Modern Restaurant Management (MRM) magazine seeks out research impacting the restaurant and hospitality industry. This End-of-April 2017 edition features some Canadian research, a Restaurant Success Report as well as surveys on minimum wage and tipping and the impact of online reviews.
Restaurant Success Report
Ninety-two percent of restaurateurs are optimistic for sales in 2017.
Toast Restaurant POS compiled a “Restaurant Success in 2017 Industry Report” to take an inside look at restaurant owners’ plans and strategies. Toast compiled data from 450 restaurateurs representing fast casual restaurants, fine dining restaurants, diners, pizzerias, cafes/bakeries/delis, and bars/nightclubs, and have come to conclusions that modern restaurateurs cannot afford to go without.
Some key findings revolve around the following topics:
- A Strong Sense of Optimism: 92 percent of restaurateurs are optimistic for their sales in 2017.
- Taking Control: 86 percent of restaurateurs believe the success of their business is in their control.
- A Dedication to Visual Content: YouTube will be adopted by more restaurateurs than any other social network this year.
- The Rise of Social Media Sponsorship: Restaurant social media advertising is set to increase by 20 percent.
- Staffing Struggles: 36 percent of restaurateurs name hiring, training, and retaining staff as their biggest challenge in 2017.
Minimum Wage and Tipping
According to research from Upserve, minimum wage laws are at a tipping point. Those in favor of a higher minimum wage argue their necessity based on the cost of living. Opponents, on the other hand, fear the potential impact of higher labor costs on businesses. For restaurants, the squeeze is tighter on than most other businesses.
Roughly half the minimum-wage workforce is employed at businesses with fewer than 100 employees, and 40 percent are very small businesses with fewer than 50 employees, according to the Census Bureau.
Heading into 2017, 21 states committed to putting minimum wage increases into effect. Currently, the minimum wage has increased in 20 states or cities. Minimum wage is increasing across the country, but some front of house restaurant staff are concerned misinformation, or a lack of understanding of how these increases work, has resulted in negative impact on the tips they depend on, according to a survey Upserve conducted.
The minimum wage is going up …
A little more than 36 percent of our respondents said the minimum wage has risen in their state of employment in the last six months.
*Only 2 of the respondents working in a state with a minimum wage increase selected that they do not receive tips in their position.
… But take home pay is not.
Of those respondents, 73 percent said that their take home pay – restaurant wages and tips – has not increased since wage went up.
While salary for a waiter or waitress might be up, tipping is down. Approximately 24 percent say their tips have decreased as a result of an increase in minimum wage.
It appears, according to the survey, that restaurant staff believes guests’ perceptions of what an increase in minimum wage means. And 45 percent believe that guests’ think the waiter or waitress salary has gone up, and staff makes more money as a result of the minimum wage increases. The reality is that in most cases, tipped workers are not impacted by a blanket minimum wage increase. In states like Vermont and Maine, for example, tipped workers make $5 an hour, despite minimum wage increases to $10 and $9 an hour respectively. Worse, in Massachusetts, where the minimum wage rose to $11/hour, tipped employees still only make $3/hour.
The change in laws puts restaurant owners in a tough spot, however. Many restaurants might look at surcharges, or raising the hourly wage while dropping tips. But in our survey, tipped workers said they wouldn’t accept a substantial increase in hourly pay if it meant eliminating tips. More than 68 percent of restaurant staff said they would not take an increase in hourly wage if tipping were removed. This isn’t surprising, as a past Upserve study indicated that 97 percent of servers preferred tipping as their payment method.
For restaurants, one thing is clear: margins might be tight, and the minimum wage will impact your bottom line, but perhaps not in the ways you thought.
Impact of Online Reviews
Online reviews have increasingly developed the past few years and ReportLinker conducted a survey to answer three questions:
- Do people trust online reviews more than their friends?
- Do they read reviews before buying a product or visiting a place?
- What items or activities are the most reviewed online?
98 percent of people believe online reviews are reliable.
Key results show that:
98 percent of people believe online reviews are somewhat reliable
And 59 percent of shoppers believe online reviews are equally as trustworthy as a review provided by a friend
Consumers choose different online review sites depending on the product or service being researched:
- When looking for a good restaurant, consumers head to Yelp 53 percent of the time
- But for those looking for product reviews Amazon and eBay top the list, with each mentioned 57 percent of the time.
