September 10 2013

My Smartphone, My Burger, My Hotel

More and more, I use my smartphone as a remote control for life. Via a Verizon FiOS app, my smart phone has become my TV remote. Through the Sonos App and Spotify, my smart phone controls my house-wide sound system AND gives me instant access to almost every song ever written. Ok, not EVERY song ever written, but at 20 million songs, that’s some amazing access and I love it! These are examples of incredible convenience and access available via smart phone apps. What about the service providers? Do they benefit? Yes, the providers benefit from my continued patronage/purchase of their services. That’s called customer stickiness and service providers love customer stickiness.

I was asked a very pointed question by an investor last week…what are other examples of businesses/industries benefiting from offering mobile apps? Can Apps on customer’s smart phones add measurable value to the broader business environment? YES, and I’ll site personal experience…Five Guys restaurants. I have 3 growing boys. Growing boys love hamburgers (at least mine do). My growing boys love Five Guys hamburgers. I love the Five Guys mobile app. I’m able to order from anywhere, set a time for pick-up, pay and so on. With what seems like an endless list of burger fixin’s, anyone that’s been to a Five Guys knows that the ordering can get complex. I love that I can create standard orders within the app for each in my family and store it for next time. My oldest? He most always orders a double burger, double cheese, bbq sauce and grilled mushrooms. My middle son gets a little cheeseburger, grilled onions, mayo, lettuce and ketchup. My youngest orders…well, you get the idea. Remembering all this for a big order can get taxing and honestly, a bit annoying. The Five Guys App to the rescue! When we’re about to leave the 3rd soccer game on any given Saturday and its lunch time, I whip out my phone, open the app and within 20 seconds, I know my order will be ready for my family when I walk through the door …ordered, prepared, paid for and accurate.

For me, the benefit = awesome convenience. And this means I push my kids to go to Five Guys vs. the “other guys”. For Five Guys, they gain increase wallet share, increased operational efficiency (no need for counter staff to take my order) and the promise of increased check averages (industry stats show 20% – 30% increase in check averages with mobile ordering). Further, they gain purchase habits and other incredibly valuable consumer behavior data. Marketers love consumer behavior data. I call this a win/win/win (the customer/the store/the marketers).

Let’s move over to the hotel industry and see what lessons are there to be learned. Generally, hotel mobile apps have not yet seen side adoption by the guests. Why? What did Five Guys do that hotels have not done? The answer is hotel apps have generally not provided real value to the customer, that’s why! At Five Guys, their smart app on my phone is integrated directly into the system that runs the restaurant…the Point of Sale System (POS). This means when I hit “order” on the App, my order goes directly into the POS at the right time and my burgers hit the grill. The customer wins & Five Guys wins…VALUE! Now, lets look at hotels. Most of today’s hotel smart phone apps are not integrated to the systems that run hotels…the Property Management System (PMS). This means that offering real value to the guest via the smart phone app (checking in/out, ordering F&B and services, etc) becomes near impossible without integration. Thus, the most hotel smart phone apps are reduced to becoming little more an online brochure for the hotel…showing pretty pictures, listing restaurant hours and maybe a link to the online booking system so the guest can book the next stay. This does not provide real value to the guest during there stay. Thus, adoption to date has been poor.

The key to real app value is real integration!