By Bob Barrett

Michael Keller, Dairy Queen

By one measure, the Dairy Queen brand could be considered old — 70 years as of 2010. “By human standards, that would put you right into the grandpa and grandma category,” says Michael Keller, chief brand officer for the Minneapolis-based company. But when it comes to marketing, DQ is decidedly young and hip, with Keller and his team serving up a far-reaching social media strategy that has its foodservice competitors drooling with envy.

“[Foodservice] is very competitive, so you cannot afford to be 70 years old when you’re competing the way any restaurant brand has to compete in the industry,” Keller told attendees during his presentation at the Masters of Marketing Conference. “You have to stay fresh, you have to stay nimble, and you have to stay relevant or else you’re really only appealing to a demographic that once was and not a demographic that’s going to be. That’s one of the reasons why our social media activity is so important.”

Keller, who joined Dairy Queen in 2001, is responsible for the marketing, brand, concept, and product strategies for Dairy Queen in the U.S., Canada, and international. In this exclusive interview with ANA Magazine, Keller addressed a range of topics.

Q. How has Dairy Queen achieved growth and defied the recession in 2009, and what role has marketing and branding played in helping the company succeed during a period of economic turmoil and high unemployment?

Michael Keller: There’s no easy or simple answer to it. It’s really a combination of things. It has been a very difficult year for the restaurant industry, in general, and, surprisingly, the QSR [quick service retail] industry. In fact, recent industry data points to almost historical sales declines for our industry. Fortunately for Dairy Queen, we do seem to be outperforming the industry this year. A lot of that has to do with a very strong first quarter, but we’re still doing relatively well and I think there’s a variety of factors at play. Perhaps one of the most important for Dairy Queen in 2009 is that this is our first full calendar year of having our first ever value menu across the entire U.S. and Canadian Dairy Queen system. The value menu is called Sweet Deals and features a variety of our food, beverage, and treat items, making it somewhat unique because it’s one of the few places where you can get something as sought after as a Dairy Queen treat built into the value menu. And it’s also unique in that you decide how much you want to eat, pay, and save. It’s an escalating value menu where you can get two items for $3, three items for $4, or four items for $5. We have seen pretty strong performance on that front. Our value menu has represented seven percent to 10 percent of our sales throughout the year and really has not varied. We didn’t have a value menu prior to 2009, so obviously there have been a lot of customers who have either traded into it or frequented us as a result a little bit more often. Our value menu has been absolutely key to what we have been doing. We have also been very steadily improving the overall consumer experience in some of our restaurants throughout the system by encouraging significant reinvestment in our facilities, as well as putting significant time and energy into running a better, more friendly, faster, cleaner operation, which is starting to pay dividends as well.

BB: One of your primary responsibilities is to help the company connect with consumers and build an emotional relationship with them. How have you capitalized on the Internet, social media, and gaming to achieve that?

MK: My team and I are responsible for this area and we have had a very, very good year in this area. Interestingly, we have been recognized for our advances in the areas of social media. In one study, we were viewed as the eighth best or eighth most active restaurant company in social media, even though we are the 20th or 21st largest restaurant company in the U.S. So in a sense we’re overindexing for activity in social media and some of the success we’re having there. In a very recent study that just came out that I think was Facebook-centric in terms of restaurant activity and fan base size on Facebook, we’re ranked fifth of all restaurant companies. So those are a couple of independent, third-party measures that sort of demonstrate that Dairy Queen appears to be ahead of the curve and ahead of our size, if you will, in terms of social media presence. We are doing a lot.

BB: What are some of the best examples of Dairy Queen capitalizing on social media?

MK: Probably the most unique thing we have going for us is that we have the Blizzard Fan Club, which is at nearly 2.5 million — and growing — people who signed up by sharing their e-mail address and birthday with us. It’s a private fan club, meaning this is not on Facebook or MySpace or Twitter or anywhere else out there. It’s not a list we purchased. It’s literally an organically grown list of nearly 2.5 million people who just love the Blizzard and the Blizzard brand. As a result, we’ve created a very large community with whom we interact, we do research, we ask them to vote on stuff for us, we communicate with them constantly about flavors, promotions, offers, etc. And, if I’m not mistaken, we have one of the largest, if not the largest, types of clubs in the entire restaurant industry and in some cases in the world of the Web. It allows us to narrowcast to this community, and we’re working on a variety of methods to increasingly make this more of a community than a fan club. So that’s one thing that’s very unique to us. We’re very active on Facebook. We have official sites for Blizzard and for DQ, and there are unofficial sites for Blizzard and for DQ that are also huge. I believe we’re well over one million members when you combine those four.

BB: And how about Twitter, gaming, mobile marketing, and other new media?