- By far the most popular category of online reviews is electronics with 71 percent of mentions
- Hotel and restaurant reviews are the next most-popular searches (53 percent and 52 percent)
- Followed by automobiles, entertainment and clothing, beauty and personal care product reviews.
- Despite an extensive reliance on these online evaluations, only 51 percent of online shoppers say they take the time to write them.
Delivery is All About Convenience
Convenience is a key reason why consumers use restaurants and other foodservice outlets and there is nothing more convenient than ordering a meal or snack for delivery from an app or website, which is why delivery now represents 1.7 billion foodservice visits annually, reports The NPD Group. Delivery is such a popular way to source meals and snacks that one-fourth of all U.S. consumers claim to have ordered a meal via delivery in the past three months, finds NPD.
Young adults are the heaviest users of foodservice delivery, representing 56 percent of delivery orders. As a comparison to other generations, 29 percent of Millennials ordered restaurant food/beverages via delivery in the last week while nearly 50 percent of Boomers and older use delivery less than once a month. Across the board, consumers using delivery services are very satisfied but young adults are the most satisfied with 93 percent of Gen Z and 87 percent of Millennials very satisfied or satisfied.
Ordering delivery through a website, app, or text is the fastest growing method. Digital orders have jumped from 22 percent or 637 million of all delivery visits in 2011 to 48 percent or 2 billion visits in 2016. NPD reports that 46 percent of all foodservice delivery orders are on a deal because of the accessibility to coupons and other discounts.
“Delivery epitomizes convenience, which is the value of using foodservice in the first place,” says Warren Solochek, president of NPD’s Foodservice Practice. “If delivery fits a foodservice operator’s business model and it’s operationally feasible, they definitely need to add it on as an option in order to stay competitive.”
How Do You Like Your Pretzel?
A recent national survey conducted by SUPERPRETZEL, the nation’s #1 soft pretzel, showed that Americans have serious habits when it comes to pretzel consumption. In honor of National Pretzel Day on April 26, SUPERPRETZEL shared the data, which found that almost two-thirds, or 65 percent, of consumers eat the curves of a soft pretzel first and save the knot for last.
When it comes to pretzel toppings, 28 percent prefer cheese, while 17 percent like mustard or chocolate, respectively. Only 13 percent prefer to eat their soft pretzels plain, and 2 percent like to dip or top their pretzel with another sweet or savory food item, such as cinnamon, icing, peanut butter or marinara sauce. In a surprising twist, men are more likely than women to prefer chocolate.
The online survey, which was conducted among 2,012 adults, sheds some light on the dipping versus topping debate. When eating soft pretzels, 69 percent prefer them dipped, while 31 percent prefer their pretzels topped. It also found that some groups are more adventurous when it comes to eating their soft pretzels. Interestingly, those who do bendy exercises, like yoga, Pilates, gymnastics and dance, are more likely than those who do not to be a bit more adventurous with their soft pretzel by trying new flavors or toppings.
Quebec Wants Wine Reform
The Montreal Economic Institute (MEI) poll on wine imports and distribution reveals most Quebecers believe the current system impedes restaurants and their customers. In the poll, 71 percent of Quebecers believe independent restaurateurs should have the right to import wine and sell it directly to consumers.
“These numbers show a solid majority of people from Quebec recognize the huge hurdles to wine imports, and the negative effect it has on consumer choice and product diversity,” says David Lefebvre, Restaurants Canada’s Vice-President Federal and Quebec.
Currently, direct imports from producers are sometimes allowed, but the taxes, levies and paperwork required make it almost impossible to do so efficiently.
“Our members want to be able to offer a better variety of products, and make them affordable for their customers,” says Lefebvre.”To allow operators to import some of their own products, without always going through the province’s liquor monopoly, is a step in the right direction.”
“It’s obvious that all Canadian producers of beer, wine and spirits would greatly benefit from liberalization of the market, and removal of legislative and regulatory hurdles,” says Lefebvre.”Dozens of small- and medium-sized Quebec producers stand to benefit from a new regime, and our members can’t wait to have more of these products on tap.”
