Jeremy Julian
Jeremy Julian
52:39
Owner: Jeremy Julian
loyalty, loyalty program, brand, people, guests, restaurant, marketing, data, cdp, machine learning, bit, customers, spend, program, groups, offer, database, olga, platform, talk
Olga (70%), Jeremy (30%), Intro (1%)
I
Intro
0:02
This is the restaurant technology guys podcast, helping you run your restaurant better.
JJ
Jeremy Julian
0:13
Welcome back to the restaurant technology guys podcast. We thank you everyone out there for joining us. As I say, each and every time I know that you guys have got lots of choices on how you spend your time and energy, so it’s a privilege to get to come to you guys on the airwaves. Today, we are joined by a very special guests and her and I were talking prior to the show, it’s kind of interesting because both of us have been in the restaurant space for quite some time but hadn’t gotten the privilege of meeting until very recently. I’m gonna let her introduce herself. But she came by way of I think our first intro was through a former guest on the show, Tammy Billings. And then Olga and I have and other people on our team have just continued to talk, but I’ll go Why don’t you introduce yourself to the audience? And then we’ll talk a little bit about what what you get the privilege of doing day in and day out in the restaurant space? Yeah,
OL
Olga Lopategui
1:03
absolutely. Thank you, Jerry, when I see you jump in a skirt with a lot around my last name, which most people you know,
JJ
Jeremy Julian
1:09
I looked at it and they said, You know what, I’m gonna jack it up pretty bad. So I’m not even going to try sometimes. I’ll work my way into them every once in a while. But, but this will not happen.
OL
Olga Lopategui
1:19
No, not this one. Yeah, so my name is older la parte de la parte de is a Bosk surname, I’m borrowing it from my Puerto Rican husband. But as you can probably hearing my accent, I’m not from around here originally or not from Puerto Rico either. I was born and raised in Moscow, Russia, which is currently misbehaving, but I have nothing to do with it. So don’t blame me for it. And I’ve been on the world of restaurants for Well, I guess over 20 years now. So my, my background is unrest and marketing I work for in Dallas, like Jamia was with Pizza Hut for a number of years, KFC, tgi fridays. And then about four years ago, I started the restaurant law specialists, which is a small consulting firm that specializes in restaurant loyalty. So we work with desktop chains that have loyalty programs, or think about launching loyalty programs. And we’re holding them through everything from strategy to education in the platforms of their choice. We’re not affiliate not affiliated with any particular software. So we work with, you know, was with you guys, that’s, that’s, that’s our approach.
JJ
Jeremy Julian
2:32
I love it. And I know we’ll dig quite a quite a bit into into the ideas. You say, you know, you you’ve been in this space for 2020 years or over 20 years. Talk to me a little bit about kind of the beginnings and how, how did you steer towards restaurants? How did you steer towards marketing? Because I, you know, I’ll make you go into the wayback Wayback Machine to kind of figure that out.
OL
Olga Lopategui
2:54
Yeah, it’s a funny, it is supposed to have a good purposeful answer, but they really fell into a lot of things in my life. So this was one of those things that I fell into. So I, I started my career as a corporate lawyer in the oil and gas industry, way, way back, then, didn’t like that very much. Want to Harvard Business School where there was a bunch of soul searching and trying to figure out what you what you like, and it turned out I like food more than anything else will then travel. And I made a non traditional choice to join yum brands, international division, out of out of that MBA program, everybody looked at me like that was crazy, you know, you do. First you become a lawyer, then you get an MBA and all your soul gets in chicken. And but it was fun. It was fun. I love the food, I love being around it. I love being loved being around international markets, I got to see a lot of the world that way. And then over time, you know, Mark I ended up sticking was a marketing function, I worked through a little bit of supply chain a little bit separation. So had like well rounded exposure to the business. And then just a few years back, when I felt like I’ve had my fill of corporate, I figured I’ll just started a consulting firm here. I love this.
JJ
Jeremy Julian
4:16
I love it. So I’m gonna ask you to define loyalty for us, especially in the restaurant space, because I think I mean, I think oftentimes, when we get on these these shows, and I talk to guests that have been working in this space, what young might define as loyalty might look very different to even what McDonald’s might define as loyalty, you know, two different brands competing for some of the same market share, and then you’ve got your mom and pop. So why don’t we dig into what do you consider loyalty for restaurants? And, you know, because loyalty from a package perspective versus loyalty from just kind of a a definition is oftentimes, at least when I talk with different people, they have different definitions of what that means. Yeah, long
OL
Olga Lopategui
4:59
to What is loyalty is a very loaded question means different things to different people. But I’ll tell you how I view loyalty from the narrow angle of what we do at trust includes a specialist. And I would even say the name of the company, restaurant loyalty specialist really should be restaurant rewards specialist as opposed to loyalty. Okay, because a lot of the things that we do are substantially more tied to rewards and guest experience as opposed to true emotional loyalty. So, like, a couple of my friends specialize in this industry saying Loyalty. Loyalty programs are a misnomer. Loyalty programs are really create rewards for the guests in order to encourage more loyal behavior and more repeat visit higher frequency and so on. So when I look at, what do you call the restaurant loyalty programs, what I see is programs that help generate behaviors that are beneficial for the restaurant, the restaurant chain, do they truly how often do they truly create that deep emotional bond? You look into the eyes, and you’re like, Oh, my God, I love it. For some guests, you can get there for the vast majority of the guest database, what you’re looking at is incremental transactional behavior, that everything you do within the loyalty program, and helps move them a little bit into an extra transaction, a couple extra dollars here and there. Just to delay just a little bit. Do you always create that emotional connection? In most cases? Not. But if you’re honest about it, you couldn’t get more out of it? Because you’re not the loser? No.
