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Fri 14th Sep 2018 - Friday Opinion
Subjects: Step up to the (reusable) plate, getting delivery right, hospitality needs government support and five key principles to drive NPS growth
Authors: Glynn Davis, Ann Elliott, Kate Nicholls and Ed Pyke

Step up to the (reusable) plate by Glynn Davis

Unpackaged was a pioneering store in London’s Hackney that attempted to radically reduce the amount of packaging it used by getting its customers to utilise reusable containers for many products bought in the shop.

Even its in-store bar did its best to limit glass so all mixers were created on-site through a Sodastream. This device was something I recalled from my childhood but thought had died a long time ago. But no, there it was alive and fizzing in the Unpackaged store.
 
Sadly the Unpackaged business was ahead of its time and the standalone store was unsustainable. But fast forward to today and the company is back in the game – providing its model on a concession-type basis in Planet Organic stores and advising myriad other specialist stores and supermarkets on how to reduce their packaging. 

The recent purchase of Sodastream by PepsiCo for a hefty £2.5bn is another tell-tale sign the climate has changed. Whereas the drinks-maker was originally viewed as a gimmick, its valuation at the time of the PepsiCo acquisition was based on its metamorphosis into a “convenient and environmentally friendly beverage solution”. That’s how the company describes itself anyway.

Sustainability and cutting waste have become anything but a gimmick and the reason Starbucks and McDonald’s launched a collaboration to create a fully recyclable, compostable cup. This is good news because between them the companies distribute 4% of the world’s cups – a staggering 600 billion a year.

Consumer appetite for the adoption of more sustainable practices has accelerated dramatically in recent years. Cast your mind back a few years and it was a long time before retailers, consumers and legislators came up with solutions to tackle the rampant use of non-compostable plastic bags.

In comparison, the action on plastic straws has been dramatic. It seems as soon as the public saw Blue Planet on television they took an immediate dislike to plastic straws. The response from operators has been impressive. Many companies have banned them or limited their use, in some cases bringing in alternatives.

I have been given a metal reusable straw once, while the likes of Greene King are introducing compostable PLA straws made from plant-based materials that decompose naturally. According to research from Fourth, 90% of people view the hospitality industry’s straws ban as a positive move.

Pret A Manger is pursuing a similar agenda to cut waste. After it offered discounts to customers who brought their own reusable cups into its stores and launched a water bottle deposit scheme, it is now introducing compostable cutlery.

The foodservice companies that offer takeaway foods are among the biggest users of plastics and packaging. This has been recognised by delivery firms Just Eat and Deliveroo, which have moved on to the front foot with their sustainability agendas.

Deliveroo has installed an option on its app where customers have to opt-in to receive disposable cutlery and the company is also working with its restaurant partners and manufacturers to create a line of eco-packaging. It is a similar story at Just Eat, which is investing in research to develop alternatives to single-use plastics. The first item it has been testing is a seaweed-based sauce sachet that is fully compostable.

Such development can’t come quick enough because a growing number of consumers are actively reducing waste in their everyday lives and expect the brands they spend their money on to follow suit. Failing to follow this lead could be fatal, according to Fourth, which found four-fifths (80%) of UK consumers want to reduce waste and as more than two-thirds (67%) boycott brands that lack an ethical conscience.

This is a pretty clear message that all hospitality businesses have to step up to the plate (a reusable one, of course) and join the sustainability cause pioneers such as Unpackaged began and the rest of us are just starting to catch up with.
Glynn Davis is a leading commentator on retail trends

Getting delivery right by Ann Elliott

The piece from Morar in Propel this week on Deliveroo (and presented at the recent Deliveroo conference) was enlightening, interesting and worth discussing further.

It stated that during the past six months, the proportion of people ordering food for delivery had increased from 31% to 36%. That’s an extraordinary number when you think about it. More than a third of “people” have used delivery recently. This is not a flash in the pan phenomenon, this represents real consumer demand for convenience and it’s likely this demand is only going to go one way. If operators decide not to adopt or use a delivery platform, this has to be a conscious strategic decision and not one taken lightly. 