Older Canadians are Drinking Less
As Canada’s population ages, the habits and preferences of seniors are contributing to a shift in the beverage landscape and, as a result, the demand for beer is evolving.New research from Mintel reveals that Canadians are drinking less beer than they used to, with volume consumption per capita declining eight percent in the last five years from 83.4 litres in 2011 to 76.9 litres in 2016.
The decline in per capita beer consumption is due, in part, to Canada’s demographic shifts, specifically, the growing senior population. While nearly three in four (74 percent) Canadians overall say that they typically drink beer, consumption declines significantly among older consumers: 35 percent of Canadians over age 55 say they do not drink beer. What’s more, older women show less interest as three in five (58 percent) women over age 65 say that they do not drink beer.
Despite decline, beer remains Canada’s most popular alcoholic beverage, with beer accounting for 80 percent of alcoholic beverage volume consumption in the country, according to Mintel Market Sizes.
“While beer remains far and away the most popular alcoholic beverage in Canada, the ground is shifting. Canada’s population is aging and one of the key distinctions is that the drop off in beer consumption among seniors primarily occurs among women. As such, developing tactics that support a strategy of providing more palatable beer options, such as socialization with hints at flavour exploration, for women in this advanced age range can support a larger goal of stemming potential declines,” said Joel Gregoire, Senior Food and Drink Analyst at Mintel.
Despite their waning interest in beer, women over-55 (26 percent) are more interested than men of the same age (10 percent) in exploring unique flavours and are more open to beer recommendations (28 percent of women 55+ vs 16 percent of men 55+). Though lower on the list of priorities when selecting a beer, lower alcohol content also proves slightly more important to women over-55 (12 percent) than Canadians overall (8 percent).
A bright spot for the category, craft beers are gaining traction with Canadian consumers. Over half (57 percent) of Canadians say they typically drink craft beers. What’s more, one quarter (27 percent) of beer drinkers agree that craft beer offers better quality than mainstream beers, with some 24 percent also agreeing that it is worth paying more for craft beer than mainstream beers.
Many Canadians also appear to make a clear connection between craft beers and buying local. One quarter (24 percent) of beer consumers agree that craft beers from small, independent brewers taste better than ones from large companies, and just under one fifth (17 percent) say they would like to see large companies release more craft-styled beer.
While craft is the darling of the beer industry, a number of Canadians also gravitate toward drinks that combine beer with other beverages. One third (32 percent) of Canadians claim to drink radlers, also known as a shandy, which combines beer with juice. According to Mintel Global New Product Database (GNPD), the top flavours in global beer launches with ‘radler’ in the description include lemon (26 percent), grapefruit (12 percent) and lemonade (11 percent). What’s more, nearly one third (31 percent) of consumers drink spirit-flavoured beers, while one quarter (24 percent) are interested in fruit-flavoured beer.
“Canada’s craft beer industry represents an evolution not only in the beer market, but also in the broader beverage industry. A boon to local economies, the craft beer renaissance provides consumers with choice and allows brewers to innovate and push the boundaries when it comes to taste. Within the Canadian market, larger manufacturers investing in craft-styled brands will need to be clever in developing strategies that address an apparent disconnect many consumers have when thinking about craft beer from larger brewers,” continued Gregoire.
In addition to the rise of craft beer, the popularity of cider is reflected in the sheer number of Canadians who drink it. More than half (53 percent) of Canadians say they drink cider, including seven in 10 (67 percent) 18-34-year-olds. Unlike beer – which men are more likely to drink (84 percent) than women (65 percent) – when it comes to cider, men (54 percent) and women (52 percent) are just as likely to say they drink cider. This may have to do with cider’s flavour as women are more likely to agree that they prefer the taste of cider over beer (27 percent of women vs 16 percent of men) and are more open to trying unique flavours (34 percent of women vs 20 percent of men).
And finally, Canada is abuzz with talk of hard soda, which blends the nostalgic flavours of soda with alcohol. Mintel research reveals that one quarter (25 percent) of Canadians are interested in drinking hard sodas. This format seems to be especially popular with younger consumers, with 42 percent of Canadians aged 20-24 saying they’re interested in hard sodas, including nearly half (45 percent) of women aged 20-24.