JJ
Jeremy Julian
6:36
Yeah. Well, and and it’s funny, because I’ve been doing this for almost 30 years now. And we, we would often talk to restaurant, you know, restaurant marketing groups, restaurant technology groups, and oftentimes, there’s a divide between those two. Number one, let’s just start there, that marketing wants all of these crazy ideas, and, and the tech firms like, whoa, doesn’t quite work that way within our point of sale, or within our CDP, or whatnot. But the the, you know, 20 years ago, when you started in this space, that there wasn’t a whole lot of data, it feels like more and more we continue to work in a world where we’re getting data about what consumers behaviors are looking like, so that you can offer those words, why don’t you take me on a journey of kind of where we were and, and how you’ve seen a shift, specifically, in the last probably five years, to understanding who the consumer is and where the data is at because, again, probably 20 years ago, get some form of data, but you often would put an LTO out and you’d be like, Okay, how did it do sales wise? And did we end up getting the behavior that we wanted? Versus now we truly can start to measure the the incremental success that we’re having?
OL
Olga Lopategui
7:42
Yeah, absolutely. Yeah. But back when I started my Pizza Hut, franchisees were still debating if they need a website, like why would you need a website for a pizza? Yeah, who’s gonna who’s gonna use that you just call? So yeah, that’s, that’s where we started, we don’t consumer data over time you started getting to a point where you can gather more information about who they are. And you can gather more information or almost all the information about what they like, when they visit, the how much they spend, and all of that good stuff. And so they boast the amount of data available to companies right now. And the ease of acquiring that data is absolutely fascinating. So the number of records associated with individual customers that are being gathered was, you know, like midsize chains, is just absolutely, truly shocking. What is interesting, though, is in, in my experience, it is very rare that the companies actually know what to do is yes. Because it’s no, it’s, it’s tricky. And so one of my favorite examples of data that I consider not super relevant for loyalty program purposes is demographic information, right? So you happen to be male living in Dallas, Texas, I happen to be a female living in Austin, Texas. And that seems like a fairly substantial difference. But if both was like the exact same product, the same brand new probably should be targeted. In the same way. If we can come in on a similar cadence, and they have the same product preference, a similar span, it doesn’t matter, they the gender doesn’t make any difference in geography, probably doesn’t make that much difference. That much difference either. So as you look at the data that is being delivered on your interests, you it’s really important to determine well, is any of that actionable? And if actionable in which way? Yeah, right. If you’re approaching that just cool period, are you going to target more females presuming they’re they are more likely to celebrate with their kids or go out with Western kids? If you’re thinking that’s the case, maybe but probably not, you’re probably not going to divide it by gender. So, to me the most interesting and the most relevant data for loyalty program purposes of transactional data. So I want to know, what do you eat? What do you never eat? When do you come in? How many people do you bring with you? When do you never come in? And what is the next item that might pique your interest on a show it to you in your email inbox or in your push notifications, or whatever? You let me? Let me market is true.
JJ
Jeremy Julian
10:20
Yeah, well, and it’s interesting that you say that because Tammy, who’s is the person that introduced us, you know, we talked CDP probably last year at one point. And that’s, that’s kind of a big buzzword within the restaurant industry is CDP. I guess, first, why don’t you define for us what CDP is. And then we can talk a little bit about even usage, because I happen to be a father of four. And so depending upon where I’m going out, and when I’m out, if I’m going out with all six of us, it’s a different behavior than if I’m going out with my buddies and, and kind of what that looks like. But why don’t we dig in a little bit to CBP, because I think that’s often also, at the data level, something that that people don’t quite understand. Who would you know what it is, and kind of why people are trying to capture that information.
OL
Olga Lopategui
11:09
Yeah, in my experience, I think I’m not a CDP expert to work with a couple of CDP’s. For a few clients, I’m assuming more on the CRM load side. But obviously, CDP is a PART part of the experience, particularly for larger clients. So what what CDP can give you that your typical loyalty platform or your marketing automation platform, doesn’t doesn’t give you is the ability to crunch the data and analyze the data, and next president dissect and slice it in any way you want. Because when you are working inside a level two platform, all of your reporting is skewed towards low to specific metrics. Yeah, you can kind of get around to some other things in there if you’re very creative, but really, you can’t really do it very well on similarly with a marketing automation, platform marketing automation platforms will will fixate on engagement metrics, right, but not not some other things that you may want to want to be looking at. So what CDP allows you to do is to bring it all together, it also allows you to bring multiple data sources. So your loyalty platform may have information about your loyalty customers, but then you will have online ordering platform on the side that is also gathering information about some customers, and they don’t talk directly to each other. So somebody who forgot to log in when they ordered online last week, and then showed up on scan their barcode, those those transactions will never be married, unless attached to the same person. Unless you have a CDP doing all this work in the middle, then you won’t know that, you know, Jeremy yesterday bought four kids meals, but the next day, he actually put aside a bunch of beers with a bunch of budget at the same location, right? So your target, potentially for both? So that’s what CDP does. Having said that, once you’ve set it up, you still you still need to decide what you’re gonna use it for. Just knowing that Jeremy did that doesn’t get you three or four. It’s wonderful, but how much are you gonna pay for the beautiful knowledge?
