Improving the Customer Experience Through Online Ordering
CHICAGO — Though online food ordering has technically entered its third decade, it's only in the past 10 years that ordering either on a website or an app has overtaken phone orders in the United States.
Additionally, within that timeframe, it's really the post-COVID surge that supercharged it for retailers outside the restaurant industry, according to Jeff Hoover, director of strategy and analytics for convenience store brands at Paytronix Inc.
"I don't know that we've reached the peak of this adoption curve … but it's really becoming more pervasive," he said during a recent webinar on "2024 Online Ordering Trends for Convenience Stores," presented by Convenience Store News and Paytronix.
Hoover emphasized that this change in the c-store industry is still relatively new, especially compared to where the restaurant silo is, but the embrace of direct home delivery offers operators several opportunities.
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For many skeptics, supplementing an in-store experience with a digital one may feel more like a loss than an addition; a replacement for a guest walking through the door. However, while guests who may be exclusive to only one type of shopping experience deliver lower customer lifetime value (CLV), giving them options for either may actually make it more likely they'll use both.
"We're seeing when we can get a customer to use both of those channels, the CLV can grow upwards of 35% based on the data [from] our customers," Hoover said. "And it's not just about the average lifetime value that we're seeing. … There's other really strong metrics that are sort of laddering up into the CLV. So, we see that the average frequency of a customer is not quite double."
More Options, More Usage
Choice seems to overall be the name of the game when it comes to converting infrequent guests into regular customers.
While many c-store operators may feel they should concentrate on one method of delivery — using a third-party vendor such as Grubhub vs. building out a proprietary app — Hoover points out that it might be better to treat online ordering more as a "both/and" option instead of an "either/or" option.
"First-party [apps] really are very popular during the day but, in those evening hours, that third-party marketplace really tends to pick up," he said.
[Register for the upcoming webcast, "Optimizing Loyalty and Online Ordering for Revenue and Retention."]
Utilizing both can enable retailers to take advantage of those different audiences, with third-party platforms offering 24-hour convenience stores a unique avenue for delivery or pickup options at a time when most restaurants and grocery stores are closed. On the other side, an app operated by the retailer can build up a loyalty program and allow stores to gather customer data directly, creating more personalized offers.
Employing artificial intelligence (AI) within a single-party app can even help create better customer profiles and segmentation, letting operators figure out how often a particular shopper orders and what may best entice them to buy more or bring them directly into the store, Hoover noted.
"Maybe there's a customer that only comes in and has an online order once every couple months. We might want to create daily deals for that customer through online ordering every day in the month of June … or X percent off their online order," he said. "But a customer that's coming in ordering weekly, or even more frequently, we might not want to be as aggressive with them."
Taking a Cue from Outside the Industry
As this aspect of the c-store industry continues to mature and both retailers and vendors like Paytronix develop better metrics to measure success, Hoover recommends looking outside the convenience retail space for ideas on how to successfully launch and grow online ordering and delivery.
[Read more: Convenience Channel's Digital Ordering & Delivery Landscape Shifts]
For instance, if a c-store offers prepared foodservice items in addition to the usual packaged staples, it may help to look to a restaurant like Wendy's or McDonald's to find inspiration for promotions or marketing. If that brings a convenience retailer into more direct competition with a restaurant, operators should look at ways they can supplant that competitor as a top-of-mind choice for potential customers.
"Talk to your customers, survey your customers, and find that feedback or gather anecdotes from your team members [on] how we can improve that [online] experience," Hoover said. "We really have to think about whether it's emailing our existing customers; using in-store messaging or broader awareness vehicles; [or] using out-of-home, radio advertising to really make sure that you're driving the awareness and inviting people to come and experience it."
Beyond considering other retailers, c-store operators should take advantage of their relationships with suppliers, which can provide potential for add-ons, both within a foodservice order or for a purely packaged goods purchase in a way that the local pizza joint can't necessarily replicate. Well-realized audience segmentation can additionally provide the data c-stores need to bring suppliers onboard for a promotion.
"Coke doesn't want to come in and give a free Coke to everyone," Hoover said. "But if we could say, 'Hey, this customer typically doesn't buy packaged beverages,' they're much more apt to fund that promotion."
A replay of "2024 Online Ordering Trends for Convenience Stores" is available here.
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