Cracking the Customer Code Chain Restaurants
Fulfilling the brand promise Big companies are carefully organised so that their departments work to align core strategic issues over the business as a whole. But that can be difficult in the vital relationship between brand and customer experience. Often, marketing owns brand strategy, positioning and communications, while customer experience is delivered in diverse ways, through multiple departments such as retail, call centres and communications. Consequently, brand and experience are measured in different ways and most companies fail to properly join the dots between their brand tracking and customer experience programmes. That lack of continuity is a serious issue because, perhaps more than any other two issues, aligning brand and customer experience is essential to drive growth. The most successful and profitable customer relationships are achieved when customers feel that the brand promise is being truly fulfilled. Especially in a sector like chain restaurants that is crowded with competing offerings. To understand more about customer experience, TNS UK conducted a multi-category quantitative study among 4,000 consumers. The study was based on proprietary methodologies to explore the following: Customer experience (TNS TRI*M) Brand equity and growth potential (TNS ConversionModel) Brand positioning (TNS NeedScope) Fieldwork was conducted in April 2014 with small scale qualitative work in support. The research covered 12 restaurant chains: Bella Italia, Brewers Fayre, Burger King, Café Rouge, Frankie & Benny s, Harvester, McDonald s, Nando s, Pizza Express, Pizza Hut, Prezzo and J D Wetherspoon. 2 3
The customer code Charting a route to alignment of brand and experience is like cracking a code. It is difficult and requires careful thought and meticulous attention to detail but when executed successfully, brands become clearly positioned in the competitive landscape and capable of delivering against customer expectations. For customers, the brand is the experience and vice versa. There is no distinction between the two. The brand positioning creates an expectation of the experience, and the experience influences the way they think about the brand. When brand promise and customer experience are perfectly aligned, the brand is in harmony with its customers. But when customers find a disconnect between the brand promise and what they experience, they notice: and they feel let down. The proliferation of digital media and especially social media ensures that any perceived disconnect can reach a large audience fast. Negative comments on digital media about a brand that fails to deliver can trigger doubts among other consumers, who are receiving offers and brand messages from rivals at the same time on the same devices. Retaining existing customers and attracting new ones in this competitive environment is challenging and costly. Managing customer relationships has never been more important. Cracking the customer code puts a brand on the path to business growth. Some brands lose the plot and they care more about the brand than what they are supposed to be delivering. Brand is brand it s all marketing spin. There has got to be something tangible behind it. Male, 46 years old 4 Cracking the Code 5 Brand promise Defines expectations Creates the brand perception Customer experience
Be good at what you need to be good at Bringing brand promise and customer experience into alignment may sound relatively simple. But customer experience is complex, with many strands that are hard to untangle if the brand is to reach a real understanding. Every customer is different, and their experience of the brand ranges across service delivery and communication involving a whole range of channels. It s hard for businesses to know which area of customer service to focus on to drive growth. Many companies make the mistake of trying to be good at everything. It s obvious that achieving this simply isn t possible at least not at a price consumers are willing to pay. Instead of a scattergun approach, investment of time and money should aim at delivering an optimal customer experience. That means being the best in the market at giving customers what they expect from that brand. And being good enough at other things that are important for the category. This allows investment of time and money to focus on areas that will deliver maximum ROI. One example is McDonald s it is the 4th most valuable brand globally as measured by WPP s BrandZ measure of brand value, so it is clearly delivering for its customers. Our study reveals McDonald s is out in front of the chain restaurant sector when it comes to speed, value, ease of dealing with and being child friendly: the building blocks of its brand offering. It isn t in the Top Ten in the sector for food quality and restaurant environment. But they are important factors, and it matches its closest rivals KFC and Burger King on both. McDonald s offers the optimal experience to its target customers. It s best at what they expect it to be best at, and good enough at the other things that all chain restaurants should be good at. Leading vs sector Speed of service: No. 1 Value for money: No. 2 Easy to deal with: No. 1 Child friendly: No. 1 Source: TNS Brand promise fulfilled McDonald s Weakness vs sector Restaurant environment: No. 17* Food quality: No. 19* *But it matches KFC and Burger King on both The fourth most valuable brand globally 6 Cracking the Code 7