JJ
Jeremy Julian
13:09
Yeah, well, and what are you going to do with it? And that’s one of the things that you talked about earlier is is a lot of times the data is great, but if you don’t have you no prescription to say, this is exactly what we need to do with that data. It makes it almost useless. And I don’t mean, it’s not completely useless, but it’s not necessarily driving the behavior that you want. Why don’t we take it take a walk down that path, then you talked about engagement, you talked about getting the data, but you know, I guess at the loyalty level, and kind of what you guys are trying to do talk to me about the behaviors that you’re looking to drive within the Restaurant Brands, because, you know, having a whole bunch of Facebook likes or having a bunch of people commenting on your tic TOCs mean nothing if it doesn’t drive the behavior that you’re looking for. And so what are some of the outcomes besides just purely sales numbers that restaurants are looking for when when they engage with loyalty?
OL
Olga Lopategui
14:03
Just purely sales numbers. So that’s really what everybody is looking for. Every everyone I talked to is like, what are your goals for this engagement with us? It’s like, oh, I want to increase my sales. Like,
JJ
Jeremy Julian
14:14
percent increase in sales on my LTL Come on. It doesn’t happen that way. But yeah, so
OL
Olga Lopategui
14:19
it doesn’t happen that way. But also like take a little step back. Yeah, the number of Facebook likes, percent doesn’t matter. Views, doesn’t matter versa. However, we all know that visibility is linked to top of mind awareness on top of mind awareness is linked to sales. And this is not my my part of the marketing chain. I don’t do anything with social media, with our clients work with partner agencies. So this is not just genuinely media placements visibility through media is not my partisan piece of pie, but it is extremely important that those likes do matter. They absolutely Absolutely no matter how much do you pay for them as a different question? Do they matter? Five bucks a pop? Probably not 50 cents a pop? Probably yes. But going back to, you know, what do you do? What do you do with that data? So I might, as I’ve been building out our approaches to restaurant loyalty and rewards marketing, so what we’re trying to do was we’re trying to shift behavior of the user by either getting him to spend a little bit more, or getting them to come in a little bit sooner, or ideally, both and at a bare minimum, getting them to look at our communications a little bit more, because that drives additional visibility, visibility translates to top of mind, Top of Mind increases frequency, of featured and all that, all that good stuff, not all of it is traceable, right, some of some of these, you will not be able to translate directly to sales. But you know, you do this work, sales show up in the app, as you think about how do you use customer data to get there is the key philosophy that we use is people. People pay attention to advertising, if what they see in advertising is something that they’re already interested in. Absolutely. And I’m kind of butchering the quote. But basically, if you, if you like, shrimp salads, chances of you clicking on shrimp salad are substantially higher than the chances of you clicking on a burger from the same chair. Yeah, I am. That’s really the whole logic, when you see people purchasing certain items, you want to give them predominantly more of what they already like. And every now and then you want to branch out into something that you think they might like, or sometimes something they just market to everybody in the database, like your OTO. But if you’re LTO, happens to be brisket, tacos, and you have a sub segment of our population that predominantly buys salads, and you’ve never seen them touch a car before. So maybe you target that sub segment of your database with a practice of what was a brisket, taco message once, maybe twice in a quarter, but you don’t go at it every every week, like you do with the rest of the database. That’s due to the principle more stuff that they like, well, stuff that they probably don’t like.
JJ
Jeremy Julian
17:14
Well, and again, we talked about data earlier. And I think more and more, it’s becoming available to you, I have a real real life example, I don’t drink alcohol. But one of the brands that that I’m on their loyalty program that happens to be a customer of ours, and was sending me marketing content about their beer club. And so I sat with the CMO and said, let’s talk a little bit about what that might mean. So I was sitting with their CMO, and I’m like, Hey, so how do we get to a place because that ultimately makes me not as open to looking at their communication, when they may have something that I want. Talk to me a little bit about kind of what that looks like within your world as it relates to loyalty and marketing to those consumers because you don’t want them to turn off all of the messaging, because the minute that you turned it off, whether it’s on the in app notification, or with all of the rules with emails and whatnot, you don’t want them to turn off all the messaging, you want to really understand what is resonating with them and what’s not, because my wife might really like their new cocktails that came up because she does drink and I don’t, it’s just a different conversation.
