Q&A: Yum China CMO's modern marketing for an old recipe

How difficult is it for a traditional fast-food brand such as KFC to digitise its marketing? What sort of backend capabilities and operations do you have to overhaul internally?

KFC is essentially a traditional FMCG brand and also a very large retail brand covering more than 1,200 cities in China, with over 5,400 physical stores. 

As a traditional company, we have inevitably been impacted by and faced challenges in the Internet age. Technology has largely changed the habits and behaviours of customers in the fast-growing market that is China. The popularity of mobile phones and the convenience of mobile internet mean that customers have higher expectations of our services.

Given that KFC has been in China for 30 years now, we want to modernise our marketing activities, especially those that relate to customer experiences, and be loved by young people. Over the past three years our strategy has been to use mobile technology to redesign our restaurants and digitise our retail operations. 

What we’re talking about here is not the traditional understanding of digital marketing (i.e. using content to advertise our brand on social media and other digital media channels) but, in fact, working on the digital transformation of our marketing operations from the bottom up and the inside out. While the overall strategy encompasses a connection to the top tech companies in China, it means a completely digitised way of thinking.

To do this, we split up the entire customer journey into different scenarios. These include the choosing of menu items, the ordering flow, the payment methods, the feedback after the meal, the loyalty membership system and the delivery process. Using digital product management thinking to shape each scenario, we redefined each step of the customer experience with mobile technology. 

Take ordering, for example. Customers can either order manually at the counter or electronically, at in-store kiosks or on our mobile app. As for payments, they can choose to use the traditional cash method, or they can pay through WeChat Pay, Alipay, or our electronic gift cards. It is about giving customers more choices — unlike in the past when customer experience was very centralised. 

As time passes, we will have a complete digital ecosystem that allows different entry points to our brand and customers will have more frequent interactions with KFC.

Steven Li will speak at Campaign's Digital360Festival in Shanghai, 25-26 April.

What would you say are the next significant digital transformation challenges for KFC China?

To redefine ourselves and modernise the KFC brand, we need synergy between operations, product development, advertising and promotions. This sets new requirements for our marketing teams. Internally, we need to build up our capabilities to be engaging customers digitally 24 hours a day.

Apart from a customer-centric team, we have also created a product team that can design digital experiences. This is a new marketing function with a technology mindset that has been overturning our old marketing architecture since 2015. New technology such as AR will continue to evolve and we need to understand how to translate this into user interactivity, in terms of both software and hardware, that is relevant for the restaurant industry.

Has digitalising marketing operations improved marketing effectiveness in 2017, as measured by return on investment (ROI) and customer-engagement metrics? By how much?

In our bid to redefine and modernise ourselves, we have not put as much focus on short-term ROI. Technology will always change the way we live and the way we serve our customers. What we need to care about is how to make good use of this technology to design new customer experiences and strengthen our competitiveness.

I think it would be considered very slow to actuate an innovation in 12 to 18 months — that belongs more to the realm of traditional business thinking now. We should learn to iterate quickly, like tech companies, and we should not tangle ourselves with short-term ROI. Quick changes will keep us on the edge and help us compete.

For example, KFC was unfortunately not the first restaurant to offer wifi, some five years back — Starbucks was the first. The reason for the delay was that we were arguing about the ROI from providing wifi. Today, if we were still debating about ROI and struggling to make decisions based on this alone, it would almost be laughable. 

Learning from this, when we switched from cash to cashless payment systems in 2015, it took us only four months. Later, in 2017, we revised our ordering app over 40 times within 12 months. Traditional companies would certainly think that products should be perfect before you launch them. But then again, technology is always changing and if you cannot keep up, customers will complain. 

Brands that are serious about digital transformation should have different standards in terms of speed. Too heavy a burden on our back makes it difficult to go fast.