With membership business sales exceeding 62%, how does KFC lead in all aspects of consumer digitalization?

Starting from KFC, this article comprehensively and objectively analyzes KFC's digital transformation from the perspectives of user experience, points and membership system, and digital innovation. It is recommended for those who work in the catering industry.

Today, the competition among enterprises is not only about products and marketing, but also about consumer digitalization, which has become the most important means of competition and can effectively help enterprises increase revenue, reduce costs and improve efficiency. This is also true in the catering industry. KFC's digital transformation has always been a benchmark in the industry. This "foreign fast food" brand, which has been in China for more than 30 years, has been deeply engaged in digital innovation and presenting a more diversified dining experience.

KFC started its digital operation layout very early. It launched KFC Home Delivery in 2007, took the lead in exploring mobile self-service ordering in 2013, fully connected to mobile payment in 2015, integrated Super APP in 2016, and took the lead in exploring the Douyin live broadcast sales model in 2021...

As of 2021, KFC has 330 million members, with member sales accounting for 62% of total sales, take-out and take-out sales accounting for approximately 60% of revenue, and digital orders (including take-out orders, mobile phone orders, and self-service ordering machine orders) accounting for 87% of revenue.

A high degree of digitalization has effectively helped KFC reduce operating costs and improve the end-user experience. Especially in the face of the epidemic, KFC's advanced digital awareness has helped the brand stabilize its revenue and demonstrated its strong ability to resist risks.

Today we will analyze KFC’s successful digitalization of consumers from the perspectives of user experience, member loyalty, and marketing innovation.

1. Super APP, continuously upgrading user experience

Now when we walk into a restaurant, it has become common to pick up the phone and order by ourselves. KFC launched the mobile self-service ordering function as early as 2013, when smartphones and mobile payments were not yet popular. After many attempts and iterations, KFC found the best entry point for digital transformation.

The membership system was launched in 2016, integrating the brand APP, ZTO APP and mobile self-service ordering APP, and turning it into a mobile platform for ordering, payment and reservations - the KFC Super APP.

With this incision, the connection between online and offline has become much smoother, and consumers have a better experience when ordering food. From the user's perspective, the Super APP improves the user experience in several ways:

1. Support ordering in advance to reduce waiting time

Consumers can place orders on the road before arriving at the store to reduce waiting time. The system will automatically identify the restaurant closest to you and set the time to pick up the food.

In addition, a "breakfast butler" function is specially launched for the breakfast business. Users can make an appointment for breakfast the next day and pick it up directly at the restaurant at the agreed time. Restaurants can also use order data to more reasonably schedule restaurant production capacity and achieve cost reduction and efficiency improvement.

2. Customized menu function to meet personalized needs

KFC developed the "Customize My Menu" function based on the three major needs of each user: ordering habits, finding discounts, and trying new things. Each user can generate a menu based on their own preferences, which intimately meets the personalized needs of users.

3. “Discount Assistant” reduces user decision-making time

When users place an order, they can click on the "Discount Assistant" in the lower left corner to see all the coupons, prepaid benefits, or discount activities that can be used for the current order, without the need for users to jump back and forth to select. This not only saves users time in searching for coupons and making decisions, but also makes it less likely that they will miss any available discount opportunities.

4. Service upgrade to optimize takeaway experience

KFC's daily delivery orders surge on rainy days, so KFC has developed a rainy day delivery feature. When users open the KFC Super App on a rainy day, they can unlock limited-time 1-yuan items and rainy day meal packages.

The recommended meal packages are screened, which shortens the user's ordering time and the preparation time on the operational side, allowing companies, riders and users to have a better experience in rainy day delivery scenarios.

In addition, KFC has been actively expanding new business scenarios and innovatively provided "corporate delivery" services in 2019.

5. Information flow page, follow the current interaction mode

The lower half of the APP homepage is filled with information flow content. Users can scroll down to explore customized new information, including new products, product peripherals, discounts and joint activities.

This method allows users to explore more interesting and valuable content at the moment, and provides a one-stop service from "planting grass" to "pulling grass", making the KFC Super APP an application that can not only be used to order food, but also to browse.

6. Diverse and personalized services to achieve user accumulation

In addition to ordering meals, KFC has also deepened the connection between stores and users by developing the K-Music song-ordering function that allows users to customize the in-store background music.

When you are in the store, you can use the super APP K-music function to request songs, and let the restaurant background music change according to your request. According to statistics, the APP can receive millions of song requests per month during peak periods.

7. Minimalist mode, focusing on the elderly

KFC has also developed a "minimalist mode" specifically for the elderly, which can be switched in the APP settings. The fonts and icons in the minimalist mode are enlarged, recommended menu options are set for the tastes of the elderly, and marketing information is reduced, making ordering easier.

As of the end of 2021, the user scale of KFC Super APP has reached hundreds of millions. Many "segmented groups" in the traditional sense have become groups that cannot be ignored based on such a huge base.

Continuous understanding of users and continuous transformation of products have also made KFC Super APP an increasingly warm digital product.

2. Points and membership system, deeply linking users

Statistics show that KFC has 330 million members, and member sales account for 62% of the total sales, while the figure for McDonald's is 53% and that for Burger King is 40%. Such high member stickiness must be inseparable from KFC's meticulous construction of the membership system. In 2016, KFC officially implemented the KFC membership plan, and through continuous traffic on its own platform, it accumulated more than 50 million users in just one year. The V Gold Mall, membership card package and a series of member-exclusive activities launched during this period also better bound the relationship between the brand and its members.