Mapping the way to growth Layers of influence To decide where to focus its resources on customer service, a brand requires a clear picture of how well its customer experience currently relates to its brand positioning, and a map of its options to make it stronger, more differentiated and more profitable. To crack this code, TNS conducted a self funded research study among 4,000 consumers across four consumer categories: restaurants, fuel, home media and utilities. We applied three of our validated analytics to each brand to understand: The existing customer relationship The size of the opportunity and risk for each brand How well brand and experience are aligned Customer relationships We used TRI*M, our approach for helping manage customer relationships, to identify: Absolute and comparative relationship levels Perceptions of service quality Elements the brand should focus on to strengthen the relationship Hygienic factors to maintain Where performance can be reduced without damaging the relationship Opportunity and risk We used our ConversionModel tool, to put a financial value on the brand s untapped potential or on the market share that the brand risked losing. Brand and experience We used our NeedScope tool to identify, for each brand: The level of alignment between brand and experience Differentiation opportunities Implications for style of delivery What if projections for evolved positioning / delivery This booklet describes the restaurant study in some detail. It shows how two brands, in quite different ways, have built customer experiences that are in strong alignment with their brand positions. The research in this category covered 12 restaurant chains. There are particular challenges and opportunities for chain restaurants in aligning brand and experience, because customer experience is more multi-layered than in other categories. Chain restaurants can differentiate their customer experience across four key dimensions to achieve that alignment with brand promise. The customer service The product The environment The brand personality They have this in common with other categories such as banking, fuel, airlines and hotels. Service Product Environment Brand Personality Restaurants Finance Airlines Hotels Many categories have fewer levers at their disposal for example, while chain restaurants have control over the customer environment, brands such as home media and insurance must rely on getting it right in terms of brand personality, the product and service delivery. In other areas, such as utilities, brands have limited ability to differentiate on product, apart from varying tariffs, so they must rely on service delivery and brand personality. Fuel Retail The research covered 12 restaurant chains: Bella Italia, Brewers Fayre, Burger King, Café Rouge, Frankie & Benny s, Harvester, McDonald s, Nando s, Pizza Express, Pizza Hut, Prezzo and J D Wetherspoon. 8 Cracking the Code 9
Nando s and Prezzo 10 Cracking the Code 11
Two offerings: two success stories Our case study on chain restaurants focuses on Nando s and Prezzo, two chains with very different offerings. Our analysis shows how both have succeeded by delivering a strong alignment of customer experience with the brand promise. The customer experience: Nando s & Prezzo In the fiercely competitive restaurant sector securing customer loyalty is key. To measure the strength of the brands existing customer relationships, TNS applied its TRI*M analysis technique, which measures the strength of the relationship between the brand and its customers. When measuring customer loyalty it s important to evaluate not just performance how consumers rate the overall performance of an organisation or brand; but also preference the extent to which consumers prefer that organisation or brand to competitors. Combining performance and preference creates a one-number customer satisfaction summary the TRI*M index. Both Nando s and Prezzo have strong customer relationships. Both chains score very strongly on performance, though Nando s is significantly higher on preference. This is important for Nando s in terms of the strength of its bond with customers: strong performance is not enough on its own, the strongest relationships exist where customers not only rate the brand highly but also prefer it to other brands. Nando s TRI*M index of 80 is the best in the category, and Prezzo s score of 74 is third: the category average is 69. Performance Preference 91 70 Customer relationship index (TRI*M) 80 Performance Preference 89 60 Customer relationship index (TRI*M) 74 12 Cracking the Code 13
