Dunkin' Brands: Mobile is the center of marketing strategy

Dunkin' Donuts and Baskin-Robbins continue to get a lot of play out of traditional marketing channels — television, outdoor, radio and point of purchase — despite the staggering growth from digital channels.

That said, however, mobile has emerged as the center of parent company Dunkin' Brands' marketing strategy, according to John Costello, president, Global Marketing and Innovation. Costello spoke about the mobile/digital initiatives, including a loyalty launch later this year, during today's Investor Day in Boston.

"Traditional marketing remains very effective with a very good ROI. Some are forgetting about old media. In our case, we're moving aggressively in digital and social, but traditional continues to work," he said. 'We're going to focus on what's relevant, what works, and not get buried in the hype."

Costello adds that Dunkin' Donuts uses Twitter, Facebook, etc., to engage in dialogue with its guests, inviting them to be a partner and showcasing their loyalty (for example, through a "Fan of the Week" campaign that showcases loyal guests' photos on a billboard in NYC's Times Square).

Since the launch of its mobile app in August, there have been more than 2.4 million downloads. This is compared to 500,000 at the end of Q3 2012.

"We're off to a pretty good start. Mobile is a place where customers can find a Dunkin', to pay and for us to engage with them," Costello said.

The company is not ready to report mobile transactions as a percentage of total transactions yet, but Costello said it is growing significantly.

The mobile gifting component also continues to grow. Dunkin' Donuts' Valentine's Day gifting activity was the strongest in its history, driven by mobile. The company anticipates strong Mother's Day and graduation gifting as well.

Geotargeting

One of the objectives in prioritizing mobile is to develop a loyalty program and increase one-to-one marketing. Guests want geotargeted offers as well as national offers, Costello said, and the brand now has a better ability to generate these deals because of its standardized (Radiant) POS system.

"The power of this data is that we know sales by store, by SKU, by hour. We know what the sales are of all the product categories. This enables us to geotarget offers — so in the Northeast, for example, where there are strong beverage sales, we can build ticket by offering deals on bakery sandwiches," Costello said.

Dunkin' Donuts is on track to launch a loyalty program later this year. It will roll out specifically with a focus on driving profitability on the franchise level, Costello said, by enabling the company access to data through registered DD Cards. Such data will then be used to develop targeted offers, ideally by 2014.

"So we're moving from mobile to loyalty and moving to a CRM platform in 2014," Costello said.

Big data

Pulling this data to develop a strong CRM platform is the future of the fast-paced QSR industry, according to Dunkin' CEO Nigel Travis.

"We've all just scratched the surface. The more data we can get, the more we can drive guests into our stores," he said.

Franchisees are openly adopting the enhanced use of data to drive their business and their reaction has been "very positive." The company's Radiant POS system provides real-time data overnight. Paul Twohig, COO, U.S., said having one POS system across the U.S. business has enabled not only information about its guests, but also its back-of-the-house details.

"This gives me the ability to know what I did in every store, down to the number of bottles of Coke that came out of my cooler and how many Munchkins I sold. That kind of data allows us to stay focused on the things that really matter," Twohig said. "On another level, there is a back office system, about creating ideal food costs, taking inventory, scheduling, cash management, etc."

The food cost component tells franchisees how much they should be spending on food based on what they actually sell. "That's a big deal," Twohig said.

LTOs

Executives also provided an overview of Dunkin' Donuts' "biggest pipeline in brand history," a pipeline that includes items that won't be introduced for another two or so years. The brand's LTOs are part of a broader strategy called "familiarity with a twist," which describes customer habits of visiting habitually during the morning or afternoon rush hour, for example, but having something new presented to them that they may be willing to try while they're there.

"People like going to the same place, but they also like to try new things. This strategy can drive additional ticket and traffic. It creates consumer excitement," Costello said.

There are more than 100 products currently in the pipeline across both Dunkin' Donuts and Baskin-Robbins. In 2012, Dunkin' Donuts rolled out 30 new products and tested more than 40. Some examples of what's coming up in the near-term include a new breaded chicken sandwich and a hot chocolate Coolatta in June. Beyond that, there are new grilled chicken offerings, fruit-filled oatmeal bars and the once-rumored glazed donut breakfast sandwich.

"We have a robust pipeline in all categories and all categories. Our mission is to drive profitable, top-line sales through the creation of differentiated products that are consumer driven," said the company's executive chef Stan Frankenthaler. "We intend to involve our menu along with our customers — current and new in new markets and to reflect customers' changing tastes as well."

Costello adds that the company creates demand for its LTOs by creating appetite appeal through marketing campaigns.

"The product is the hero," he said.

Read more about marketing and branding.

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