Pizza Hut, the quick-service restaurant chain, is using digital testing to make sure the new online tools and features it develops serve both consumers and its business.
As digital is responsible for an increasing share of Pizza Hut’s business, it must ensure that any changes in this area have been rigorously considered.
Through a “virtual testing” platform that replicates its dotcom hub, the brand can gain a clear view on the likely impact of modifications to its main digital site.
Increasing the price of its pan pizza and the introduction of online tipping tools are two initiatives that have benefited from this approach.
Digital channels have come to play a vital role in helping Pizza Hut take a larger slice of the quick-service restaurant category.
“Today, more than half of our orders are placed online,” Rachel Lorraine, director/strategic pricing at Pizza Hut, explained to delegates at The Market Research Event (TMRE) 2018 in Phoenix, Arizona.
“So, clearly, online is important for us. And, effectively, because so much of our business is done online, our website is basically our biggest storefront.”
Even those consumers who ultimately place an order via the comparatively old-school medium of a phone call, she continued, often browse pizzahut.com before dialing their nearest brick-and-mortar store. As demonstrated by this behavior, the brand’s digital capabilities can influence offline revenues, too.
“Our website has a really, really big responsibility. It needs to message the right things for our brand; it needs to help us highlight our key products and what we want consumers to buy; and, of course, it needs to be easy to shop, and make it easy for customers to place their orders,” said Lorraine.
When the “magic” formula works, the Plano, Texas-based enterprise – which is owned by Yum! Brands – can “maximize conversion in the moment” and enhance customer retention, its pricing guru said. “We really use online testing to help tell us a lot about our business. So, again, because we are so digitally-focused, we can actually count on our online learning to help direct overall business decisions for us,” she added.
In fueling those outcomes, the brand employs user experience (UX) research, meaning small groups of consumers supply in-depth feedback on proposed features, tools, products, and a variety of other subjects.
Moreover, A/B testing, where certain visitors to its website are shown different iterations of this platform, delivers an in-market view of how variations in layouts, images, promotions and similar factors can influence behavior.
Sitting between that pair of research methodologies is a virtual testing program. This approach typically involves 400 to 600 of Pizza Hut’s online customers, who are charged with trialing a cloned version of its digital hub that is not live on the web, but exactly replicates the functionality of the real-life service. In doing so, the participants provide an impression of how changes to pizzahut.com might play out in practice.
This analysis is “more behaviorally-based” and aims to ascertain how alterations to its digital site will change “their buying behavior, or how do we think it will affect their buying behavior,” Lorraine said – be it a tweak in the cost of a pizza, the organization of its menu, experimenting with brand messages, or discovering if a new product is seen as a complement or alternative to existing items.
Developed with Decision Insight – a shopper intelligence and retail-strategy firm located in Kansas City, Missouri
– the dummy version of pizzahut.com enables the brand to attach some valuable metrics to potential shifts in its tactics and strategies. These include: what consumers see, as determined with post-test recall scores, as well as site-navigation data, clicks,and online eye-tracking using webcams; what consumers think, evidenced by user perceptions covering areas such as brand satisfaction and their likelihood to return to the site as well as their views on menu variety, value for money, site layout, etc.; what consumers do, encapsulated by the goods that users select, if they trade up, change the usual product mix, spend more (or less), and so on.
A case in point, Lorraine revealed, saw Pizza Hut explore the prospective impact of raising the price for its pan pizza. This market segment originally was pioneered by the brand in the early 1980s, but had grown increasingly competitive as Little Caesars, Papa John’s and Domino’s – three rival chains – had introduced equivalent products over the course of a few years since the start of this decade.
“What they did differently from us is they launched their pan pizza at a premium. So, where our pan pizza is line priced with all our other crust types, they debuted their pan pizza at a higher price point,” said Lorraine. “That begs the natural questions of, ‘Could we be charging more for it?’ and, ‘Are we selling ourselves short by line pricing our pan pizza with all the other offers?’”
Using its “virtual shopping” platform to run a variety of tests that highlighted a $1 price rise yielded several findings from participating consumers:
“When we asked them after their shopping exercise whether they paid more or whether they noticed the up-charge … virtually no one took that away,” Lorraine said.
“Site satisfaction remained pretty much at parity. So, we weren’t seeing a drop off in terms of usability [and] perceived clarity. But, also, we weren’t seeing a drop off in terms of price perceptions or value perceptions.”
“In point of fact, we were able to retain our pan buyers, and we were actually capturing incremental margin because of the up-charge.”
Such insights “helped us to prioritize the work to build out the digital environment to put it into test,” Pizza Hut’s pricing expert reported. “This was not the step before launch; there were subsequent steps. But it did help us prioritize the work that we were doing to say, ‘Do we feel confident that we could put this out into a test market?’”
Another test incorporated the addition of a tipping option to the brand’s website. This tool brought the decision regarding how much a delivery driver’s gratuity would be from being the final element of a transaction to taking place at a stage well before a customer has received their tasty meal.
The new digital feature reflected the gradual trend towards a “cashless” society, which means customers regularly have no coins or notes at hand to reward their delivery driver, Lorraine asserted. A supplementary benefit was equally practical, as people are often forced to juggle a pizza box with ensuring their children or pets don’t run out the door, all while digging in their pockets for money to use as a tip.
Easing a broader painpoint was a further objective: “There’s also the fact online tipping takes the emotion out of it. Pizza is one of those categories when you are standing there, trying to figure out the tip, and somebody is watching you figure out how much to pay them. It’s an uncomfortable experience. It’s uncomfortable for the drivers; it’s uncomfortable for the consumers,” said Lorraine.
Making life easier for customers was important, but that comfort had to be balanced with protecting employees. “What we really wanted to understand is: ‘Does it still benefit the drivers?’” Lorraine said. “Because the worst news for us is putting it into place to make our consumers’ lives easier, but then potentially hurting our delivery drivers – taking tips away from them, [and] cash out of their pocket – because of a change that we made.”
The test results included:
“The first thing that we learned is that consumers are inherently lazy; most people opted in to the online tipping when it was offered up,” Lorraine said. “Most people opted in to whatever was offered to them first. So, we actually have quite a bit of influence on the tip amounts based on what they’re seeing.”
Concerning the site experience, “Everything was maintained … If you look at things like perceived ease of use, prices, [and the site] being clear and easy to understand, all held at parity.”
“Overall site satisfaction trended up. As we added this tipping function, more and more consumers were pleased.”
“We were able to increase driver tipping. I think a fear of ours was that they would be uncomfortable tipping upfront, before they actually know how the experience is going to pan out. And that was not the case.”
Following this test, online tipping was made live in real-life trial markets, and “panned out [in] the exact same way as what we’d seen” with the dummy website, Lorraine told the TMRE confab. And a nationwide launch of this payment tool is in the offing, too – an exercise that, in turn, hints at the ways in which Pizza Hut’s virtual testing efforts let it formulate a true recipe for growth.
“This is something that helps us prioritize digital solutions … based on not just what do consumers like and what are they telling us, but projected bottom-line impact,” she said.
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