OpenTable Payments is a Big Data Game Changer

OpenTable announced today that they are expanding their mobile payment functionality roll-out.

But most of the buzz around the announcement is about the payment processing and diner convenience. Those are both fine benefits of the functionality, but it’s missing the big picture. “Pay with OpenTable,” as the feature is called, has given OpenTable the ability to link directly into restaurants’ point-of-sale (POS) system. With POS data, OpenTable gives restaurants small and large the ability to leverage Big Data for big profits.

OpenTable’s Real Power (Now)

To diners, OpenTable makes it easy to make a reservation – via the web or smartphone apps. Unsophisticated restaurants also use OpenTable to manage their reservations – they can more easily accept and manage reservations without worrying about accepting too few or too many reservations relative to their capacity (number of tables and chairs in the dining room).

Sophisticated restaurants on the other hand recognize OpenTable’s real value: they not only know HOW MANY diners will be coming in on future days / times, they also know WHICH diners will be coming in.

“Pay with OpenTable” Will Supercharge Restaurant Sales

OpenTable explains explicitly that with the “Pay with OpenTable” functionality, diners’ POS details will be pulled into OpenTable for diners to review and pay via their smartphones, and servers will be able to process diners’ payments through OpenTable and / or the normal POS.

Combined with the old OpenTable power of knowing WHICH diners will be dining in the future, the line item details (e.g. what drinks, entrees have been ordered) of what diners have ordered in the past give restaurants opportunities to maximize revenue like never before.

Imagine this:

  • I use OpenTable make a reservation at RestaurantX, and proceed to eat at RestaurantX and pay through OpenTable’s mobile app.
  • A month later I make a reservation at RestaurantX again. This time, when I show up for my meal, the server at RestaurantX takes a quick look at my OpenTable profile and history and sees that last time I ordered a low priced glass of pinot noir. With this information, the server approaches my table and says “Good evening, Mr. Maher, can I interest you in our best pinot noir?”
  • The moment that I sit down, the restaurant is up-selling me, and the server is making me feel like a VIP by greeting me by name and knowing what I like.


Taking OpenTable Big Data to the Next Level

Restaurants can also take this combination of knowing WHICH diners have made reservations and their detailed order histories to an even more aggressive profit driving level.

Imagine this:

  • The manager of RestaurantX  logs into OpenTable to see that next Tuesday night is already completely booked. The manager then adjusts her staff schedule to make sure that there will be extra servers, bartenders, cooks, etc. working that night to keep up with the rush.
  • The manager also notices that the weighted average revenue per person for everyone with a reservation for next Tuesday night is significantly below the RestaurantX’s normal target. The manager can deduce that next Tuesday night’s diners are going to be a bunch of cheapos so she sets the specials-of-the-night to be great value (perhaps as opposed to the more luxurious specials that she typically uses on a Friday night).
  • The manager also notices that the 3 most popular items ordered by those with reservations for next Tuesday were all salads, and that the 3 least popular items ordered were all steak entrees. So the manager adjusts her ingredient purchases and inventories to reduce food waste.
  • Finally the manager notices that the diners with reservations for next Tuesday have historically showed up for their reservations on average 5 minutes late, but have eaten quickly turning tables in less than RestaurantX’s normal average. This allows the manager to prepare the staff for a late night with lots of turns.

In Summary

OpenTable has long simplified the diner reservation making process and the restaurant capacity planning process, but with “Pay with OpenTable,” now restaurants can really take advantage of big data by making customers feel like VIPs – driving up average tickets. Furthermore, restaurants can get even more sophisticated to optimize all of their costs and strategies.


Hospital Business Improvement: Sales Reps

Hospitals are littered with opportunities to become better businesses. As I learn about specific opportunities I’m capturing the list so that I can try (or help others) to solve them sooner or later.

Executive Summary – Hospitals Need Sales Reps to Grow Revenue

Hospitals current org structure fails to place necessary focus on growing volume and revenue. By adjusting the org structure and possibly even hiring pure sales reps, hospitals can grow volume and revenue through:

  • increasing market share within the community
  • improving price mix of volume.

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Hospital Business Improvement Opportunities and Ideas

Hospitals are littered with opportunities to improve as businesses. Jump straight to the list.

As an operations management consultant to hospitals for seven years I realized that hospitals are led by smart, highly educated people with very little business management training (i.e. doctors and nurses) – and often an explicit focus on clinical outcomes over business performance.

But I believe that hospitals can have both: great clinical performance AND great business performance. So this is a list of all of my ideas on opportunities that hospitals have to improve their business.

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Why The US Should Not Switch to the Metric System

As an operations management guy, I’m almost always in favor of standardization.
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The Ultimate Deal Site & Why Deal Sites Like Bync Fall Short

Today I received an invitation to join Bync, a new deal site that promises to offer deals that I WANT as opposed to deals that retailers are offering (TechCrunch launch article here).

By analyzing my bank and credit card transactions, Bync will determine which stores I have shopped at in the past and therefore, at which stores I want deals. Unfortunately, Bync is doomed to become yet another in a long list of consumer deal startups that are just further poisoning the retail well.

Bync vs Groupon / Living Social

Groupon and Living Social are the big players in the retail deal websites, and there are literally hundreds of others ranging from unique schemes (e.g. Woot) to a long tail of weekend hacker projects that won’t die. Bync’s scheme does have some good logic though – if I have shopped somewhere in the past, there is a higher likelihood that I will want a deal there than the likelihood that I will want a deal on teeth whitening, paint balling, or private massages (the drivel constantly being pushed on Groupon).

But, that is NOT to say that I will want a deal at Target or Kohl’s just because I have patronized those retailers in the past.

Why Deal Sites Are Doomed: They Are Not Serving Their Primary Customer!

Groupon and Living Social made a huge bang in their early days and delivered a serious injection of customers to the retailers which offered deals. Unfortunately those retailers quickly found mixed results with making the customer injection a profitable endeavor.

Retailers find three difficulties in getting good value from deal sites:

  1. The discounting required is too drastic, often yielding 75% off normal price (a $100 product is offered for $50. Then the deal site takes half of the $50payment resulting in the retailer receiving $25 for a $100 product).
  2. The new customers are too thrifty. Retailers are not always able to wow the deal site customers into more profitable upsells or loyal repeating customers.
  3. Deal site offers tend to create a sudden massive spike in customers which sounds great, but often results in the retailer struggling to provide good service levels and even crumbling under the pressure of the demand.

Groupon, Living Social, and most other deal sites do not charge the consumer, but rather charge the retailer (as noted in difficulty #1 above).

Bync may well offer deals to consumers that are more targeted than the deals offered on Groupon and Living Social, but there is no apparent strategy to better service their ultimate paying customer – the retailers. Indeed they do not seem to be addressing any of the three customer problems.

Unfortunately, Bync has another obvious barrier: they expect consumers to hand over access to their bank account and credit card. Mint has been able to convince consumers to hand over access to bank accounts, but very few others have had even slight success in overcoming this barrier.

The Ultimate Deal Site Concept

I have good news for you, Mr. Ryan Bales (Bync CEO and Founder), the following concept is the ultimate deal site! The following concept is better than Bync, Groupon, Living Social, and all other deal sites in the following ways:

  • Better solves the general problem of getting retailers more customers
  • Comprehensively addresses all three of the problems with current deal sites
  • Offers deals to consumers that are explicitly and exclusively deals that consumers want

The ultimate deal site will work as follows: [click to continue…]