The growth opportunity: Nando s and Prezzo With strong customer loyalty what are the prospects for long-term growth? To understand brands and measure the growth potential, TNS applied its ConversionModel methodology. Demand for both brands is higher than their current market share. For Nando s, opportunity exists to grow market share from 5.9% to 6.6% (worth about 50m a year); for Prezzo the potential is even greater with the chance to take an extra 1.3% of the market, a 96m annual opportunity, bringing its overall share to 3.5%. Our findings also pointed to a specific demographic opportunity for Prezzo. It found especially strong demand for the brand from women aged 25-34, and estimated that 24% of the brand s growth opportunity comes from this group. 5.9% 424m 2.2% 163m +1.3% 96m +0.7% 50m ConversionModel is TNS s approach to brand equity By comparing the level of customer desire for the brand with the brand s actual market share, it identifies and quantifies opportunities for growth, where share is at risk. Market context data provides more granular actionable insights into: Which rival brands represent growth opportunities Which pose risks to market share Within which segments the risks and opportunities apply Which levers to use to deliver optimum results ConversionModel overcomes two significant weaknesses of more conventional brand equity approaches: 1. Failure to take into account that human beings are comparative and hence it is critical the brand equity preference metric is asked for other relevant options for the customer. What matters is the relative rather than the absolute score a consumer gives. 2. Failure to take into account circumstances that play a role in what people do e.g. market factors. Key Growth potential Current market share Share value 14 Cracking the Code 15
The customer service keys to success: Nando s and Prezzo Analysis of some customer experience hygienics and key drivers for both brands shows a similar pattern to that found for McDonald s. Nando s and Prezzo both deliver strongly on the qualities that are important for their brand offering, while not excelling in other areas. In order to understand customer experience in more depth and really get behind what is the right type of experience for different brands, we need to go much further into the experience: we need to understand the appropriate brand positioning. Performance on key customer experience metrics, relative to the category average Hygienics Speed of being served Accuracy of delivering my order Accuracy of bill Convenient payment options Drivers Value for money Food quality Friendly staff Restaurant environment Helpful staff Range of products and services Average Above average Below average 16 Cracking the Code 17
Brand positioning: Nando s and Prezzo How are Nando s and Prezzo achieving such strong customer loyalty and opportunities for growth? The answer lies in their respective brand positionings, which TNS evaluated using our NeedScope framework. The framework identifies the fundamental emotive and functional customer needs within a category and measures how brands map against those needs. NeedScope enables consumer needs to be plotted in six segments, to see where competing brands are positioned in terms of fulfilling customer needs. This gives an opportunity for future planning for a brand. For example: to strengthen its offer against a particular need versus competitors, or to change its positioning by amending its offer to meet a different set of customer needs. Placed in this framework, the brand positionings of Nando s and Prezzo fall into the Carefree and Stylish areas respectively. The Carefree space is a great place to meet friends, has a modern and vibrant feel, and the staff are informal and easy going. In Stylish, the feel is more luxurious, plush and adult, and offers more privacy. Staff are knowledgeable, respectful and efficient. As the brand promises are different, so are their customers expectations of the experience and environment. Carefree Environment Great to meet groups of friends Modern, vibrant feel Fresh, trendy feel Friendly Customer service style Friendly, easy-going staff Informal and cheerful Carefree Dynamic Stylish For chain restaurants, TNS identified these segments as Carefree, Dynamic, Stylish, Mellow, Friendly and Discerning. Mellow Discerning Stylish Environment Very attentive staff Luxurious, plush feel Somewhere adults enjoy Provides privacy Customer service style Deals with me efficiently Professional and formal Staff treat you with respect 18 Cracking the Code 19
Nando s under the microscope Looked at in detail, the different aspects of Nando s personality lively/outgoing, carefree/fun-loving and adventurous/ daring are all closely grouped in the Carefree area. The customer experience factors including the environment and style of service are also grouped in the same Carefree area, demonstrating a close alignment of brand promise and customer experience. It is very rare for all the dots in a NeedScope framework to be aligned so closely. The position of the dots within Carefree mainly closer to the rim than to the centre signifies a relatively high level of differentiation. For example, the purple dots, representing the three aspects of the brand personality are all close to the rim. The larger dots show a stronger association. To measure how strongly the brand is meeting the needs of its segment, we calculate an IQ score the irresistibility quotient. A strong IQ score is not just a useful figure for benchmarking, it is proven to relate to brand usage and sales success. Strong alignment is driving desire for Nando s, giving the brand an irresistibility score (IQ) of 78 in the Carefree space. Based on our database of