OL
Olga Lopategui
18:19
Yeah, that’s fine. It’s all in our family. It’s the same I drink and my husband doesn’t want his images, he’s getting marketing emails, promoting hotels all the time drinking every now and then that brings a very challenging for him because very often, it is hard to tell from the consumer behavior, which items are purchased for that consumer and which ones were for the group that their words. Right. So it’s it’s it’s not an easy thing to identify when you sometimes you show up by yourself, sometimes you show up in group, figuring out how do you contribute the main main course of beverages to individual consumers, that is pretty tricky. So it’s, I think that’s not going to become perfect for a while, although there are some machine learning methodologies that start getting in that direction and start identifying, you know, who is buying what, but that part is not perfect. So the way the way that we approach it, just as our less than our own is, I would say it’s fairly rudimentary, but it’s also fairly effective. We just look for any given item, one of the popular items, how frequently when you come in, do you purchase that item? And if that item is on your check 50% of the time or more, chances are you’ll like it or maybe somebody in your family likes, yep, no, this is probably a good item to leave. If something is never only check, it’s probably a good indication that that category of a particular item is not something you want to assume more. So we started looking at the database and doing this segmentation exercise where we say hey, here are the top 10 items. On the menu here are people that almost always purchase steak here are people with almost always purchase shrimp salad here, people will almost always purchase steak salad here, people would always buy chicken tenders, which looks like for kids or kids meals. And essentially, I will build a model where we say, hey, this group of people most likely let’s let’s double up on steak messaging for them, and let’s take them out of dessert as much as possible. And those let’s, let’s give them more salad and healthy. Hallo, all of all of that good stuff and less of heavier items. And then becomes tricky, because you know, you may be in both groups, right? A lot of people will fall into multiple groups. Yeah. And then the other layer you put in on that is what we call the RFM. recency, frequency and monetary sound. So in addition to the preference in terms of their product preference, we’re also look, how often have they been in, are they due for the next visit or not yet, if they do for the next visit, you wait until they’re a little bit overdue. And progress in the month offer, make sure that they don’t disappear, I mean, quite a bit overdue. So you have to kind of time it to make sure that they’re not just counting to earlier, you’re not driving that visit with a discount when they probably just didn’t get near the discount to show up. But you also don’t miss the window, or they still remember about you. And they probably would have shown up was a little a little fun, it’s playing?
JJ
Jeremy Julian
21:36
Well. And it’s interesting that you bring that up, because that was going to be the line of questioning it was gonna go down this is how often do discounts play a part I was on, I had an interview recently with the CEO of a brand that really became known as a brand that that would only drive traffic when there was a discount. You know, and we all know those brands, and you know, famous retailer Bed, Bath and Beyond, they’ve got the blue and white coupons and my wife’s got 40 of them and in our glove box, why don’t know why we saved them all. But we do. And, and at the end of the day, the only reason we go there and every time we go there, we’ve got that discount. And I’ve seen lots of brands struggle because they get addicted to the to the high of of the rush. And then the only reason people come in, how do you balance that? How do you balance? You know, you kind of alluded to it there? How do you know when Olga’s do to come in because she comes in twice a month, and it’s now been 17 days, 18 days, 19 days, and she hasn’t been in what’s driving that behavior? Again, real real time example from another brand that our family frequents a lot. But the last two guest experiences have been bad. The reason we’re not going in is not because the food is bad, not because the menu has changed significantly. It’s because our service was bad. And so how do you dig into that? Because driving the discount is only going to, you know, impact their gross margin and impact their profitability? Not necessarily, it’s not going to necessarily drive the fix for why I’m not going in there.
OL
Olga Lopategui
23:07
Yeah, I think unfortunately, the loads, the problem itself was not going to solve issues was operational experiences. Yeah, you can always send a survey to the customer figured out what the problem was. You could also look if they did check in if you have the data, you can find out if, let’s say guests that are associated with a particular server or that particular day part time two laps more than other guests. Or maybe you can you may be able, if you have that level of analytics and there you may be able to determine that most brands don’t get down to that level. Usually what happens is, you know, the server that consistently provides a bad experience gets fired and when somebody else gets fired, you’ll never get to the root cause of it. But loyalty program, January a loyalty programs are not designed to help us address those types of issues. So it would be wonderful to do it though I completely, completely agree with you. But jumping back to your earlier question about discounting. It’s a really, really interesting thought once that is one I work with brands, they all want to drive visible, measurable results. Yep, it is substantially easier to drive visible measurable results when you have an offer. When you don’t have an offer, those results are substantially smaller and substantially less visible. They’re still important, but if what you’re trying to get us to say hey, my program brought in X percent increases in in sales and you can kind of play was the discount rate on the run optimize a discount rate a little bit but if you’re looking for that number that says hey, we increased net revenue from loyalty guests by this much using this problems. Unfortunately, your best bet is a discount.
JJ
Jeremy Julian
24:57
Direct one to one correlation. I offered it out of thin
OL
Olga Lopategui
25:01
air. Exactly. Yeah. So. So it’s it’s really a little bit of a long term versus short term or medium term view. Right? So if you are doing targeted messaging and you’ll say, hey, so gerima like steak, and I’m going to pepper him was steak messaging, and he never bothered us or it was probably on the Keto, or they were never gonna show him another ice cream sundae. So he understands. We know him, right, we offer him what he likes, we mentioned what he likes. So if you if you do that consistently over a period of time chances of Jeremy showing up more often. Yeah, and ordering what he already likes are substantially higher. Are you going to say, hey, after this campaign, he shows up more? Probably not, you gotta go with it for six months, there’s gonna be some tweaking in there. And that’s gonna be an expensive project. In the end, it’s most likely going to be to pay off, but you’re not going to see like, Hey, this is what I brought in right away. It’s not going to be instant turnaround. Mix. Yeah, yeah. So balance that all the time.