“The ingredients in cider, including apples, pears, peaches or berries, are relatable to consumers and this is likely one of the factors that has contributed to cider’s success. Recently, we’ve seen an explosion in the cider market due to consumers increasingly looking for new experiences, the mainstreaming of cider options with larger beer producers offering their own brands, the potential health associations tied to cider and the emergence of local craft producers,” concluded Gregoire.
Food Allergies in Canada
Enjoy Life Foods shares findings from its 2017 Ipsos survey chronicling the snacking habits of Canadians. The survey measures the inconveniences that an estimated 8 per cent1 of Canadians (or 2.6 million) who suffer from severe food allergies face.
According to the survey, people who suffer from food allergies, or have someone in their immediate family who suffers, prepare or eat the largest proportion of snacks made fresh (58 per cent) as opposed to snacks that are prepackaged (42 per cent). Closely following are those who regularly prepare snacks for an allergy sufferer (57 per cent).
The reality is more Canadians are skipping traditional meals in favour of something they can grab on the go2 or at work yet, until recent years ready-made options have not been widely accessible to those suffering. Food allergies change the course of a person’s life, causing “daily thoughts of safe food preparation and avoidance of cross-contact, often a side dish of quarrels with close relatives, some awkward socializing moments, and endless explaining to caregivers, friends, schools, and restaurants.”3
“We pay close attention to the challenges faced by those with food allergies,” says Joel Warady, CMO and Innovation Officer of Enjoy Life Foods. “We are constantly researching and developing new products that allow our consumers more opportunities to eat freely and safely without worry and above all, experience a better quality of life.
People Love to Sparkle
There are good times ahead for sparkling wine producers all over the world, including Champagne, according to the latest joint just-drinks/IWSR Global Insights report – with non-Champagne fizz set for dramatic growth.
At first glance, that might look surprising. After all, overall sparkling wine consumption (including Champagne) only expanded by 0.3 percent in 2015, with Champagne bucking the recent trend by outperforming its global competition.
But, the figures were skewed by short-term losses in some of the category’s major markets, including its European heartland and, in particular, the CIS markets – which shed more than 2m cases in 2015 alone.
Factor in worsening economic conditions in key African markets – especially Nigeria and Angola, both of whom have been impacted by falling oil prices – and it added up to a difficult year for sparkling wines in general.
But, underlying trends are broadly positive.
If the category had a star in 2015, it was Champagne, which surprisingly out-performed non-Champagne fizz thanks to continued gains in the US, Japan and Australia, as well as a return to growth for the UK, the leading Champagne market by volume. This performance gives a clue to the source of future growth for the Champagne houses, with the category poised for a period of “unprecedented and uninterrupted growth” in the years to 2021, reaching just over 28m cases thanks to a compound annual growth rate (CAGR) of +1.7 percent.
While France will continue to account for more than half of those sales, the country will see its category share erode further as a wide range of markets, including the US, Japan, Australia, Global Travel Retail, Italy, Spain, Canada and Hong Kong all exhibit healthy growth.
As the report notes: “This rising tide will benefit almost all markets, with Champagne’s top 18 destinations all set to see their volumes rise [between 2016 and 2021], showing the remarkable geographical diversity and resilience of the category.”
Growth for non-Champagne sparkling wine is poised to accelerate even faster in the next five years, according to IWSR predictions, with volumes set to reach 219m cases by 2021, a gain of nearly 30m cases at a CAGR of +2.2 percent. As with Champagne, only a few of the top 20 sparkling wine markets will decline over that timescale (Ukraine being the most notable), with six leading markets – Russia, the US, Italy, the UK, Argentina and China – set to record “spectacular” growth.
Germany, still by far the world’s leading sparkling wine market despite recent challenges, will consolidate its position with solid gains to 2021, with France and Spain, two more leading markets, following suit.
But, Germany’s position as the leading consumer of imported sparkling wines could be under threat in the next few years. If the UK continues to grow at rates above 10 percent – as it has done over the past five years – it will soon overtake Germany.
