SOURCE: MARKETING TECH

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.

Personalization vs individualization

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.