JJ
Jeremy Julian
26:05
Oh, well. And it’s tough, because you don’t ever want to become that brand where everybody only thinks of you when you discount. And at the same time, you’ve got to drive traffic, which, which actually leads me down the path talk to me a little bit about third party delivery and how it plays on the loyalty. Because it’s hard. It’s a it’s a, it’s a part of the business that everybody has had to deal with. I say everybody, 99% of the people have figured out some way that they’re dealing with third party delivery and off premise. I recently had authors of the, you know, delivering the digital restaurant experience book on and we were talking about converting people from, you know, Carl and Meredith and they’re fantastic. They’re, they’re awesome. We talked about converting from third party to first party and how do you do that the guys from you know, couple of the couple of the even the the guest feedback companies have talked about that. And so talk to me a little bit about how third party comes into loyalty. You know, because again, I may be loyal to that same brand, I get an offer from DoorDash. Now I’m wondering they’re versus on their first party. And what does that look like?
OL
Olga Lopategui
27:09
Yeah, and I haven’t haven’t grabbed the the new book from Carla Marie just yet. I know. It was just I think it was either just released, or it’s on the Preview on Amazon. So I don’t know what they’re, I think it tackles this exact subject,
JJ
Jeremy Julian
27:21
because it really tackles kind of the idea of are they that we just recorded a week or two ago? And? And it was it was the whole idea of how do we take what we’ve now learned from a theoretical perspective and put it into action. So there’s a lot of great insights, Carl, and I were at a recent conference and spent a good hour talking about kind of some of the things that he even discovered through the data. But I’ll let you finish. Sorry about that.
OL
Olga Lopategui
27:45
There we go. I love their first book with general a couple years ago, and so I, I have the new book on my, my read list. So I think somewhere in the before the beginning of summer, that’s gonna make it down to my reading list, there’s a long list of stuff on there. What’s her party’s delivery, I’m guessing that my view is probably aligned, more or less aligned with what Carla marriages are thinking. So third party delivery is just another channel. That’s just another marketing channel that you should look at it as a marketing channel. Yep. So you will have guests on there that orders with a third party delivery because of convenience, the ability to discover whatever perks those platforms, give to them, you know, your dash boss or what have you. So some guests will discover your brand and become loyal fans, and you will eventually be able to move them into the first parties and even other people will just stay was there. Was there a third party delivery approach. The downside is if they continue ordering from third party delivery, they’re typically more expensive to service is even though you increase prices typically increase prices for the third party delivery platforms. And then your margins are still somewhat lower, even if you drag them up. So it’s generally more profitable to work with those customers their loss. If you go search, particularly those customers are, they remain anonymous, you don’t know who they are, you cannot market to them, you’re at the mercy of your door dashes and UberEATS in terms of being able to retarget them. So you have to pay for every impression if you start marketing on those third party platforms. So I always recommend to my clients that have a substantial share of third party delivery to do what they count to help convert those guests. The main just our main program, so never never give points or awards for the third party orders. You’d have to order the wrapped in order to be able to do earn credit for your purchase. And then use packaging as much as possible for promoting your loyalty program because you Most platforms do not allow you to put promotional materials inside your third party delivery containers. But if your packaging incorporates your loyalty program messaging articulates the benefits materially. Gayle’s explains that you have to wonder here to become a to be a member and sharing credits. So that you cannot separate it from the product. And that was a perfectly was perfectly legal way to do it. But also, it’s great practice, you have not not for preventing third party delivery encroaching for everything it just looks for Yeah, it just doesn’t do it. Because you never been able to grow the program if it’s not visible enough. Well, and
JJ
Jeremy Julian
30:41
so I’d love to dig a little bit into growing a program. Talk to me a little bit about strategies, you see statistics of people like Starbucks, where, you know, it’s some some astronomical amount. And then I talk with other brands where loyalty represents less than 10%, or less than 15%, or less than 20% of the transactions. Talk to me a little bit about, give me some strategies, you know, we’ve got, we’ve got a loyalty program in place. I’m a restaurant brand, I’ve got a loyalty program in place, but I’m seeing 8% of my transactions that are hitting loyalty. You talked about packaging, but how do you drive traffic to that because ultimately, I know the statistics, and I’d love for you to talk about it. loyal customers come in more often. They’re, they’re more emotionally connected to the brand. And ultimately, there they are the top, you know, 5% or 1% of your customers that you want to make sure that you keep happy. So can you can you? Can you talk through a little bit of that? And how do you grow a little program and then loyalty program? And then really, how do you? How do you measure it? And what does success look like for most brands?
OL
Olga Lopategui
31:41
Now there’s a lot of questions and one
JJ
Jeremy Julian
31:45
gets thinking and I’m like, I gotta I gotta steal some of this stuff and get it out to our audience because they want to know,
OL
Olga Lopategui
31:51
yeah, so let’s see. So where do we start? First? How do you how do you grow your
JJ
Jeremy Julian
31:57
success look, like? I guess, in a brand that you might get, you know, one visit a month, you know, what does success look like? Casual dining, ran, I’ll give you the scenario. I’m a casual dining brand. You know, I’m in the middle of the road. And I compete with kind of the big brands, the Chili’s the Applebee’s the, you know, those kind of brands of the country. But I want to I want to increase frequency and or spin within the restaurant, what can I expect to see from a take rate on my loyalty? And, you know, if I were if I were to do that, what does success look like there?