Much of the growth in the UK – and indeed in the US and many other global markets – is being driven by the Prosecco boom. This, says the report, has become the “go-to option for aperitif seekers”, thanks to its perceived status as an everyday mini-luxury.
The Rise of Robots
According to the new market research report “Food Robotics Market by Type, Application (Palletizing, Packaging, Repackaging, Pick & Place, Processing), Payload (Low, Medium, Heavy) & Region – Forecast to 2022”, published by MarketsandMarkets™, the global food robotics market is estimated at USD 1.37 Billion in 2017 and is projected to reach USD 2.50 Billion by 2022, at a CAGR of 12.80 percent during the forecast period.
The articulated robot by type had the largest market share in 2016. Articulated robots can range from simple two-joint robots to complex ten-joint robots. The more joints an articulated robot has, the greater its range of motion which makes it flexible for food processing. Moreover, articulated robots have a wide variety of payload capacities, which makes them useful in the food industry wherein there is a varied requirement for robots in the low to medium payload category.
The medium segment of the food robotics market by payload had the largest market share in 2016. The medium segment may be defined as robots with payload capacity ranging between 10 kg to 100 kg. In the food & beverage industry, the market for medium payload robots led in 2016, as most of the automated processes require a certain degree of flexibility to cater to the changing manufacturing needs, which is offered by robots in this category.
The palletizing segment of the food robotics segment by application had the largest market share in 2016. This is due to reducing operating cost and labor requirements, increasing turnaround time and production, and reducing ergonomic issues; these properties help in increasing their demand in the food & beverage industry. Palletizing refers to the process of loading and unloading large and heavy boxes and parts to and from pallets in food & beverage manufacturing and distribution facilities and warehouses.
The Asia-Pacific region is projected to have the highest CAGR during the forecast period. The countries covered in the Asia-Pacific region is projected to be the fastest-growing market for food robotics due to the demand for ready-to-eat products has increased rapidly among consumers. The packaged food consumption growth increased due to urbanization in the Asia-Pacific region.
Indians Like Chocolate
While the global chocolate confectionery market posts slow growth, new research from Mintel reveals that India is defying the odds. Indeed, India is now one of the world’s fastest growing chocolate confectionery markets.
Sales of chocolate confectionery in retail markets grew by 13 percent between 2015 and 2016 in India, followed by Poland which saw sales growth of 2 percent. In comparison to the rest of the world, Poland and India were the only two markets to see sales of chocolate grow in 2016, with sales in the United States (US), United Kingdom (UK), Germany and France flat over this period, while sales fell in Russia (-2 percent), Brazil (-6 percent), and China (-6 percent).
Data from Mintel also reveals India’s chocolate confectionery market has had a strong CAGR (compound annual growth rate) of 19.9 percent, in retail market value, between 2011 and 2015, and is expected to grow at a CAGR of 20.6 percent from 2016 to 2020.
When it comes to chocolate confectionery consumption (volume sales), it seems India is a nation of chocolate lovers, as Mintel research reveals that India consumed 228 thousand tonnes worth of chocolate in 2016*. Other markets that have consumed in excess of 200,000 tonnes of chocolate last year include France (251 thousand tonnes), Brazil (236 thousand tonnes), and China (202 thousand tonnes). Meanwhile, Australia and Indonesia consumed 95 thousand tonnes and 94 thousand tonnes worth of chocolate in 2016 (respectively). The US and the UK, on the other hand, consumed 1.3 million tonnes and 555 thousand tonnes of chocolate (respectively).
Marcia Mogelonsky, Director of Insight, Mintel Food and Drink, said: “Chocolate confectionery had an uneven year in 2016. Volume sales in developed markets remained flat, while the picture was a bit brighter in emerging markets, like India, where sales generally fared better. Our research indicates that consumers in India believe chocolate to be beneficial and convenient – seemingly the key reasons behind the growth of the country’s chocolate confectionery market both in value and volume.”
Indeed, according to a consumer study by Mintel, 42 percent of Indian consumers have eaten sweet or sugary snacks (other than biscuits) like chocolates and cakes in the past three months**, rising to 53 percent of consumers aged 18 to 24. On the benefits of chocolates, Mintel research reveals over two in five Indian consumers (44 percent) find sweet or sugary snacks like chocolates and cakes to be healthy, while over one in three (35 percent) Indians believe these snacks provide them with energy.
