants with an integrated data platform reported that they beat their revenues goal over the past 12 months, compared to 47% for those without. “We put a lot of focus on data,” said Chief Development Officer for Buffalo Wings & Rings, Philip Schram. “After a few years of running the business, we realized a mathematical model could help us make better decisions.”

Despite being slower to adopt data analytics (in other industries, data-driven marketing is either embedded or strategic for 78% of marketers), restaurants are ready to get going. According to recent Forrester Research, guest data and analytics have become strategic imperatives, led by the C-suite. “Our new board is driving [the guest analytics initiative]. They believe it’s part of re-inventing [our company]. . . . We can’t do it fast enough,” said one senior director of IT at a casual dining brand Forrester surveyed.

In an industry that gets more competitive by the day, data-driven marketing can provide restaurant brands with the edge they need to succeed. More than half of restaurant marketing and IT decision-makers “strongly agree” that using guest data, to improve operations and marketing, would give their brand an advantage over the competition. “In an environment where resources are scarce – it’s a thin-margin business –[…]you need to be able to make really intelligent decisions with how you prioritize investments. All of the information and insight that we’re now able to glean [from our data] helps us make better decisions on how to spend money to drive sales,” said Rob Gotti, CMO for Not Your Average Joe’s.

One of the main reasons why data-driven marketing is helping restaurants stay competitive is that their guests are expecting a more customized experience that data-driven marketing provides. In the retail industry, 73% of consumers prefer to do business with brands that use personal information to make their shopping experiences more relevant.

With all the optimism and enthusiasm around data-driven marketing and its proven success in other industries, why does adoption remain slow? Change means risk, and many decision makers fear they have little room to fail.

Taking risks is seen as a necessary evil in the restaurant industry, and while it is certainly necessary, it doesn’t have to be evil. However, data-driven decision making can help restaurant brands “fail fast,” “fail small,” and avoid mistakes. Domino’s – a true leader in the industry – employs a team of data scientists who analyze customer data. This team helps them determine quickly, before too many resources have been allocated, if an idea will be successful. A data-driven approach gives marketers a better understanding of who their guest is and enables them to be confident and proud of the marketing campaigns that they execute.

Finally, an investment in data analytics is not just a marketing investment. Insights gathered from analyzing guest data can help inform everything from menu management to site selection to personnel management. Data can be the rising tide that lifts all boats – helping break down silos for a streamlined and optimized operation.

Want to learn more about the impact data-driven marketing can have? Keep an eye out for more blog posts on the issue and join us for a live conversation on June 30.