OL
Olga Lopategui
32:29
Yeah, I think there are a lot of ways to approach that question. But I think one that may, Engel people may not have seen, aside from the metrics that you get out of your little depart from it will tell you, Hey, you’re loyal to customers and spending this much more than sometimes this much less than the regular customers. And here’s a percentage of guests. So that’s another how frequently they visit percentage of guests. Identified transactions loaded transactions versus your, your entire database of transaction. So all of those metrics are available, and all of them are useful. Not a single one of those is like this is the metric. When you look at them and combinations, you can say, hey, all this one looks abnormally high, that one looks abnormally low. When they’re in the normal range, they don’t tell you very much, but they can help you identify problems. The one angle that I haven’t seen, discussed as much and that we’ve paid quite a bit of attention to particular was larger clients is what does it take to to get the ROI on your loyalty program? So if you look at your current flow guests, what does it take to pay for the loans program pay for the benefits, you give the guest pay for the cost of the program software, the service and all associated services? linked with creative media placement, packaging, or heavier? Not you’ll find in most cases, I’d say them in all cases, you generally you only need to get that guests to come in, maybe like half the time a year or more. In order to pay for referrals you get to pay for the program, if you give them two, again, depends, you know, it’s a model, right? So depends on what you ever check looks like what’s current frequency, but generally, if you increase their visual spy by over 6%, and they increase their spam by just two to 3%, from before, which is completely doable. You’ve paid for the program, and more. And the other thing that you can do for brands that are very interested in getting clear financial performance numbers, with all groups, all loyalty platforms have the ability to run control groups and promotions. Yes, as a brand, you have to get over the fact that some people will get the promotion and other people will not. And there always will be somebody who’s gonna say well, my boys got this and I didn’t get it. How come and complain? And they say it’ll happen on the other side. have employees on the restaurant saying, well, this person said they have this on that person cut up. So they don’t have it. You have to you have to deal with that. But if you if you get past that hurdle, and you get to control groups and socialize the concept of control groups within the organization, so your team actually believes that control group actually means something. So then you can truly measure the impact of your program down pretty much towards the results, in most cases, in the vast majority of cases, I have looked up the toilet paper themselves, and when they don’t, then there’s usually something structurally wrong was the offer, or was the base problem structure? And you can work with it and fix?
JJ
Jeremy Julian
35:43
Yeah, no, that’s, that’s great insights. You said something in your description that surprised me. And I’d love for you to, to dig into it a little bit. All of the statistics, I have seen his loyal customers spend more. And it was a half a sentence that you said, maybe you look at the data and see, I guess, overall, do you see most programs loyal customers spend more? I guess, let me ask you that question first. And then when they don’t, what do you? Is it a structural problem? We’re talking to me a little bit about that.
OL
Olga Lopategui
36:14
Yeah, so usually, they spend more, usually more, having said that, I’ve run onto a handful of clients where they were spending less before we started. And that is very disappointing to see. We spend less, they should be spending more everybody told me they’re gonna be spending more and look, they’re spending less, yes, it’s a very, very annoying number for an executive to see.
JJ
Jeremy Julian
36:41
I’m sure they spent, they spent money and now they’re spending less per per, per visit or per transaction.
OL
Olga Lopategui
36:47
Yes, it is really, it is really unpleasant. And he just covered that. So they there are a couple of reasons that may be behind that poor combination of reasons. And one thing that we have seen is the indiscriminate discounting for faulty Program members, if you send offers to all of your loyalty database to all signed up, I mean, you can do it on a regular basis, people that are most loyal, if you send them offers, they will use those offers. Yeah, if those offers are very generous, you’re gonna start driving there every check down. And next thing you know, people that are loyal are spending less because you allow them to write, so they may be coming in more frequently. But the span lift or span of negative stablished positive standards, it doesn’t tell you how frequently they’re coming and just tells you they’re spending, maybe they’re showing up three times more. That’s a different metric. You got to look at them together and figure out what’s going on. But you just stare at how much they spend, they’ll spend us if you send them 20% off, every week, they will spend 20% of every time they come in. So that’s that’s one, one common common issue that we have seen. So you have to make sure that when you send offers substantial offers out, you’ve only seen them to people that they really need them and not to absolutely everybody. That’s one one, frequent catch, we have seen another one. And it’s an interesting one that we see sometimes is that you’re for certain types of brands, loyalty Ds are the guests that come in with much higher frequency are much more likely to become your loyalty guests. But they’re also more likely to spend less, because they come so frequent. So let’s say they’re your lunch guests. And they just come in, they come in just for lunch, and always get lunch special. And they come in maybe two or three times a week. And this was their lunch spot. They they’re not upsetting to steak, they’re just eating, you know, the blue plate special because it’s there. It goes for their special occasion that somewhere else. What was your brown splurge? Oh, sorry, they do that. If you love the program is over penetrated. Because those super high frequency value seekers, you’re going to see the lower standard lift. So against film, lift is just a metric, right? So what you can do is you can drive those lower spending guests to just start spending more on their subject next for that. But what you also can do, you can try to grow the database of other guests that don’t come in. Because you know, if I come into your brand to eat three times a week, I’ll probably figure out they have a loyalty program fairly quickly. If I come in once a month and they spend a good chunk of money on special dinner at that brand. I might not figure out as easily that they have a loyalty program. Well, let’s make sure they figure it out and join. Yeah, that metric needle move is it will start moving up once you start acquiring less people. Yes. And then you can market to them and all that good stuff.
