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McDonald's orders up customer service analytics, shakes up fast food

The fast-food giant is acquiring Dynamic Yield, a big data analytics platform, in pursuit of a more personalized customer experience on drive-thru and digital orders.

As big data and analytics sweep through the customer service world, disrupting traditional processes and resetting C-suite thinking, McDonald's might not be the first consumer institution that springs to mind as a cutting-edge technology testbed.

As an industry, however, fast food has committed seriously to digital customer service over the past few years. With its March 2019 announcement that it would acquire Dynamic Yield, a big data platform based in Tel Aviv, Israel, McDonald's has signaled its intent to take the lead in fast-food customer service analytics.

Big data and burgers

Dynamic Yield's expertise is in personalization, which, for McDonald's, means carefully targeted order customization -- a bot version of "Do you want fries with that?" Churning the data of the global fast-food franchise's 68 million daily customers, augmented with environmental data from a variety of sources, Dynamic Yield will customize offerings in real time, taking the upselling approach that has served McDonald's so well in the past to new digital heights.

The system will factor in customer service analytics including the time of day, current weather and traffic conditions surrounding individual stores to deliver optimized offerings that not only have more appeal to the customer, but are also easier on the kitchen during periods of peak activity. It's a win-win for McDonald's, as well as a major step forward for the industry.

Multichannel personalization

McDonald's is taking the quick-service restaurant industry down the path that retail is blazing.

It's not the first foray into the digital realm for McDonald's. The fast-food industry pioneer made news several times last year when it rolled out touchscreen self-ordering kiosks in 4,000 stores -- at a cost of $120,000 to $160,000 per store -- only to have reports emerge in the U.K. that fecal bacteria had been detected on some touchscreens. It was a net gain, however, as stores with the customer self-service kiosks reported 5% sales increases on average.

Still, 70% of McDonald's store traffic is drive-thru, not walk-in, so the kiosks are used by only the remaining 30% of customers. But they, too, have digital accommodations: McDonald's mobile app had been downloaded 60 million times by the third quarter of 2018 and has its own strong customization and promotional features.

The strategy is to enable Dynamic Yield's personalization functionality across every ordering channel, including drive-thru: optimized promotions and customized ordering for every customer, regardless of how the order is being placed. Beyond the obvious objective of making customers more satisfied with their experience, the hope is to increase efficiency and traffic.

Personalizing fast food

With its all-in move into big data and customer service analytics, McDonald's is taking the quick-service restaurant industry down the path that retail is blazing.

In retail's case, it's a survival move: With customer order fulfillment now moving at the speed of Amazon, supported by analytics-driven logistics, next-day home delivery and a mobile-friendly internet, chain stores are doing everything they can think of to create a customer experience that will move the consumer from the couch to the store. This includes everything from smart mirrors that visualize the buyer in a new outfit without requiring that they actually try it on, to mobile apps that guide the buyer through the store, pointing out specials and offering promotions along the way.

The fast-food industry's quest isn't quite as existential: The convenience of acquiring a warm meal for the entire family in less than 10 minutes is still a draw, especially if everyone is out of the house at mealtime, anyway. Anything making the experience more convenient and more personal -- such as reliable customer service analytics -- will raise customer satisfaction standards for the industry as a whole.

Dynamic Yield's contribution to the McDonald's customer experience, implementing a data-driven, multichannel ordering process and folding in geophysical data, has the potential to go beyond even what the retail industry is doing. It's also more precisely targeted, as the mission of a fast-food customer is far more focused than that of a retail shopper at a big-box store. Even modest improvements in wait times, order accuracy and ordering convenience will be sufficiently appreciated to boost McDonald's market share and spur imitation throughout the industry; but the expectation of lower cost, easy options and a personal touch will be game-changing.

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