Meanwhile, as many as one in two (49 percent) Indian consumers associate sweet or sugary snacks like chocolates with convenience. Data from Mintel also reveals 43 percent of Indians consume sweet or sugary snacks like chocolate and cake between lunch and dinner, with over half (53 percent) of Indian consumers reporting that they tend to snack in between meals because they get hungry.
Overall, global launch activity in the confectionery category was somewhat restrained in 2016. The number of chocolate confectionery launches globally grew by just 3 percent between 2015 and 2016, with seasonal chocolate launches accounting for one quarter (25 percent) of global chocolate new product launches. This was the biggest area of chocolate new product development (NPD) in 2016, according to Mintel Global New Products Database (GNPD).
Proving chocolate lovers have a heart, interest in ethical products remains relatively strong, with 17 percent of new products claiming some sort of “ethical-human” positioning, which could include fair trade, Rainforest Alliance, or some other independent “bean-to-bar” certification. Although still a small part of the category, accounting for less than 6 percent of global new product introductions in 2016, launches of chocolate confectionery with an organic claim increased 6 percent between 2014 and 2016.
Finally, Mintel research shows that consumer demand is likely to be the major impetus for more conversion to organic offerings. In India, as many as 19 percent of Indian consumers would like to see a wider variety of natural snacks that have no additives or preservatives, for instance.
All for Mom
Consumers say they will spend more than ever on Mother’s Day this year as they shower moms with everything from jewelry to special outings at favorite restaurants, according to the National Retail Federation’s annual survey conducted by Prosper Insights & Analytics.
Mother’s Day shoppers are expected to spend an average of $186.39 for the holiday, up from last year’s $172.22. With 85 percent of consumers surveyed celebrating the holiday, total spending is expected to reach $23.6 billion. That’s the highest number in the survey’s 14-year history, topping last year’s previous record of $21.4 billion.
Consumers expect to spend $4.2 billion on special outings such as dinner or brunch.
“With spring in full bloom, many Americans are looking forward to splurging on their mothers,” NRF President and CEO Matthew Shay said. “Retailers will be ready with a wide range of gift options and a variety of promotions for their customers.”
According to the survey, consumers plan to spend $5 billion on jewelry (purchased by 36 percent of shoppers), $4.2 billion on special outings such as dinner or brunch (56 percent), $2.6 billion on flowers (69 percent), $2.5 billion on gift cards (45 percent), $2.1 billion on clothing (37 percent), $2 billion on consumer electronics (15 percent) and $1.9 billion on personal services such as a spa day (24 percent).
The overall increase is expected to be driven largely by spending on jewelry, which is up 19 percent, and personal services, up 15 percent.
When it comes to “gifts of experience” such as tickets to a concert, 28 percent want to receive such a gift, compared with 24 percent last year. Younger consumers in particular may be looking to create a special memory, with nearly half under the age of 35 planning to give such a gift.
“Consumers are opening up their wallets a little bit more to celebrate the women with the most important jobs in the world on Mother’s Day,” Prosper Principal Analyst Pam Goodfellow said. “We will see older Millennials (25-34) spend the most, and younger consumers will put their online shopping skills to good use to purchase the perfect gift.”
When searching for that perfect gift, 35 percent of consumers will head to department stores and 31 percent will shop at specialty stores such as florists, jewelers or electronics stores, while 24 percent plan to shop at a local small business. Meanwhile, 30 percent will shop online, up from 27 percent last year. Among smartphone owners, 34 percent will research gift ideas on their phones while 19 percent will use them to make a purchase.
The survey, which asked 7,406 consumers about their Mother’s Day plans, was conducted April 4-11 and has a margin of error of plus or minus 1.2 percentage points.
Impact of Messaging
Quiq, a provider of Messaging for customer service, revealed that consumers are willing to pay 17 percent more on average for a product or service that is supported by messaging. While it is well known that consumers use SMS/text messaging in their daily lives with friends and family, that same convenience has not been available with their favorite brands.
