While today’s sophisticated quick service restaurant (QSR) marketers display exceptional creativity, the most successful are also leveraging data and technology in ingenious ways to conquer the last “marketing gap” and close the loop. Which marketing gap? Understanding cash purchases and what drove them.
From Location to Payments
Over the past five years, many QSRs and their agencies have come to rely on location data to know whether their digital marketing is driving location visits. Though location data can be collected regardless of payment type, small sample sizes and slow turnaround affect its actionability. Additionally, location data can be more error-prone when stores are in close quarters, such as in food courts or urban areas.
More retail marketers are now shifting their measurement efforts to close the loop using sales data. Compared to location data, card payment data is attractive because of its broad coverage, always-on nature and inherent accuracy. I should note here that my company, Commerce Signals, is in this business. We help retailers close the loop using the first-party card payment data so they can optimize and grow sales.
Card and digital payments are continuing to grow. But as quick service restaurants are acutely aware, cash payments are not going to disappear in the United States anytime soon. Just 12% of consumers claim to make no purchases with cash, according to a Gallup survey. In fast food restaurants, cash is still the preferred payment type for 39% of consumers. And 34% prefer to use cash in coffee shops. Compare that to department stores, where cash is the preferred payment type for just 8% of customers.
So if you are a QSR marketer considering stepping up to closed-loop sales measurement, how do you account for cash purchases? Here are a few recommendations:
Understand the current split of payments for your brand by cash, credit and debit. Check with your finance or treasury teams if you don’t know the split of transactions for your brand. Ask for both the splits by transaction count and dollar value. Typically, cash will represent a bigger portion of transactions than dollar volume. If the splits by transactions and dollar value are similar, that may be a clue that cash and card users are behaving similarly. Consider how cards and cash are typically used by your customers. Are cards used interchangeably with cash, as in, “Oh, I don’t have cash; I’ll use my Visa”? Look for any primary research you have about the demographics and psychographics of card vs. cash users for your brand.
Determine if card purchases are representative of your total business.
In other words, do the people who use a Visa or Mastercard react to your advertising the same way as someone buying with cash? The data gathered in step 1 can help you answer this question, but it can be hard to definitively know without research.
A way to test your hypothesis or conclusion is to measure the incremental sales generated by your marketing using payment data. This is easier than you might think. Commerce Signals can have a study up and running for you in just two weeks with no IT effort from your team.
Beyond learning what’s working and what’s not in your campaign, you can then compare the measured sales growth to the overall sales results for the same time period. When comparing the sales lift of a measured campaign to your overall business results, you’ll need to do a weighted average between the sales lift for the people you reached with your campaign and the people who were not exposed. For example, if you reached 50% of your customers, and those customers bought 4% more from your store, you need to balance that with growth from the half you didn’t reach. If you were showing zero/flat growth before the campaign, you’d expect your overall sales to show a 2% increase. If your baseline run rate was 1% growth, you’d expect your overall sales to show a 3% lift.
If they match and you don’t have a business need to apply some other adjustments, you can infer that your cash and card purchasers react similarly to your advertising. Plus you’ve found your solution to measure the impact of both card and cash sales. Look no further.
There’s an app for that
Frequent shopper programs were once primarily the domain of grocery stores, but QSRs have recently been launching sophisticated loyalty apps. Unlike some order-ahead apps that require a credit card, new apps from Dunkin’ and Chipotle allow customers to get points for purchases no matter how they pay. Customers just scan a code generated in the app to get their loyalty points and redeem special offers. (RestaurantDive)
Loyalty programs like this have numerous benefits for the QSR chains that are large enough to handle the upfront investment and ongoing expense. One big benefit is the ability to link cash purchases to a specific customer — ultimately helping QSRs close the loop. Furthermore, because apps like these often have back-end connections to the same payment processors that manage card payments, they make it easier to arrive at a holistic look at your customer base.
If you already have an app, drop us a note to see if we work with your payment processor. If so, we can connect you to your own first-party transaction dataset that they manage on your behalf. And no IT work is required from you to make it happen.
Cash is king, but…
You don’t need to let the challenge of connecting cash purchases to an individual keep you from closing the loop using sales data. The sales growth opportunity of in-flight campaign optimization is too big to pass up.