MK: We are actively Twittering now. Our Webmaster is quite good at it and we’ve developed a nice following in a very short period of time. In some cases, we’re Twittering multiple times a day so we’re pretty active in terms of having a dialogue. Sometimes our Tweets are literally responses to things that are coming back to us in that given day, so we’re getting very big kudos for responsiveness. We also have a corporate blog and a blogging team of which I am a part. I actually do audio blogs and we have around 75,000 people who have engaged with us through our corporate blog. We use FriendFeed to consolidate a lot of the updates, especially those that are related to Twitter and Facebook, so we’re very active on FriendFeed. We’ve done some mobile phone testing. I wouldn’t say we have an actual mobile platform yet but we’ve done some mobile phone testing, which has been very interesting and helpful to us. We’ve had some great gaming success. We’ve actually developed a full on video game with Game Mill Entertainment, which has been very successful for us and generated a lot of press earlier in the year. I would say that we’re probably active in two or three other smaller areas that complement some of the bigger ones I just shared with you. So some really good stuff going on in terms of building our relationship with customers outside of the store experience.

BB: As a follow up, how have these so-called “new” media platforms helped Dairy Queen gather insights that allow you to better understand the needs and preferences of customers?

MK: As I discussed today, while everything I shared is very exciting and new — and may be the future — there are certain things about it that I think are also true. One is that it’s very hard to measure the impact that these [marketing efforts] have on a bricks-and-mortar business. Obviously, your social media activity can be infinitely measured online. You can measure everything, and if you’re willing to invest in analytics it’s amazing how much data you can get from your social media or other digital activity. But when you’re a bricks-and-mortar brand, like a restaurant company, and let’s say you’re a franchise system like Dairy Queen, ultimately you’ve got to connect the dots between the social media activity and the impact it has on the store. That’s very hard to do and I’m not aware of anyone that’s really doing it in a significant and profound way — in a way that you can say that social media has an outstanding ROI for a bricks-and-mortar business. That being said, there are some things we are doing that do give us the kind of help and insight we need. First, when you’re having active dialogue with as many as we are speaking with through Facebook, through Twitter, through our blog, you get a lot of feedback. You get a lot of feedback about your products and your service. And if you’re smart, you’re using that feedback to improve what you’re doing — and we are doing exactly that. So whether it’s improving our current products or it’s developing new products or it’s listening to how people are experiencing our brand and trying to improve the brand experience, the feedback that’s relevant is circulated throughout the company and all the relevant departments to work on these things to improve the overall brand experience based on that feedback.

BB: Specifically, how is the Blizzard Fan Club helping you gather customer insights?

MK: I perceive the Blizzard Fan Club as a very fortunate and hermetically sealed slice of social media because we can talk to these people in a way that is more beneficial than talking to the average consumer. What have the Blizzard Fan Club members done for us? Well, we have a delicious fun panel, as we call it, of thousands of members of the Blizzard Fan Club who opted in and agreed to basically be a research source for us. They are constantly answering quantitative questionnaires about buying habits, new product ideas, names, and a variety of things that would lead marketers to the kind of insights that would lead to the development of products and programs for introduction in the marketplace. We also have used the Fan Club to literally decide Blizzard of the Month flavors that we promote in the U.S. and Canada. Most recently, we used the Fan Club to select our logo for the 25th anniversary of the Blizzard brand next year. So going even beyond insight, we’ve literally asked our customers to tell us what they’d like and then we’re just giving it to them based on their voting. We’re working with our customers, collaborating with them, to decide on our marketing activities.

BB: In addition to traditional b-to-c marketing, Dairy Queen, and you, spend considerable time and energy on b-to-b marketing efforts targeting your franchisees. How are your b-to-b and b-to-c marketing tactics similar and how are they different?

MK: I guess the best way to say it is that they really are fundamentally different marketing approaches because the target audiences — in this case, the consumer versus our franchisees — are completely different and the problems we’re trying to solve are completely different. With consumers, you’re trying to solve a problem or meet a need or make an emotional connection. With our franchisees, all those are true as well, and we’re trying to continue to build trust and respect mutually with our franchisees. But they’re small business owners who are part of our decision making process and system. The consumer is much more of an intermittent visitor to our brand. In so many ways they are different, but many marketing principles will still apply. That being said, we don’t develop television commercials and purchase media to reach our franchisees. We speak to them in face-to-face meetings, on conference calls, through our highly developed Intranet site, and through e-mail and our various electronic news bulletin approaches. We are trying to get them excited about products and programs, marketing operations, development, reinvestment. We’re trying to get them excited and engaged in the programs and the dialogue around the programs so that ultimately their feedback is reflected in what we’re doing, they understand what we’re doing, and ultimately embrace and execute what we’re doing. That’s how you have to work in a franchise system. We have to get the franchisee community excited about the vision for the brand and business and get them on board and get their feedback and input, get them engaged, and then ultimately work with them to execute.

BB: So how does that compare to the ways you market to consumers, especially in terms of the channels and platforms you use?

