By Andrew Robbins, Paytronix
The pandemic has permanently changed the way people order food. This is the main conclusion of Paytronix Order and Delivery Report 2022. The process of technological change that had been underway for a long time received a huge boost when the country was locked down in 2020. Now that we are coming out of what we hope will be the worst of the pandemic, we see that consumers have adopted the digital revolution by using new technologies to continue their connection with their favorite brands.
Data from Paytronix shows that a third of all food orders in March 2022 were made digitally, up from just 12% pre-pandemic. Additionally, we are seeing take-out emerge as preferred delivery options.
Yet third-party delivery services play a key role in the overall digital ecosystem, and savvy brands have embraced these technologies, along with other tools that allow them to streamline operations. A report from Paytronix and PYMNTS found that since the start of the pandemic, 42% of consumers have used at least one delivery aggregator. This is true even if consumers know they are paying more to use this service.
There is evidence that this trend may be changing, however, as consumers choose to order direct when possible or, as our data shows, choose to pick up rather than have food delivered.
This new trend becomes evident when consumers are asked what drives their choice of a restaurant. Convenience is a major factor, influencing 47% of purchases, with 19% of customers saying convenience is the most important choice factor. Gen Z consumers are the cohort most likely to cite convenience as a motivating factor: 24% say it’s the most important factor when choosing where to eat. Similarly, 46.5% rank “convenience to take” as “most important” or “important” when it comes to making restaurant choices.
The rise of digital orders has also opened the door to more customer reviews. Customers want to share their feedback and, in turn, feel they are heard. This presents brands with a huge opportunity to influence future customer visits and lifetime value by responding proactively.
The proliferation and growth of digital controls means operators need more information on the front lines. Quite often the delivery can go wrong, and this error is compounded by the difficulty of correcting errors off-site.
When something happens, getting the information to the manager quickly and directly so they can take action on the customer’s behalf makes the difference between winning a customer back and increasing customer lifetime value (CLV) or losing them forever.
Paytronix data shows that customers who leave a 1-star rating are as likely to return as those who leave a 2.4-star rating. In fact, 13% of customers who left a 1-star review can be attracted with a coupon, and this coupon leads to a 4 times increase in CLV. Additionally, negative feedback can hide in 4-star ratings, and artificial intelligence (AI) can help surface negative sentiment at the right time to take corrective action.
As businesses look to the future, there are exciting opportunities to explore programs that drive sales by learning and adapting to customer behavior. This is where artificial intelligence can play a key role. AI can drive individual customer action by delivering a superior customer experience, which translates to increased revenue for restaurants and convenience stores.
Specifically, the AI can recommend suitable menu items to individual customers. By understanding behavioral segments within online ordering audiences, technology can quickly motivate subsequent orders to increase order size. For example, customers who order delivery are incredibly loyal, with 31% of delivery orders coming from repeat customers. They tip better and more often too. Offers aimed at this group may not need to cost as much compared to other groups.
The future of digital ordering, powered by AI, will enable a better customer experience, and it’s a bright future for convenience brands embracing technological change.
Andrew Robbins is CEO and co-founder of Paytronix Systems Inc.