By Brian Baumgart
Franchises are known for quickly responding to customer needs. They adopt new technologies and find ways to be more efficient, benefitting billions of customers and franchisees around the world.
It’s hard to believe how much we take for granted today that was once considered an innovation.
Whether it’s accepting credits cards in the late ‘90s, or online and mobile ordering in the mid-2000s, franchises are good at testing and implementing what’s new. Customers’ expectations are reset, until something else comes along to push them to new heights.
But with every innovation comes a new set of challenges and risks. Let’s break down how technology and digital innovation is fueling success, along with what to watch for as you look to implement new tools like artificial intelligence (AI).
1:1 customer experiences and data
Hyper-personalized customer experiences are more common than ever. If a customer always orders extra sauce or doesn’t like bananas, you can easily save that information. Mobile apps make it easy to create repeat customers. But with that influx of data, security is more important than ever, too.
- Where is the data stored?
- If there’s a breach, who is liable?
- Do you have a plan to mitigate risks?
- Have you thought about payment card industry (PCI) compliance?
These are all good questions to have answered as your customer database grows.
Dynamic menu and service adjustments
A quick service restaurant brand recently had a lot of blowback due to their “dynamic pricing” strategy. And the jury is still out whether customers will embrace it. The intent was to highlight their new menu boards, but it got lost in translation.
Implementing menu or service changes based on hyperlocal factors has been around for decades. College towns have “welcome back” items and promotions, and seasonal and holiday offerings are constantly rotating. Technology can make these changes even easier to implement and if combined with customer data, should offer more value.
The risk here isn’t so much digital, as it is risk related to reputation and perception.
Technology allows franchises to dynamically alter menus, services, pricing, and even in-venue marketing, but is it a good idea? What is the return on investment? If dynamic changes hurt the brand, is it worth it? Let’s not forget some people had strong reactions to credit card payments — until it became commonplace.
Artificial intelligence
AI can be a huge asset to franchises. Internally, it can make operations more efficient, through assisting with inventory management, paying invoices, or helping to predict cash flow. But humans must understand the objectives, business case, and be in the loop. What if your AI model doesn’t notice an invoicing error and overpays a vendor?
While accounting and general business processes can use AI for automation, it’s the customer-facing use cases — like chatbots — that get by far the most attention. If you plan to implement AI (especially externally), conduct proper testing and evaluation.
A car dealership who put a chatbot on its website went viral and had thousands of people flooding the website trying to trick it into giving away cars for free. An edge case for sure, but something to take into consideration before letting AI run free.
The digital journey continues
Early adopters are often trendsetters. The strongest franchises can cut through the noise and implement new processes and technologies. They are quick to discard what isn’t working and double down on successes.
Digital innovation isn’t stopping. The challenges may be new, but so are the opportunities. AI is everywhere with lots of buzz, but remember, credit cards were also once new and a 30-minute-or-less guarantee was considered impossible. Assemble the right team and partners, be prepared to try new ideas, and keep what works.
For more information contact Brian Baumgart at [email protected] or 414-721-7659.
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