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Pizza Hut CIO Proving The Unprovable: Mobile ROI
The Pizza Hut app has a lot of nice touches. But even before the iPhone app, Concors’ team was mobile creative. They offered, for example, the typical SMS purchasing, but with a twist. Their SMS also allows aliases to be assigned for different orders. One order could be labeled “Beth,” and it would include a large half-mushroom pizza because that’s what Beth likes when she visits. The customer simply texts that one word to the system and it knows everything else—the phone number the order is sent from tells the app the delivery address and the payment card on file while the one-word alias describes the entire order.
The app itself leverages as many iPhone attributes as possible. The geolocation for the nearest restaurant is easy, but Pizza Hut’s app allows users to order pepperoni on only half the pizza by tilting the phone. Animation then shows the topping sliding in that direction, until it only covers half the pie. If chicken wings are ordered, shaking the phone applies the sauce. The phone’s two-finger pinch and stretch functionality allows the pizza’s size to change without clicking or typing.
The mobile app—just like the Web app—is also tied into workforce records at specific restaurants. This offering has several benefits. First, if an employee phones in sick or has a day off—or is merely late—the system notes it. When an order is sent to a store that has one fewer worker, the app increases the amount of time to create and deliver the order, making its time estimates much more accurate.
When a store is closed, the system will not allow any orders to be processed for it, something that is reversed as soon as the store manager signs in. This feature was tested this week during a blizzard in the New York City region and, sure enough, Zip Codes in the blizzard area all refused orders and Zip Codes in less weather-intensive areas accepted them.
The mobile app also has some extensive analytics, which allow Concors to know which sales are likely mobile-app-caused. “We can see where and when people used to order” and the system flags any purchase pattern changes coming from mobile app users, he said.
Some retailers—such as Starbucks—have been scared about allowing mobile apps to complete payment, worrying about the security issues, among other things. Pizza Hut sidestepped that issue by using its Web cloud. Consumers have their payment method saved within their profile, which sits in Pizza Hut’s own servers. (The customer can also choose to pay when they pick up their order or have it delivered.) The mobile app can then simply send the purchase request through the Web site to hit the cloud and then transmit the order to the store. Those mobile orders come into the Pizza Hut location just like any Web or SMS order.
The biggest challenge the Pizza Hut team faced during its initial testing and predeployment involved load-balancing and testing, given how remarkably unknown the iPhone app market’s likely response was at the time.
“How do you test the load? How do you possibly know how popular it’s going to be?” the pizza chain CIO asked. “We didn’t know what to expect from a load perspective. That forced us to test a variety of scenarios.”
-Marc
February 11th, 2010 at 9:21 am
Creative use of technology, well suited to the likely audience: mostly young, students or urban professionals, many of whom with iPhones. However this particular use-case may not be portable to other industries and categories. Let’s keep in mind that Apple has only a minor share (14%)in the smart-phone market worldwide, well behind Symbian/Nokia (51%) and BlackBerry (21%). Meanwhile the Android eco-system is growing by leaps and bounds. So unless you only deal with young urban professionals (iPhone generation), you probably need to either develop and maintain a number of native apps, one for each platform or, create mobile-optimized micro-browser based apps that are completely portable.
February 11th, 2010 at 10:53 am
Fabien, I have to respectfully disagree with you. First, you shouldn’t look at the worldwide smart phone market when looking to deploy a US only mobile application. You have to look at the US trends. You can’t doubt the popularity of the iPhone here in the US. Secondly, the iPhone is not for “young, urban professionals.” Neilsen published numbers that show there are just as many iphone user 55+ years old as there are 13-24.
http://blog.nielsen.com/nielsenwire/online_mobile/iphone-users-watch-more-video-and-are-older-than-you-think/
February 11th, 2010 at 1:21 pm
I believe this is a terrific example for a couple of reasons:
1. Remember the app was prominently featured in Apple iPhone commercials run nationally. I have heard estimates as to the value of that exposure. The number is large.
2. We are still in the very early days of mobile commerce. Pizza Hut made a bold decision and I believe have been handsomely rewarded for their gutsy call.
3. From a US perspective the iPhone user is the perfect demographic to experiment with. The validation of mobile commerce is not unique to the iPhone world. As other platforms grow in adoption this type of app flows right along.
This year we will see many retailers experiment with mobile commerce. Many will be unsuccessful. So be it. The message here is to take chances.
February 11th, 2010 at 4:23 pm
Congratulations to Pizza Hut for being a leader and for a well planned and executed strategy.
However, the headline of this article suggesting that mobile ROI is “unprovable” is inaccurate and not true.
Mobile ROI is very provable and, in fact, I see dozens of companies every day seeing measurable ROI with mobile.
When used properly, mobile is one of THE most measurable direct marketing channels, and the response rates deliver better ROI than many of our clients other direct channels such as email and direct mail.
Many mobile companies can show you hundreds of case studies.
February 11th, 2010 at 4:32 pm
Editor’s Note: For what it’s worth, the headline was indeed accurate and true. But it was referring to something else. It was saying that getting approval for the mobile app BEFORE it was launched …. THAT’s when it’s incredibly difficult to prove ROI. Before launch, not after. I am strongly guessing all of the case studies you’re referencing and dealing with after launch.
February 11th, 2010 at 5:57 pm
Greg, Using the numbers you provided yourself, 42% of iPhone users are less than 34 years old! That’s huge! I am not saying this is not a worthwhile demographic, in fact in the case of a pizza brand, that is precisely where you want to be. However many professionals (people with jobs and disposable income) carry BlackBerries, not iPhone. Also many “early adopters” are now ditching the iPhone and going with Android. So my point is as soon as you develop for a single platform, you really need to ensure your customer demographics are aligned with that platform and be prepared to develop for a new platform (eg: Android) when the winds change; they eventually will.
February 11th, 2010 at 6:23 pm
The Pizza Hut app is a great example because its useful, engaging, and leverages the capabilities of the phone. Yes its specific to the iPhone, but there’s no better place to start. You certainly wouldn’t criticize someone for releasing their software on Windows first and following-up with other operating systems once its proven. And I agree that justifying an investment in something so new is tough, but at least now we have some positive data for the other companies that follow.
February 15th, 2010 at 1:45 pm
At last someone has a decent grasp of what iPhone apps should include. A nice simple idea that uses the technology in an iPhone to maximize usability. Interesting use of technology for the payment processing as well. Too many brands are currently jumping on the app bandwagon and failing, Domino’s app is sub-standard to say the least (so is their website!)
February 15th, 2010 at 3:02 pm
Dave said: “Domino’s app is sub-standard to say the least (so is their website!)”
Well, so is their pizza, but that’s another issue.
February 17th, 2010 at 7:44 am
Hats off to Pizza Hut! Their iPhone app has a very well designed user interface. It actually makes ordering a pizza on your cell phone fun. I’m generally not a huge fan of food companies creating apps because they offer me very little extra utility. Large scale brick and mortar retailers should focus on the location based aspects of mobile commerce, and not try to simply port their web strategy into mobile. Mobile requires its own strategy, as does other forms of app marketing (social apps and sharing, etc). Finally, should Pizza Hut be considering other app platforms as the platforms become more saturated? For example, car electronics.