Inside Taco Bell’s Mobile Commerce Transformation

How do you turn avid fans of a brand into avid customers of their mobile commerce solution? By delivering a valuable experience that has payments baked into it, says CARDFREE CEO Jon Squire. MPD CEO Karen Webster recently caught up with Jon Squire to understand how CARDFREE is helping convert Taco Bell fans into mobile commerce consumers, which starts with the ability to order ahead and ends with the ability to pay in app and never stand in line again.

KW: Let’s talk a little about CARDFREE and the mobile commerce game. There are lots of new entrants and approaches to mobile commerce these days. How is CARDFREE different?

JS: When we launched, we were really hyper-focused on being a true end-to-end solution in the marketplace. Virtually every other player in the space initially approached it with a single-point solution – payments, or a mobile gateway, for example – then ultimately tried to back into the data story. CARDFREE’s platform, from Day 1, was really focused on a solution that catered to the entire customer journey, from the initial engagement of brand through the subsequent visits.

Specifically, for us, this means four distinct offerings. One is CRM – smart offers to drive the customer in-store. The second is the ability to take that basket or order data and build it on behalf of our customer, with the third being the ability to pay either in-store or when located near the store via BLE or the cloud. Then, finally, taking that down to the SKU level. With all of our partnerships, we do get the SKU level data and make it smarter. Those [four] things serve up the most relevant experience for the customer’s next visit, driving them back into the store.

Our adoption is driven primarily through working with the largest brands and their enormous customer bases. Currently, we reach, through our five partners, 82.5 million customers a week with over 21,000 locations. As a white-label solution, we’re really not trying to build that direct customer brand or compete with our brands, but we’re really trying to empower the merchants to interact with customers directly. That’s what we’ve seen these large brands wanting to do.

KW: One of these brands you can mention is Taco Bell. Help us understand how what you just described comes to life for Taco Bell and its customers.

JS: I’m sure you’re quite familiar with the brand. It’s very unique, with extremely avid fans that literally go so far as to tattoo themselves with the brand logo; they’re so in love with the experience. So Taco Bell has been a great one to launch out of the gate with.

Mobile has allowed Taco Bell to interact with their potential customer demographic, which given the age group and avidness of the fan base, could be the most spot-on merchant in the mobile space. They are now able to interact with the customer on the go, and what that’s done for the customer is literally expose thousands of customizations to the menu that folks may not have been previously aware of before, while also expanding their product reach.

They’re serving up new products that are only in the app, which has driven A/B testing capabilities as well as the ability for customers that are mobile friendly to have early, additional access to the brand.

So what it’s really doing for Taco Bell is driving menu awareness as well as order accuracy, because the order is preloaded in the basket, showing up and geo-locating the customer when they’re close.

Whenever you marry operational efficiencies with a passionate customer base that now has a new workflow that makes life easier, you ensure yourself a home run with a brand that size.

KW: So has Taco Bell been able to measure any kind of incrementality that’s come out of adopting this approach to serving their customers?

JS: Yes, we can speak to the public numbers. They’ve been pretty forthright in coming out at over 2 million downloads within the first few months, which eclipses others from a pure adoption standpoint. They’ve also been public in mentioning that ticket size has grown by 20 percent using mobile order ahead, which is massive. Their vertical has been more focused on driving things like payments via stored value cards in the past.

What’s really unique about the way Taco Bell has approached is this it’s that almost the “Uberization” of the order ahead space within QSR. They’ve essentially, effectively, taken payments out of the equation. It’s totally seamless. Their example has set the bar, and we’ll see a lot of QSRs follow as far as order ahead goes.

KW: I agree that pushing payments to the back, so to speak, and doing things like ordering ahead and picking up in-store with the product already paid for is far more valuable to the consumer, but it also suggests that there’s a lot these QSRs have to do to deliver that service to their customers. What goes into the process of making something like this real, beyond just making the decision to mobilize ordering and payment?

JS: There are a lot of operational considerations that go into order ahead, which is historically why people have avoided it. These are things like making sure the product is fresh and not sitting on the shelf for hours. Technologies like beacons and GPS let people jump into the space now, so much so that they are willing to take on those operational challenges, and in some cases reconfigure the in-store and drive-thru capabilities.

Obviously, they wouldn’t take on these rather Herculean efforts without an ROI attached, which most of them have spent significant time analyzing. So we’ve seen that order ahead is either on the roadmap or leading the roadmap for almost all in the space.

