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Pizza Hut Hong Kong rips up traditional CRM rule book

IT director of parent company Jardine Restaurant Group has transformed the way Pizza Hut interacts with customers in Hong Kong and plans the same in Myanmar and Vietnam

Faced with digitally-savvy customers and a competitive casual dining scene in Hong Kong, Jardine Restaurant Group IT director Ravel Lai knew a radical approach to customer satisfaction and loyalty was needed at its Pizza Hut operation in the city.

Jardine owns the Pizza Hut restaurants in Vietnam, Myanmar and Hong Kong.

Lai saw the inadequacies of the traditional customer relationship management (CRM) approach taken by the Pizza Hut chain of restaurants in Hong Kong, and decided to change things.

Responsible for both IT and digital marketing at Pizza Hut Hong Kong, he questioned the wisdom of traditional customer interactions.

“Why do the same thing?” said Lai. “TV, leaflet and print were the key communication channels for Pizza Hut for the past 20 years. However, these channels are costly and time-consuming from design to distribution.”

So Pizza Hut took a revolutionary approach to CRM, which Lai terms “social CRM”. It changed the business’s relationship with its customers from a transaction to an interaction, through social media and technology.

“After we launched the social CRM platform with a mobile app a year ago, we found this digital communication channel to be a far more cost-effective and efficient way to connect with our customers,” said Lai.

“It is not an app or a project. Social CRM is a company strategy. We built our own social communication channel for customer engagement, which we think is the next generation of customer re-targeting.”

Underlying social CRM is the adoption of “customer mania”, where corporate culture is totally dedicated to serving its customers – a strategy that Lai has championed since joining Jardine.

“Top management support is very important,” he said. “Hence I spent eight months selling this idea to the management.”

Another critical factor for the strategy’s success was co-operation between IT, marketing, digital marketing, operations and customer services.

A few iterations

Social CRM at Pizza Hut Hong Kong did not happen overnight, but has gone through several iterations. The company’s digital transformation began in 2006 when it launched Hong Kong’s first online ordering system. This was followed by a mobile ordering app in 2010.

According to Lai, in the past, CRM had been more “inside-out”, with a single approach taken for communication with customers. It was one-way communication, based on the company’s chosen promotions and selected timeframe.

Then Pizza Hut explored the customer lifecycle management (CLM) approach, where the customer database was segmented based on usage and buying behaviour.

“We started the mobile-first approach in 2010 but we found that mobile-first is just a channel,” said Lai. “Therefore, we changed to a social CRM strategy, which is customer-centric, targeting increased interactions.

“Mobile-first is just the communication method. Social CRM is at the heart of how we treat our customers – a ‘customer mania’ corporate culture.”

Now the company is using its social CRM platform and app to drive member loyalty and encourage repeat purchases, with its business data linked to its restaurant point-of-sale (POS), mobile apps and Facebook.

Get Happy app

The Pizza Hut mobile “Get Happy” app has replaced the traditional membership card, delivering personalised information and promotion news to customers quickly and easily. Customers immediately receive coupons when they download the app.

They can easily access their points through the mobile app, whether to share points with friends, book a table or even to join the express queue at a Pizza Hut outlet.

The launch of the mobile app, along with other CRM strategies, has sparked a 20% increase in Pizza Hut’s customer membership database and a jump of 30% in its annual turnover.

“This has helped to increase engagement, customer loyalty and desire to purchase,” said Lai.

The company’s focus on points redemption has proved a success. Points redemption jumped to 57% in 2015 and sales generated from social CRM and loyalty efforts grew by more than 27%.

Cloud is key

Cloud technology underpins Pizza Hut’s social CRM platform.

“We moved most of the customer-related systems to the cloud as there is much more flexibility to trial new ideas and for expansion,” said Lai. “We use Salesforce Marketing Cloud for campaign and customer journey management, and Storellet as the loyalty engine to keep the customer records, activities and e-coupons.

“Both systems are running in the cloud. We also host our mobile app content management system (CMS) and online ordering system in Microsoft Azure.”

Pizza Hut’s social CRM strategy is among the more sophisticated use cases, said Somak Roy, senior analyst at Forrester.

“All across Southeast Asia, companies are making CRM the cornerstone of their customer experience strategy,” he said. “CRM used to be about internal operational inefficiencies; now it underpins all customer experience efforts.”

Personalised experiences

Consequently, customers now expect brands to deliver personalised experiences, tailored to the individual, informed by context – such as location and the history of purchase and interaction with the company.

Also, smartphone apps had become the “primary onboarding channel or a key sales channel, and the preferred services channel”, said Roy.

“Mobile is especially important when there is an impulse element to the purchase, which is the case with Pizza Hut,” he said. “When the impulse strikes, your brand must be in the vicinity to deliver. And because the smartphone is ubiquitous, and almost always on the user’s person, there is no better way to instantly gratify impulse than through a phone-based CRM approach.”

Next up for Pizza Hut’s Lai is to introduce iBeacon technology, in which a tiny device placed near the restaurant entrance can detect customers who walk past and have the Pizza Hut mobile app. The customer will then receive e-coupons, encouraging them to step inside for a meal.

Jardine Restaurant Group plans to spread this social CRM beyond Hong Kong’s to its outlets in Vietnam and Myanmar.

Read more on Customer relationship management (CRM)

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Way too many people are fascinated with baubles.

While I'm no expert on Pizza Hut or Hong Kong, this seems less like a way to interact with customers and more like a way to avoid any human interaction with customers. And now, presumably, the company can begin to shed unnecessary employees. The ultimate outcome does not look pleasant for anything but profit margins....
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