In 2015, Messaging became the most popular digital communication channel, surpassing social networking, to become the dominant form of personal communications across the globe. Customer preferences for brand interactions have evolved alongside, with 64 percent of consumers preferring to text a company than talk over the phone.
“Today’s consumers don’t want to talk on the phone or wait for an email response. Nor do they have the time,” says Mike Myer, Founder & CEO of Quiq. “With Quiq Messaging, a consumer can use his or her favorite Messaging app to be immediately connected with a company representative and get help with pre-sales and post-sales support questions.”
According to the Customer Preference for Messaging report by Market Strategies International, 66 percent percent of respondents rank Messaging overall as their preferred channel for contacting a company. When asked what they would contact a company for, 70 percent of respondents said they would use mobile messaging to help troubleshoot an issue and 64 percent would use it to make a purchase or booking. But consumers haven’t been able to interact with brand contact centers via messaging until now.
Additional key findings:
- Nearly 100 percent of millennials (age 18-34) text every day, while 8 out of 10 (age 35 and above) text daily
- Cable/Internet/Wireless providers, retailers, video streaming services, travel services, and financial services are the top industries consumers want to message
- 71 percent of consumers find SMS/text messaging to be very or extremely effective for engaging with a brand
- Convenience, quick response times, and easy of texting are the top 3 reasons consumers want to use messaging
- 82 percent of consumers say a poor customer service experience would significantly impact their decision to continue to do business with a company
- Six out of 10 would never buy again from a company that delivered a poor customer service experience
“Consumers see such a significant value in mobile messaging that it is impacting their behavior,” states, Paul Hartley, Managing Director, Marketing Strategies International. “It improves their brand perceptions, causes them to select one product over another, and they are even will to pay more for it. It is impossible to ignore a platform that makes such a measurable impact to the top and bottom line.”
The Incentive Research Foundation’s “Using Behavioral Economics Insights in Incentives, Rewards, and Recognition: A Nudge Guide,” is an analysis of how behavioral economics can be applied to the incentive, rewards, and recognition (IRR) field. Offering practical takeaways to apply immediately to IRR programs, the report highlights proven behavioral economics approaches and the powerful role emotions play in employee performance.
“Behavioral economics gets to the heart of why people make specific choices, and it can be an effective resource in designing IRR programs that motivate employees’ best performance,” said Melissa Van Dyke, IRF President. “By understanding the role of emotion in motivation as explained in ‘Using Behavioral Economics Insights in Incentives, Rewards, and Recognition: A Nudge Guide,’ IRR professionals can use this knowledge of human drives to make work more satisfying, enjoyable, and rewarding.”
Behavioral economics helps the user comprehend the motivations behind people’s actions. It combines much from several disciplines including the fields of traditional economics, social psychology, and neuroscience. Because behavioral economics recognizes that 70 percent of human decision-making is emotional—as opposed to rational—it proves to be a useful tool in helping employers understand what actually motivates employees, why some incentives are more effective than others, and how they can strategically apply these principles to their own businesses.
“Using Behavioral Economics Insights in Incentives, Rewards, and Recognition: A Nudge Guide” demonstrates how IRR professionals can apply behavioral economics principles to the everyday design of IRR programs. Some examples detailed on the report include:
Incentive programs should focus on using nudges (subtle incentive tools/practices) to make the reward system user-friendly and to maximize the program’s emotional impact. Emotionally compelling rewards hit the mind harder, are remembered longer, produce quantifiably better results from employees, and influence the internal brand the most.
Employers need to move beyond programs that rely solely on monetary rewards. For large rewards in particular, experience-type programs involving travel tend to generate warm memories and appeal to more than two-thirds of an IRF survey’s respondents over the cash equivalents.
Reward a top performing team as opposed to using a system in which members of a team all compete against each other for a single reward. In today’s workplace, cooperative incentives are more effective and valuable than competitive incentives. Emotional pressures cause people to do things they don’t really want to do; but it doesn’t cause them to do those things well.
Implementing emotionally meaningful incentives in IRR programs has benefits that extend beyond just improving employee productivity. Eventually, high-performing employees turn into brand ambassadors who extol the company’s virtues to non-employees—including current and potential customers, vendors, and media.