The research found increased use of mobile technology was driving food delivery, with almost half (46%) of consumers ordering their food via a website or app. This means those brands that feature on delivery platforms have got to ensure their brand looks great on a mobile site – an art in itself. 

Crucially, these brands also have to perform exceptionally well versus customer expectations for delivered food to ensure they are in the top ten listings on these sites. The further down the list, the lower the conversion rate. Therefore, it’s as important companies are as brilliant operationally in delivery as they are in their restaurants. Customers will not tolerate poor performance in either area.

Morar said customers highlighted “busier home lives, changing work patterns and the pressure of raising a family with work” as key reasons for them ordering more meals at home. We all know how time and thought-consuming it can be to buy, prepare and cook food (let alone wash up). Sometimes its easier to let someone else take the strain as witnessed by the fact the number of people cooking at home has fallen from 94% to 89%, according to Morar. 

As we have probably all suspected too, it’s the “younger generation” that has bought into the convenience of delivery. The decision-making starts with “shall we go out or stay in”? If the decision is to stay in it moves to “can we be bothered to cook”? If the answer is “no, let’s get a delivery”, cuisine type is the next decision followed by brand. Identifying a brand with a cuisine type is critical for that brand to benefit from this decision-making process. Understandably, the decision to get a delivery is much more spontaneous than the decision to go out.

It would seem the growth of delivery has mirrored the rise of Netflix, Amazon, Sky and video on demand, with more than two-thirds (67%) of people consuming their delivery meal in front of the television. Ordering a delivery would seem to be a treat – perhaps people really do feel they should be cooking from scratch? – and part of making staying in feel more special. The research indicated delivery was taking sales from takeaway sites as well as cooking at home – not from eating out in restaurants. It also said more than three-quarters (76%) of people were likely to dine at a restaurant if they had previously enjoyed an online delivery from the site. More evidence that getting all food platforms right is important.
 
My sense is Deliveroo is going to bring delivered food to as many people as it possibly can and operators can be part of the journey or not. If not, they will fill the gaps themselves. Meeting customer expectations has to come first.

Those who want to work with Deliveroo (preferably exclusively) will be treated as partners with constant innovation as part of the journey. These operators have to an in-depth understanding of delivery customers’ expectations – food quality, punctuality, food temperature, speed and value for money. Just as importantly, they also need to understand Deliveroo’s own expectations to maximise the relationship’s benefits. At the end of the day, cuisine choice is more important than brand and Deliveroo is delivering to its own customers not customers of the brand on the whole. It’s a really important distinction.

There are, though, a number of operators that believe the incremental volume opportunity of working with the likes of Deliveroo comes at too high a price. A third party is dealing directly with their customers (and has their data), their brand is in the hands of others, the percentage charge is too high (and potentially subject to change), and the relationship can be too one-sided.

So what can an operator that doesn’t want to engage with Deliveroo do? In reality, it doesn’t really matter if the restaurant offers delivery or not. The dining-in experience has to be experiential, memorable and Instagrammable, with great food, superb service and value for money all givens. It is the consumer driving these demands – something I think Deliveroo probably knows more than most.
Ann Elliott is chief executive of Elliotts, the leading integrated marketing agency in the hospitality and leisure sector – www.elliottsagency.com

Hospitality needs government support by Kate Nicholls

The UK’s hospitality sector is a resilient and inventive one. It has helped provide growth, jobs and investment in every region and has been vital for the regeneration of UK high streets following turbulent economic periods. However, without government support and immediate action on escalating employment costs, businesses in our sector will struggle to continue to provide these opportunities for individuals, particularly young people.

