What’s Next for Mobile Ordering?
By Tom Kneubuehl, Preoday
To remain competitive and relevant, payment system providers should be active players in mobile’s transformation of our economic and business landscape. Nowhere is that more apparent than in the quick-service restaurant space, where ordering and paying ahead are exploding.
In its recent quarterly earnings report, Starbucks revealed that its mobile order and pay service grew more than 100 percent from 2015 to 2016 and now accounts for 7 percent of all transactions and growing. Additionally, mobile payment reached 27 percent of Starbucks U.S. company-operated transactions.
Other companies like McDonald’s have announced aggressive plans to expand their mobile offering with the clear expectation that it will grow their businesses. Hospitality providers are feeling the pressure to raise their game in this area as there is evidence that mobile is shifting market share.
At a more general level, Apple revealed in 2016 that its App Store had passed 130 billion application downloads in just eight years. Obviously, consumers are embracing mobile and running with it. The questions are: Do businesses understand the sea change that is taking place, can they adequately compete and can their legacy partners help them?
Consumer desire for the convenience and control of a mobile experience is transforming the hospitality industry. Mobile pre-order and pre-pay enables a consumer to interact with hospitality providers whenever, wherever and how they want. Industry leaders like Starbucks and Domino’s, companies that view technology as a competitive advantage, have invested heavily in building the capabilities that consumers want and it’s driving the rest of the industry to play catchup. In fact, 68 percent of restaurants plan to implement mobile payment technology as a standard offering by the end of 2017, according to Hospitality Technology’s “2016 Customer Engagement Technology Study.”
From a consumer experience perspective, one of the key elements of a successful mobile offering is that the experience allows them to place an order and pay for it in a seamless session. Industry leaders have focused on trying to enable pre-order and pre-pay with as few clicks as possible to satisfy this demand. Payment processors and acquirers that understand and enable this superior consumer experience for their business clients will have an edge when it comes to attracting and retaining hospitality clients.
So, why should processors and acquirers consider the pre-order experience and pre-ordering technology as part of their strategy? We need to look at the customer purchase cycle, the customer experience and the customer life cycle to understand how these all work together in the mobile ordering world and why processors and acquirers should care.
- Improved speed of service: Customers expect speed. They don’t want to wait in line and they want the same seamless experience that they enjoy when ordering and paying online. The convenience of pre-order is diminished and perhaps even negated if the customer is forced to stand in line to pay. When confronted with waiting in line, customers will leave and make other choices. The hospitality providers that can provide their food and drinks with the least amount of friction can grow their businesses. Ensuring that payment is tied to the pre-order process is also a win for the processors and acquirers as their transaction volumes grow.
Mobile ordering streamlines the selecting, ordering and paying so that the only interaction at the counter is picking up the order. A very important and growing segment of consumers wants to pre-order and pre-pay and offering customers the choice and speedier service when they do, will help improve their experience.
- The advantages of knowing customers better: Customers expect businesses to know them more intimately. It’s part of a great customer experience to be known. It generates loyalty. Customers are willing to share their personal information with businesses if it means they will receive a more engaging and personalized experience.
When the pre-order and pre-pay experiences are working together seamlessly, the business has more convenient access to customer data that helps them understand and serve the customer better. The combination of pre-order and pre-pay data provides a more rounded view of customer habits and preferences. This seamless gathering of customer data enables the business to create effective loyalty schemes and engage in better marketing efforts aimed at the individual customer. This increased customer intimacy drives more customer visits and more sales which is a win for the processor and acquirer.
- Seamless integration and operational efficiency: As the mobile and online channels explode with growth the operations, equipment and facilities of hospitality providers need to be optimized and re-engineered to absorb the increased order volumes. The best mobile-ordering solutions operate from a single dashboard and can stand alone for a separate operation and/or integrate with existing ePOS solutions to provide one workflow and ensure that orders are tracked and processed without mistakes. Avoiding dual workflows for order processing and payment processing helps prevent many problems and drives operational efficiency, lower risk and improve margins. When the pre-order information and the pre-pay information are all in one system, employees have full information to process each order in one convenient place with the assurance of customer payment for each order.
Customers are raising the bar—demanding speedy service, excellent food and a high-quality experience. Combined with mobile payments and integrated into an overall positive and simple experience, mobile and online pre-ordering is meeting these demands and helping businesses succeed and grow.
Tom Kneubuehl has more than 25 years of leadership experience working with Fortune 500 and startup companies in sales, technology and operations roles. Currently the executive vice president, North America at Preoday, he has held key management positions in five high-growth startup companies, two of which have had successful IPOs.
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