JJ
Jeremy Julian
39:55
Well, I would say I mean, I see it in my own life. It’s like the brands that I got to Go to a lot i i read their emails I it becomes top of mind. It happened this weekend, my wife and I were leaving to go somewhere. And she’s not getting emails, but I hadn’t been she’s like, oh, yeah, the last time I went there, it wasn’t very good. And I’m like, Well, let’s try it again. And now she’s like, Oh, it’s really good. We should go back there. But I promise you, it was only because it was top of mind that I saw it. And I saw it in an email. But it wasn’t a brand that we as a family frequent. I frequent it. At the office, I don’t frequent at home, but we happen to be going out on a date night, we needed a quick, you know, a quick meal before we were heading where we’re calling
OL
Olga Lopategui
40:33
for the babysitter runs out of steam. Yeah, that’s exactly
JJ
Jeremy Julian
40:36
what happened. And she’s like, Oh, last time, it wasn’t very good. And I’m like, let’s go try it again. We enjoyed it. But that was exactly what you’re talking about is is is I’m part of the loyalty program, because I was I was engaging with it during the week for that type of cuisine near the office happened to convert me to an evening, a Saturday evening guests where it wouldn’t have traditionally. But that’s exactly kind of the path that you had I not been in their database and not known because I got a different menu item to and my wife was with me. So that was two entrees. Hopefully they figure it out. And we’re working with somebody like you to drive that traffic.
OL
Olga Lopategui
41:11
Yeah, well, that’s Yeah, that’s exactly. That’s exactly how it works. And there are a whole bunch of different tips and tricks that you can figure out depending on what the brand is like, what do they have, sometimes, negative span length is a function of a poorly structured loyalty program, sometimes you could have foreseen that if you if you when you started out, building out, sometimes, you know, the you think the guests are gonna behave like average guests, and the guests withdrawal into the loyalty program don’t behave, as you expected them to, you know, I would say nobody could have predicted that. And every now and then you will have a brand that has to go through a loyalty program restructure in order to be able to make this program more profitable and reduce the gap on the span between members and non members. So that happens to
JJ
Jeremy Julian
41:56
love it. I’m going to ask you to answer one last area, you alluded to it earlier, you know, we’ve been talking about data we’ve been talking about, you know, just kind of the use of data. How is AI and machine learning? You know, how are you seeing that modify kind of loyalty programs, because it’s been all the buzzword, you know, with Chet GPT, and whatnot. But talk to me a little bit about how machine learning and AI is gonna mold and change loyalty and restaurant loyalty and restaurant marketing?
OL
Olga Lopategui
42:28
That’s a really, really good question. And I think that it’s going to make a difference, but it’s not going to make a difference as fast as we might think. I don’t think it’s going to be the evolution of the kind of the, you know, online ordering revolution that we have seen accelerated by COVID. So I think there is plenty of rooms for machine learning, and AI type of targeting in the loyalty programs. The challenge is that whenever you have a machine learning algorithm, the vast majority of people we’re working with that the only reason that I would put them down there is don’t understand. Yeah, how it landed on the conclusions that landed down. Frankly, sometimes conclusions of lay it lands on are truly incomprehensible.
JJ
Jeremy Julian
43:14
You’re like, how did they get to that from that?
OL
Olga Lopategui
43:18
Oh, on earth, did they decide that I’m going to like this. So why on earth does this thing put me in this segment, like what was going through its mind. But having said that, you can one reuse machine learning you, you can get the segmentation right, much, much more frequently than you can do it while you’re doing it manually. And we have been working with a couple of companies that are using machine learning and building their algorithms from targeting. And some have been very, very successful. However, when you say they’re successful, it kind of takes an expert to understand what they’re doing. And it also takes an expert to read the output and understand that yes, they are doing this and the other piece is that me realizing I’m a sounding a little a little too group to care. So I will, I will step out of it and make a small plug for so the marketing executives group conference is coming up in Chicago, and there will actually be co presenting a case study was one of our long standing clients El Pollo Loco. So we’ve been working with El Pollo Loco over four years now. And for the last couple of years, we’ve been also working with a machine learning AI segmentation partner together, which is called Bright loom. I mean, there was a great great, okay, so you know, you know, we’re gonna have right so we’re co presenting a case study on how we’ve taken the POJO logo from one size fits all marketing to manual segmentation to machine learning. based segmentation and that, that journey of what’s your learning curve as a company, right? How do you go from something one offer to everybody to segmenting into half dozen segments to now segmenting into dozens of segments per week, a lot of campaigns are running, though there is a lot of a lot of technology that goes into it a lot of creative material, the results are pretty outstanding. I guess you’ll have to go to math to get all the all the details. So you can share the full scope. But it’s it’s going to be very cool, very, very cool case study that hopefully will explain what machine learning is doing in a much more digestible way.
JJ
Jeremy Julian
45:44
And that’s something I tell people when they asked me Oh of computers are going to take over the world. What I have found thus far is that it’s only accelerated what I was already trying to do. It didn’t necessarily replaced my original thought that said, Olga is really going to like the shrimp salad, like I need to go figure that out. But it’s going to give me the data to back that up that says, she really likes the shrimp salad when the imagery looks like this, versus the imagery looks like that. And it’s going to be able to help with some of those things.