One of UKHospitality’s aims is to provide a voice for the sector’s concerns and identify areas of opportunity. Since our formation earlier this year it has become increasingly obvious through our discussions with members and the wider sector that securing the future of our workforce is a key concern, with an emphasis on training and skills development. This is something that has become more apparent since the Brexit vote and associated uncertainty.

With this in mind, UKHospitality established the Workforce Commission 2030 earlier this year to identify the sector’s strengths and weaknesses and give employers an opportunity to communicate this to parliamentarians. Bringing together leading employers from the sector, employees working on the front-line of hospitality and MPs, the commission provided a platform to share best practice and explore ideas to ensure our vital sector can achieve even more.

As a sector we are perfectly placed to provide fulfilling careers and increased employment in a post-Brexit world – but this is on condition we receive the right support from government to bolster efforts on recruitment and skills development and – critically – a reduction in employment costs. Our sector already employs 3.2 million people across all areas of the UK and is a major driver of social mobility. It offers many people their first job, skills development and a truly meritocratic career path.

Hospitality businesses pride themselves on providing opportunities and training for anyone wanting to break into the sector. The commission was told the industry already had several excellent training schemes in place and apprenticeships, for any age, are crucial to businesses across the country.

Hospitality is ready to continue its role as an engine of growth for the UK economy. It has the potential and ambition to create tens of thousands of jobs and up to 200,000 apprenticeships in the next five years, as well as broader development and learning opportunities. However, it is a sector that faces labour and skills shortages and a need for talent.

The Workforce Commission report makes a number of recommendations aimed to boost employment and retention and calls on the government to act decisively to help secure the future of the sector and boost the UK’s economy by:
– supporting a cross-industry campaign to tackle negative perceptions of a career in hospitality;
– providing better-quality information about opportunities in hospitality; and
– collaborating with businesses to improve engagement between businesses and students.

In addition, UKHospitality is urging the chancellor to increase the threshold for employer national insurance contributions from £6,000 to £12,000 in this year’s Budget to stimulate greater recruitment and cut business costs. It is also vital setting the National Living Wage rate remains independent and non-politicised.

The recommendations in the report map a path to a post-Brexit hospitality workforce. It is recognised free movement in its current form will end and it is critical that government supports the sector in promoting itself to young people and providing the framework for improved career development. The full potential of the sector will only be realised with positive action from the government to ensure this is achievable.

Implementing the recommendations will allow us to provide careers and opportunities more effectively, particularly for harder-to-place workers, and help the government hit its apprenticeship target. With ongoing political and economic instability in the aftermath of the Brexit vote, this is too good an opportunity for the government to miss. If acted on, these recommendations will enable us to provide even greater investment and provide more jobs in communities across the UK.

I would also like to thank everyone who gave their time to contribute to this comprehensive inquiry and UKHospitality will be pushing the government to respond and act quickly on our recommendations.

To download the report, visit www.ukhospitality.org.uk
Kate Nicholls is chief executive of UKHospitality

Five key principles to drive NPS growth by Ed Pyke 

I have been lucky enough to work in two roles where I have been given the opportunity to research, create and execute net promoter-driving strategies in hospitality and travel.

The Net Promoter Score (NPS) in almost every industry is the single most important metric to focus on to deliver customer loyalty, organic business growth and customer experience success. NPS, which was established by Harvard Business School after years of research into the best customer experience question to ask, gives you a quick way to get feedback from customers by asking: “Based on your experience of X, how likely would you be to recommend the company to a friend, colleague or family member?”

The results of this question gives the company a score ranging from minus 100 to plus 100 by classifying the answer into three categories – Detractors, Passives and Promoters.

Detractors are defined as customers who give a score between zero and six out of ten. They are dissatisfied customers who are not likely to purchase again from the company unless it is turned around and those at the lower end of the scale are more likely to be on a mission to spread negative opinions on their interaction with the company.

Passives give a score of seven or eight. They sit on the fence and their satisfaction level is neutral. They probably won’t spread negative word of mouth but they are not going to rush back to the company.