over 2,000 brands that puts it in the top 10%. We know from the TRI*M analysis that Nando s has an outstandingly strong relationship with its customers. The high IQ score shows that Nando s is delivering powerfully to fulfill its promises to its customers. IQ 78 Friendly Carefree Mellow Dynamic Discerning Stylish Customer relationship index (TRI*M) 80 Brand Experience You pay in Nando s before you get the food, you don t have to sit there and wait for a bill, you get up and leave when you re ready. Female, 27 years old Personality Lively, outgoing Carefree, fun loving Adventurous, daring Feeling Energised, stimulated Happy, joyful Brand image Popular Trendy Modern Environment Fresh, trendy feel, Modern, vibrant feel, Great to meet groups, friends Customer service style Informal and cheerful 20 Cracking the Code 21
Prezzo under the microscope Prezzo s brand values are also quite tightly aligned, this time across two adjoining segments Stylish and Discerning, on the opposite side of the framework from Nando s. The core values of the brand around style and a sense of control and knowledge are translated through to the customer experience of a luxurious and more formal environment and a professional and knowledgeable style of service. Nando s and Prezzo are clearly defined brands, giving customers a clear idea of what to expect. They deliver an aligned experience they are not the best on every element, but they excel where it matters to fulfil their brand promise. The end result is that both have achieved strong customer relationships, and they have good prospects for further growth. At Prezzo you can drop in for a quick lunch or you can dress up and go out for an evening. Female, 25 years old IQ 77 Friendly Carefree Mellow Dynamic Discerning Stylish Customer relationship index (TRI*M) 74 Brand Experience Personality Stylish, sophisticated Intelligent, thinking Organised, capable Feeling Confident, self assured Luxurious, indulgent Under control, in order Knowledgeable, competent Brand image Premium Exclusive High quality Professional For older people Environment Luxurious, plush Suitable for business/ formal meals Customer service style Professional and formal Knowledgeable staff 22 Cracking the Code 23
The Café Rouge disconnect As a contrast to Nando s and Prezzo, Café Rouge is an example of a brand where consumers see a disconnect between promise and delivery. It is simply an example, it was not the least aligned in the study. Plotted on the NeedScope framework for chain restaurants, Café Rouge shows a wide scatter of promise and delivery aspects only one segment of the framework is not included. And many of the promise and delivery aspects are closer to the centre, and therefore less differentiated. This picture suggests that customers are less clear about what Café Rouge would be like. Compared to the clear and well-aligned offer from Nando s and Prezzo, an offer of this type is less compelling to consumers: the IQ score in Discerning the strongest need state for the brand is a relatively modest 64. TRI*M analysis shows a customer relationship index of 67, below the category average. IQ 64 Friendly Carefree Dynamic Stylish Customer relationship index (TRI*M) 67 Mellow Discerning Brand Experience Personality Feeling Brand image Environment Customer service style 24 Cracking the Code 25
Next steps Brand and experience Your customers don t view them separately. You are stronger when they are united. Prioritisation, investment and actions are easier to manage when you have both perspectives. And we would be delighted to help you achieve this. TNS can act as the code breaker for your brand, to cut through to the optimal customer experience. We can do this in a number of ways: A review of the story for any brand in the four categories covered in this research A workshop, for any brand or category, exploring how to improve brand and experience alignment. This would involve your existing brand and customer satisfaction research data in conjunction with our category knowledge Research similar to the work we have done on the four categories, building case studies for your brand to provide guidance on building a stronger customer experience for improved competitiveness Tracking the effectiveness of actions to align customer experience and brand Mystery shopping to identify how the experience a brand is delivering at customer level is matching the brand promise Market-leading qualitative research to provide even deeper understanding and bring all our research insights alive for your business For more information please contact Maureen Duffy CEO, TNS UK maureen.duffy@tnsglobal.com 26 Cracking the Code 27
Other case studies in this series Home media How an established brand with a clearly defined brand position is let down by an unaligned customer experience that isn t delivering on many of the basics. Fuel How brand differentiation could be built through a differentiated customer experience proposition. Utilities The opportunity to add value through brand and customer experience in a category that is dominated by price. To obtain copies, contact Maureen Duffy CEO, TNS UK maureen.duffy@tnsglobal.com TNS 6 More London Place London SE1 2QY United Kingdom t +44 (0)20 7656 5294 www.tnsglobal.com/uk Twitter: @tns_uk