Last month, McDonald’s announced its $300m acquisition of artificial intelligence company Dynamic Yield – a machine learning specialist founded seven years ago — in a rare move for the company. For years the burger giant has avoided acquisitions.
The technology will allow McDonald’s to customize its menu displays based on variables such as weather and the time of day — milkshakes in the summer or McMuffins before 11 am.
Dynamic Yield’s technology will also assess McDonald’s customer footfall to suggest food that is faster to prepare when the kitchen is busy, or more elaborate items in quieter stretches. The burger chain, which serves about 68m customers each day from almost 38,000 outlets, plans to roll out the technology at its drive-through locations in the US this year — before expanding it overseas. McDonald’s also plans to introduce it inside restaurants and on mobile phones.
The purchase is also strategically significant as McDonald’s turns to big data to gain an edge over rivals in the highly competitive fast food business. If digital retailers can leverage personalization technology to power recommendations, why shouldn’t McDonald’s use it to simplify and influence customer choices at the checkout?
Personalization vs individualization
Personalization is based on the age-old method of segmentation – companies putting their customers into buckets based on presumed and static personas.
However, there is a problem with personalization — it does not speak to the individual.
In the age of engagement, brands need to interact with their customers in real time. These conversations have to be personal, contextually-relevant and build both value and trust. For this we need to go beyond personalization, raising our game to achieve individualization.
They may sound similar, but personalization and individuation are fundamentally two different concepts. How so? Most importantly, individualization requires a fundamental shift in thinking. With a personalization mind-set, brands see customers as targets, to be identified and aimed at with the best precision available.
With an individualization mindset, brands understand that customers are at the center of their business, and see each customer as a unique individual, and an equal partner in a trusted value-creation process with the brand. That’s a very different way of thinking – but it is key to understanding the dynamics of the digital economy.
Individualization is the natural successor to personalization, in the information and data age and is increasingly in demand. A one-size-fits-all approach simply does not wash with today’s digitally connected consumer.
To get on-board with an individualization approach, companies need to nail the prerequisites. Individualization does require personalization capabilities, but we need to go much deeper to turn it into something of more value. Step up context and relevance. In the context of McDonald’s, if personalization is offering discounted coffee, individualization is remembering that last time the fries were cold, and making up for it with free ones.
A balanced diet: McDonald’s + Dynamic Yield for effective marketing
The purchase of Dynamic Yield by McDonald’s is a bold, yet expected move by the fast food chain. It represents a blurring of digital and real-life channels and creates an omnichannel sales, service and marketing approach that provides the customer with integrated customer experience.
Operating at the scale of McDonald’s, there is great potential to derive meaningful insight and intelligence from the data it takes from its customers at the point of sale.
However, one problem a company like McDonald’s has to overcome is the fact that customers do not identify themselves until they pay using a phone, card or app. This is a crucial factor as digital channels can identify their customers and present personalized recommendations or actions before the time of purchase. It means the McDonald’s menus offered to customers in store are not based on customers’ personal preferences or purchase history.
McDonald’s CEO Steve Eastbrook is only too aware of this and the real return on his company’s investment in Dynamic Yield will be further down the line. He has stated the fact that if McDonald’s customers are willing to identify themselves in the future, before the point of sale, then the restaurant chain can call up their favorites in advance. He has also explained that his company has never had any issues with a lack of data, but it is drawing the intelligence out if it that is the key issue.
It is early days for McDonald’s investment in Dynamic Yield, however, if the fast food goliath was to concentrate on viewing their customer data through the lens of individualization and millions of unique customer journeys, then they are on the right path to extracting meaningful insights and improving their customer experience.