Pizza Hut CIO Proving The Unprovable: Mobile ROI
Written by Evan SchumanPizza Hut CIO Baron Concors oversaw what could easily be the most successful mobile application and certainly the most successful retail mobile app, a colorful applet that is directly responsible for “millions of dollars in additional sales” and 1.5 million downloads from Apple. And yet, when he was fighting to get it funded and approved, his return-on-investment (ROI) argument was weak and speculative.
Concors said he was lucky; his senior management team is open to creativity and was willing to roll the pizza dough dice on what sounded like an interesting idea for the world’s largest pizza chain, with its more than 6,000 U.S. restaurants and more than 10,000 restaurants in about 100 countries.
But few CIOs are in that position, and that’s a piece of reality that could cripple the nascent retail mobile app space. “A lot of companies are struggling with whether to enter this space because of the ROI issue,” Concors said.
A big part of the problem is that far too many retailers are deploying mobile apps for the wrong reason or doing it the wrong way. Some chains, Concors said, have aggressively promoted their iPhone app. But when a customer goes to the trouble of downloading and installing that app, they find it does literally nothing other than launching the chain’s mobile site in a browser, which the customer could have easily done without downloading the app.
What retailers need to do, Concors said, is focus on functionality within the desired platform (iPhone, Blackberry, Palm, Android, etc.) and see if there’s a clean match for what their company offers and what their customers need.
Ask yourself, “What value am I going to bring to the customer with this app?” and if the answer seems—to the customer—to be “None,” the results will likely be very counterproductive, he said. “If not, they could do more harm than good. They don’t realize the damage that they’ll cause.”
For some chains—such as Pizza Hut—the functionality answer is obvious: the customer wants to buy pizzas more easily. But Concors said that he is more impressed with companies that don’t have that obvious an iPhone tie-in and find a legitimate one anyway.
He cites as an example Charmin, the toilet tissue company owned by Procter & Gamble. There isn’t a lot of customization or other purchase assistance that an iPhone app could offer, so Charmin instead created an app that leverages geolocation to help users find the nearest public bathroom, along with descriptions. The app is called SitOrSquat and features cartoon bears that, well, clearly have to do something in the woods as soon as practical. (Now there’s a gig for an artist that I’ll bet she didn’t put at the top of her resume.)
Planning for the Pizza Hut app started in 2008, when Concors and others in management noticed “a huge surge among customers moving to iPhones.” To take advantage of that movement, “all of the executive team, even our CEO, made a conscious decision to get an iPhone” to replace their Blackberries.
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-Dan Stiel
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.