Promoters are highly satisfied customers who rate the company nine or ten. These are the brand advocates, an extension of the marketing team and loyalists who will not only keep on buying from the company but also recommend and refer it to others. They will be the first to start the conversation at a dinner party.

The NPS score is calculated as the percentage of promoters minus the percentage of detractors and thus expressed on the scale of plus 100 to minus 100. The simplicity of the question allows you to gauge your customer experience and direction of travel for revenue growth. 

So how do you drive your NPS score? There are five key points:

Buy-in from all levels and areas of the organisation – the decision to focus on driving net promoter score is not one that can be taken by a company’s individual department. You need all departments to buy into the importance and, crucially, you need board and director support and sign-up. Focusing on what is right for the customer sometimes requires difficult conversations and even more difficult cheques that need to be written. There will often be acid test points on spending capital in order to drive customer experience and it is important the board and senior managers all buy into this philosophy. Last year I had the unpleasant experience of dealing with Talk Talk’s complaints department. Its executive chairman has stated on record that the company’s key priorities are “growth, revenue and cash generation” – nothing about customer experience there. I was not surprised to see Talk Talk reveal a two-thirds profit slump a year later. Likewise, driving NPS is a holistic challenge all departments need to be aligned to – in KPIs, resource, bonus structures and outputs. When making decisions each department must ask: “Will it drive the NPS performance?”

Define promoter passive and detractor strategy – Break down the various parts of the NPS scale to create different strategies to drive scores up the scale. What is your strategy in dealing with potential zero-to-three voters? How do you turn a six into a seven or an eight into a nine? Understanding the customer psychology, mapping the customer journey and taking time to research and establish what is important to them is the basis for this point. While doing that ask yourself what are the first and last impressions your brand is giving off? How do I make a really strong first interaction and a fabulous farewell?

Decentralisation over centralisation – autonomy, decision-making and accountability are best placed in the people who serve the customer on the front line. The ability to listen to front-line feedback and place your trust in the teams that are offering a solution to a problem is a key attribute. I recently travelled with Easyjet from Gatwick. I was there two and a half hours before my flight yet was the last to check-in to what I realised was an overbooked flight. Easyjet warned me I might not be able to fly, no problem, I understood the business reasons and accepted it. I simply asked if I could check my baggage in so I could have a little less stress for the next couple of hours. Easyjet said I could but it would cost me £5. No-one in the airport, and I approached three tiers of management, could overrule the policy. “It’s not in my control,” their team leader said. “I’m not empowered to make that decision,” the most senior manager on duty in the terminal told me. I had to go all the way to the chief executive’s office to get my £5 refunded. When front-line teams have no power to change a customer’s experience, the disconnect begins.

Measure it and act – It is no surprise that to crunch the numbers and see the feedback you need a good customer experience feedback system that can deliver timely information to all areas of the organisation, including front-line teams. More than that you must obsess over the feedback and you need a closed-loop feedback system where information gets back to the customer on what you have done with their feedback and what you are doing about it. If you operate a 48-hour closed-loop system for detractors personalised to their experience, they are 20% more likely to return. My daily routine involves reviewing all feedback at 7am that was logged the day before and following up with my front-line managers. As a next stage you can involve your marketing team and publish how you are using feedback to make customer-focused decisions – “you said, we did”.

Return on investment, get the bang for your buck – Pareto’s law tells you 20% of your input drives 80% of your output. In a multi-site organisation, if you map your sites along with feedback gained next to the volume of feedback and then overlay potential to make a change, make a difference and ease of implementation of feedback, you can quickly work out which strategic capital expenditure projects to invest in to drive the highest return on NPS growth.

There you have it, five key principles to drive NPS growth in an organisation. It might be expensive and involve difficult conversations but it will be worth it when more and more people write telling you what an amazing time they had purchasing from your organisation and how much they look forward to returning and recommending you to their friends.
Ed Pyke is operations director of Simpson Travel and former head of guest experience at Greene King

 
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