In July 2018, KFC launched a subscription-based paid exclusive membership program, which not only effectively improved the efficiency of member orders, but also enhanced consumer loyalty.

So how does KFC specifically design to lock in these 330 million members? There are two main modules:

1. Points system

KFC points are called "V Gold", and users can accumulate them through consumption (1 yuan spent = 100 V Gold), signing in, etc.

The validity period of V gold usually ranges from 1 year to 1.5 years, which is mainly determined by the time period in which the V gold is obtained. The V gold accumulated from January 1st to June 30th of each year is valid until June 30th of the following year, and the V gold accumulated from July 1st to December 31st of each year is valid until December 31st of the following year.

In order to facilitate users to redeem in time, there will usually be an expiration reminder on the V-gold page in the APP, as shown below:

Through "V Gold", members can redeem a variety of rich products in the "V Gold Welfare Club", not only delicious food, but also a variety of daily necessities, audio and video cards, etc.

For example: A thermos cup requires 150,000 points to redeem, which is equivalent to spending 1,500 yuan in points.

2. Paid membership system

Compared with paid memberships of other brands, KFC has many types of paid memberships, targeting different groups of people and usage scenarios. And each type of card is divided into different price levels:

• Dashen Card (5 types from 9.9 yuan to 108 yuan): For users who frequently buy KFC, they can enjoy benefits including free delivery, breakfast and afternoon tea package discounts;
• Home God Card (from 9.9 yuan to 16 yuan, 2 types available): For users who frequently order takeout, they can enjoy the right of free delivery fee;
• Coffee monthly card (ranging from 9.9 yuan to 16 yuan, with 3 options): For users who frequently order coffee, they can enjoy discounts on some coffee products;
• Yum! Brands All-Inclusive Card (188 yuan): For users who frequently eat at Yum! Brands restaurants, it offers discounts on some products from five brands, including KFC and Pizza Hut.

  Such differentiated, multi-level paid benefits can meet the needs of different members, stimulate members to make multiple purchases, and increase customer loyalty. According to KFC's official statistics, since the launch of the paid exclusive membership plan to June 30, 2020, KFC has sold a total of about 26 million benefit membership cards. The purchase frequency and overall consumption of paid exclusive members during the payment period have more than doubled.

  Overall, the points and membership system can not only bring more revenue to KFC, but also provide a large amount of consumer behavior data, which will help KFC conduct in-depth data analysis, allowing KFC to provide more personalized value-added services and further improve user stickiness.

  3. Digital innovation to achieve multi-scenario and cross-ecological marketing reach

  KFC is well aware that the core capability of digital innovation lies in improving user experience and providing new business models to capture the minds of users. In addition to digital construction on the APP, KFC has attempted digital transformation in multiple ecological scenarios. In 2016, KFC and Baidu launched the concept of scenario-based ordering and opened two smart restaurants in Beijing and Shanghai. Using technologies such as voice recognition and semantic analysis, the robot Xiaodu can provide consumers with more intelligent ordering services in the store.

  On September 1, 2017, Alipay announced the launch of facial recognition payment at KFC KPro restaurant in Mixc, Hangzhou. Payment can be made by scanning your face without using a mobile phone. This is also the first commercial pilot of facial recognition payment worldwide.

  In 2018, KFC Super Dessert Station - an artificial intelligence unmanned dessert station was launched, making the entire unmanned service commercially available. After consumers scan the code to place an order, the robotic arm equipment only takes 30 seconds to make a K-shaped flower cone and automatically serve it to the customer.

  In the same year, at the Hangzhou Yunqi Conference, KFC and Alibaba Cloud jointly launched a world-leading AI multi-scenario smart ordering machine with three outstanding functions: "no wake-up", "strong anti-noise" and "semantic understanding".

  The year 2020 was a year in which the epidemic promoted the rapid development of digitalization and contactless services. KFC took the lead in launching smart food pickup cabinets as an upgraded service for contactless food pickup. Customers can pre-order online and then go to the self-pickup cabinet to quickly pick up their food with a QR code.

  In 2021, KFC followed the trend and began to test unmanned food delivery vehicles. The food delivery vehicles use the new 5G unmanned driving technology. There is no person driving the vehicle, and there is no employee selling food. The delivery and pickup of food are all digital and automated. Customers can stop when they wave, and the transaction can be completed in as fast as 10 seconds. It can accommodate 300 meals at the same time.

  This year, KFC has begun to enter the hot "metaverse" field...

  KFC is not only at the forefront of innovation in the field of digitalization, but its marketing capabilities have always been "online". For example, this year's popular "Pikachu" collaboration and "Crazy Thursday" literature are benchmark cases for the industry to learn from.

  Facts have proved that brands can only continue to occupy the minds of users if they deeply understand the minds of users and build the brand in a way that current consumers are interested in.

  4. Final Thoughts

  Digital transformation is now an inevitable trend, but consumer digitalization is not just about creating groups, building private domains or building CDPs. It must be centered around consumers, achieving full life cycle and omni-channel operations, and realizing comprehensive values ​​such as user experience, user loyalty, and marketing exposure. KFC also aims to continuously explore digital innovation, bringing more room for growth and momentum to the company, and also providing inspiration and new ideas for the catering industry to explore digital transformation.

  Author: Yan Tao Sanshou

  Source: WeChat public account "Yan Tao Sanshou (ID: yantao-219)"