OL
Olga Lopategui
46:10
And it’s not quite there yet, either. It’s not quite there yet either. But what machine learning can do right now, which is very hard for all guys, restaurant world specialist to do can say, hey, all you like soup salads. And but it looks like all there hasn’t been in for a while. So now it’s a good time to just remind her of the shrimp salad. And then three weeks later, it’s going to be oh, well, now it’s time to to tell her that her stream on that cell is going to be free. Yeah. So when all the rest of the flow just specialist is deciding what do you want Jason to the owner, the customer. It’s a much more complicated, much less automated process, it takes a lot of analysts brainpower and convenient packaging to get there. But for machine learning, it’s a much, much faster process, you get there faster, and was more and more reliable.
JJ
Jeremy Julian
47:00
I love it. I love it. I know I’ve taken you all over and I keep throwing questions at you. Oh, well, what else? Have we missed? If if? Is there anything that we’ve missed that, that people should consider when they’re engaging with loyalty programs? And besides the obvious that they really need to be talking to the restaurant loyalty specialists and, and engaging your team? Oh, sure.
OL
Olga Lopategui
47:20
Yeah, that’s, that’s step number one talk to us. But now, really, the piece that is often overlooked is the importance of your operations team who feels team because loyalty program tends to be the marketing silo of graduates. So it’s a CMO or head of head of marketing, whoever happens to be is pioneering it. And it becomes something that just marketers do. And really, it cannot succeed unless the operations team is in the driver’s seat as well. Yep. You got to get make transfers them you got to make sure that they feel like friends and family or the program was our clients will always talk about program, when you launch a new program, program data approaches, how do you make sure that the frontline employees are as in love with this program as you expect the customers to be so if you don’t get ops on board, nothing’s ever gonna happen. If it’s a franchise organization, you really got to get the franchisees into a frame of mind. This is helping me and this is not another way to give people discounts. Yeah, yep.
JJ
Jeremy Julian
48:28
I love that. I love that. I love that insight. Because I think a lot of what we talked about on the show is change management and whether you’re going to franchise organization of corporate organizations getting people to adopt, I one of my favorite sayings is technology for technology’s sake is worthless. But technology that’s truly solving business problems are challenging, you know, the business to get better, is where you need to be spending your time and your energy. If people want to learn more about your firm, how to engage with you, what does that engagement look like? How do they get in touch with you? You know, talk to me a little bit about about where they can find you online and, and engage with
OL
Olga Lopategui
49:04
you. Yeah, so super easy. A Berlin convenience. Restaurant law specialist.com or Olga lopetegui. On LinkedIn, I’m only one Olga lopetegui. You won’t run into somebody else with the same name. Yeah, so we’re really, really easy and easy to find. You know, engagements look different for different companies. So some work with us on just a short term project basis. Often we do just assessments. Somebody has a little to program is ours good is working as expected. So we’re on a short project where we’ll help them give them an evaluation of what we’re saying floated baseline assessment that they will run from for them. Other brands will have extended engagements over multiple years, where we help them with both strategy and execution on their platforms, whichever platform they may be on. So lots of different ways to to collaborate. I have a wonderful, wonderful team knows what firms inside out and knows what restaurants like to do. So yeah, just reach out serve up a quick call. I’ll be happy to know what your program looks like and what you’re seeing, because the challenges.
JJ
Jeremy Julian
50:15
Yeah, and I would encourage anybody that either is considering a loyalty program that hasn’t launched anything, go find some experts that will help you not stub your toe and fail at it. Because to Olga’s point, her and her team have done this 1000s of times for different brands.
OL
Olga Lopategui
50:32
1000s is a severe exaggeration. We’re like in the dozens not on this as
JJ
Jeremy Julian
50:38
well. But you’ve had 1000s of programs over the 20 years, I’m sure of different things that you’ve seen succeed and fail, if not 1000s of brands, I apologize. I’m not trying to mislead people. But just again, you guys have got so much so many miles on the odometer to teach people and really understand what is their goal? What is their objective? And how do we help them achieve it?
OL
Olga Lopategui
50:58
Yeah, and I think the key is, it’s, while it’s hard to be completely wrong, when you’re launching a low to program, it’s hard to completely screw it up, even though it is possible. You know, when you launch a program and structured in a certain way, you didn’t just it’s very helpful to know the consequences of your decisions. Yes, you go to the right, you’re more likely to see this you go to the left, you’re more likely to see that is necessarily going to happen. It’s just you know, that’s what that’s where you’re driving. And it might not look exactly how we’re predicting, but generally it will give you an ideal, what are your risks? If you choose this path? And what are the risks, the features that pass on them, you know, you take your decision and go and, and I love it.
JJ
Jeremy Julian
51:40
I love it, Olga. I know it took us a lot of years to get to know each other or to get connected. But I really appreciate you, you spending some time to educate our audience.
OL
Olga Lopategui
51:50
Thank you so much, Jeremy. I’m looking forward to meeting somewhere in the conference world and maybe in Dallas,
JJ
Jeremy Julian
51:55
ya know, at some point, I’m certain we’ll run into each other to our audience. Guys, I know that you guys have got lots of choices. Like I said at the beginning, if you haven’t already. subscribe to the newsletter. Once a month, you’ll get an email of all of the things that happen on the show. No advertising, nothing more than just really sharing all of the great guests and the different articles that we’ve posted. Olga, thank you so much for your time and your audience. Make it a great day. Thank you.
I
Intro
52:21
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