KW: That does suggest that the whole conversation about checkout and interactions physically with POS really become irrelevant as this new way of interacting in an app with a retailer really does create a whole new relationship opportunity, and eliminates POS friction.

JS: Right, and that said, as an end-to-end solution, we are doing the integration with the POS to make it seamless. There is no adjustment that these merchants need to make with the hardware, it’s usually a software services interaction with us. But we are inserting not just orders – offers, payment vehicles, or whatever is associated with the master account. That’s essentially our turn for the robust profile we build on our customers on behalf of our merchant brand – we essentially turn the device itself into a mini POS.

KW: How different is the conversation you have with merchants about what you’re doing versus a provider that’s really just focused on payments?

JS: Most of our merchants approach us for a single point solution. There was a lot of vendor fatigue with our merchant partners, and they would look at a roadmap that included things like payment or smart offers or updating their POS. They’d stand back from all of that and realize it would take 8-10 different vendors.

But in fact, that wasn’t the case with our previous deployments. They’d normally approach us for that reason – there has been no end-to-end solution with which they can grow over the course of 24-48 months. So if they know payments and 2-3 other things are on the roadmap, they ultimately wind up at our doorstep. That’s fundamentally how we structure the company – to provide services across things like CRM, order ahead and payments.

The importance of taking the entire stack of our offering is really the depth and breadth merchants get with that master account knowledge – the more services that run on the CARDFREE rails, the smarter that accounts gets.

KW: So thinking about Taco Bell as the typical profile of the QSR client you’re working with, today I’d imagine that order ahead is a small part of their business, but growing quickly. The predominance of people come in, stand in line, place the order and leave. How many years do you think it will be until most people are ordering ahead?

JS: I think that depends on the percentage of people who don’t like to interact with people! But more seriously, within the next 2-3 years, we’ll see almost everyone in the Top 20 different verticals trying to work through the nuances of how this works with their customer base. Once there are 2-3 people leading the way, there are always followers.

From a consumer adoption standpoint, we’ll see this trickle over, if done right, faster than we saw the payments cycle trickle over. There are consumers that just cannot stand standing in line, or just want to get through the drive-thru much faster. So I think the adoption is as fast, operationally, as our partners can handle it.

KW: You mentioned there are a number of other categories outside of QSR where this capability and the solution you have may be relevant. Are you guys exploring any of those verticals?

JS: Yes, given our background, QSRs are where are focus is because that’s where the transactions are. Following that, we’ve also begun to work with other high transactional-based types of companies like grocery, gas and c-store. Our platform was originally built with the concept of crossing over into different verticals.

We’ve also begun to engage third parties to distribute our APIs to and through, so we will never attack the SMB or mid-market channel directly. Our focus will continue to remain on the big brands, and really working through their customer base, directly down their customer base. We have much more scale that way.

KW: It’s a really fascinating approach to taking mobile and transforming the experience in a way that adds tremendous value to consumers and merchants, beyond just paying for something using the mobile phone. Getting consumers over the hump of using the phone to pay involves offering more value there.

JS: Absolutely, and payments for us is really the period at the end of the sentence. And in some cases, it’s really the middle of the paragraph. It’s about getting them into the reading of it – into the store itself – and what happens with that relationship after the experience, circling back and making the experience that much more seamless.

KW: And making it a very frictionless process for consumers who don’t think about payments because it’s a part of something that’s more interesting, relevant and valuable at that point in time, with a particular merchant.

Jon Squire
CEO, CARDFREE 

Jon Squire has more than 19 years of business, marketing and product development experience in financial services and emerging technologies. Most recently, Jon was CMO of CorFire, SK C&C’s global mCommerce headquarters where he led the deployment of Dunkin’ Donuts Mobile. He was also SVP of Mobile Payments at mFoundry where he spearheaded the Starbucks Card Mobile team and helped create the first mobile wallet initiatives in the U.S. with retailers, carriers and financial institutions. Between his work at CorFire and mFoundry, Jon has been involved in the two largest mobile payments programs in the nation.

Jon has consistently driven innovation and created world-class product offerings in new categories. He launched the first national mobile P2P offering in partnership with Sprint and PayPal and is well known for his leading edge work with NFC, barcode and alternative technologies that integrate with the point of sale. Earlier in his career, he also led mobile/e-commerce payment initiatives for Wells Fargo and ran E*TRADE Advisory Services.

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