How Panera uses digital to drive demand and remove friction

The key to business success is anticipating customer desire and reducing purchasing friction, says Panera Marketing Senior VP Chris Hollander.

The best way to grow your brand is to discover what your customers want and make it extremely easy for them to get it.

Think about how Panera grew from a single 400-square-foot store in Boston to 2,200 locations nationwide. Early on, we found that people wanted to be more thoughtful about what they were eating. But that’s easier said than done, especially when eating outside the home. So we began listing calories on all our menus (long before it was mandated) and offering clean foods.

In recent years, we’ve seen a shift in what people expect from us as a brand. Today’s consumers are empowered by technology to get exactly what they want, when they want it, without much effort. We need to address this shift by updating our business practices for a digital-first world. If we don’t, our hungry customers will head elsewhere—to restaurants that are meeting their ever-increasing expectations.

Digital can remove friction

A few years back Ron Shaich, our founder, noted that a Panera cafe at noon was like a mosh pit. Hundreds of impatient and demanding customers waited around to order and collect their food. This was not the experience we wanted our customers to have. Sure, a full cafe was a clear sign they desired our products, but how soon before the friction of overcrowding and long waits sent them packing? We realized digital was the natural next step in addressing this.

One solution was the digital kiosk. Customers can explore and personalize menu items, and place orders more quickly. Loyalty club members can even save preferences and payment details to earn rewards. We also introduced Rapid Pick-Up, a service that lets customers order via website or app and pick up without waiting in line.

These changes have created smoother, more accurate ordering processes and reduced wait times, which leads to happier customers. Today, 30% of our orders are generated digitally.

And we have to keep evolving. With over 1.5M digital orders a week, we see a clear demand for technology that helps customers order more easily. That means exploring any technology that helps us better serve our customers. For example, we’ve seen that voice-activated ordering can be up to 80% faster than the app, so we’ve collaborated with Google to trial it on the Google Assistant.   

Digital tech helps nurture loyal customers

With so many options for people to choose from, loyalty is crucial to our business. Today, our MyPanera loyalty program is the largest in the industry, with over 30 million members. We’ve achieved that by delivering on customer needs at an individual level.

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New technologies mean that we can get even better at meeting those needs. Drawing from our wealth of data allows for customization at scale. We can use behavioral and contextual cues to customize messaging and give customers much more relevant experiences.

Sure, we know that people love rewards. Search data shows that “reward(s)” searches related to specific brands have grown more than 40% year over year.1 But rewards must be useful and relevant. Even though two customers might have the same spending profile, they’ll likely be motivated by different rewards. For example, if you’re a soup lover who has been coming to Panera for lunch every day for the last four years, we’re not going to send you lots of messages about breakfast sandwiches and baked goods.

This personalized approach keeps people engaged, drives loyalty, and ultimately increases sales. Today, over half of our transactions come from people enrolled in our loyalty program.

Digital media helps us help our customers

Digital media allows us to assist customers throughout their entire journey.

Search plays a huge role in that because it’s a great indicator of customer intent. Working with Google, we’ve managed to capture this intent and optimize against it. We look at important search terms and make sure we show up. For example, brand-specific searches for time-saving “delivery” and “pick up” apps have grown over 205% year over year.2

We also deliver the right content for popular nonbranded category terms (like “healthy breakfast” or “delivery food near me”)—whether it’s directing customers to our delivery page or providing details to the closest store. And we use dayparting so messaging is relevant in the moment. For example, breakfast campaigns only show up before 10 a.m.

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We worked with Google to connect our online media with offline impact as part of our digital-media measurement evolution. We now include Google store visits in our ROI calculations to understand how search and YouTube ads drive foot traffic and contribute to our bottom line, which helps us justify our growing investment in digital.

Ultimately, it’s all about the customer’s desire

Understanding what people want and delivering it to them in the most seamless, frictionless way is the perfect recipe for strong brand growth. At Panera, we’re addressing this through new digital initiatives. And we haven’t been disappointed by our efforts: Digital sales via mobile, web, or kiosk have surpassed $1 billion annually.

Have there been challenges? Yes. But digital shouldn’t be viewed as a distraction from your business goals. The marketers who embrace digital technologies to further assist people will see the results where it counts—in the numbers.

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