MK: That’s a very different process and a very different end game, if you will, than inspiring the consumer to visit and experience the brand and then to manage the post-purchase relationship after the visit. The vehicles are completely different. On the consumer side, we’ve got television, social media, print, and PR — the traditional and the new marketing mix. And with our franchisees, it’s much more about one-to-one and small group and occasionally larger group communication through more typical corporate communication channels, although they’re evolving. We’re definitely making better use of technology to connect with our franchisees. We’re using Webinars and we’re making good use of our time through telephone conferences by using the latest meeting technology. That’s a very different “element” (for lack of a better term) to the marketing mix than you might use for consumers. Both are important, both need to be done, and both need to be done simultaneously. Interestingly, the work you do with your franchisees needs to precede the work you’re doing with your consumer by six to 18 months. So we have to do b-to-b marketing on our b-to-c ideas before we can even get to the b-to-c ideas.

BB: During your presentation, you talked about your DQ Brand Touchpoint Wheel as a basis for all branding initiatives. How did you come up with the wheel? and how does it help you and DQ focus on your marketing initiatives?

MK: The wheel goes back five, six years now, at least, for me. Whether it’s a combination of hearing some of the right things out there from other smart people or just people who are feeding back on the Dairy Queen brand in so many different ways, it was really a process of pulling together a lot of thoughts that marketers and business people, in general, have about brands and brand building. One of the things that becomes incredibly clear, particularly in a retail setting, is how many different ways the consumer touches the brand. When you start to think about the fact that any of those ways, the conscious ones and unconscious ones, can affect the consumer’s perception of the brand…unless you start thinking about all of those things as elements of the marketing mix or, more broadly speaking, all of those things as elements of the brand experience, you can fall into a real trap thinking that it’s just the things you do through the marketing mix that are supposed to be the brand-building elements. And it’s really not the case.

BB: How does it help you and DQ focus on your marketing initiatives?

MK: As I described during my presentation, traditional marketing, including social media, in some ways is among the least relevant ways of building a brand in the restaurant industry because in many ways the most important thing is the experience the consumer has with the brand in the store, at a unit, at a restaurant — both through the facility, inside and out, the customer service experience, and ultimately the product experience. But if you get too radical or say something like marketing is dead, that’s kind of a goofy thing to say because it’s just not true. Really, you just have to step back and combine the two. When you think about it, there are so many things you’re doing to build your brand when the consumer’s not with your brand. That might be the realm of media, social media, or traditional media. There’s so many things you do that are part of the visit or purchase or brand experience that are incredibly relevant. The facility, the store, inside and out, the customer service model you have in the store, the nature of the customer service, the quality of product you’re serving. And then post-purchase there are so many things that are done to manage the relationship, as well.

All of these things really have to be taken together to really successfully manage, protect, and grow a brand. That’s what really gave inspiration to the wheel. It just doesn’t feel like it’s enough to look at the menu and the marketing mix as a way to define your brand in the food service industry. It’s so much more than that. Once you get a good sense of your brand positioning and your brand identity, you then want to make sure that it is flowing as best it can through every element of the brand experience, marketing or not. The best brands out there do that. Those can be the best brands in retail, food, soft goods, hard goods, electronics, packaged goods, or whatever. The model can be applied to any industry. Just the brand touch points will differ by industry. It’s really interesting because it completely broadens your view, especially as a CMO, of what brand marketing really is. It’s not your traditional marketing mix; marketing really is about all the different elements of the brand experience that have to be managed.

BB: The Dairy Queen brand is well known, beloved, perhaps iconic. Still, you are obviously very much mindful of building and evolving the brand. Could you talk about the continued emphasis you place on building the DQ brand — why is that important and a worthwhile expense?

MK: Dairy Queen is not a young brand, yet we have to compete in an industry that is replete with high profile, heavy spending, very dominant brands. I think the restaurant industry is, in some ways, a lot like professional sports league. Think of the New York Giants and the Dallas Cowboys and the Pittsburgh Steelers…every franchise is known and in certain geographies each franchise has a dominance. And they’re all competing so actively against each other. The restaurant industry is like that in so many ways. McDonald’s, Burger King, Wendy’s, Sonic, Taco Bell, Dairy Queen, the chicken concepts, the other Mexican concepts, the pizza concepts. The list is ridiculously long in our industry of large, well-known, relatively strong brands that spend heavily. It’s very competitive so you cannot afford to be 70 years old when you’re competing the way any restaurant brand has to compete in the industry. You have to stay fresh, you have to stay nimble, and you have to stay relevant or else you’re really only appealing to a demographic that once was and not a demographic that’s going to be. That’s one of the reasons why our social media activity is so important.

BB: So is social media mostly an attempt to keep the brand fresh and appeal to younger consumers?

MK: Today’s tweens, teens, twenty-somethings, and thirty-somethings, that’s where they live. That’s where they spend their time. That’s where they collect their information. We’re definitely increasingly needing to appeal to a digital generation because that’s the way they gather their information and their inspiration. In some ways we have no choice but to modernize and be increasingly relevant in order to make sure that we are refreshing our customer base. We love our older customers, of every age, but the older one gets the less one visits restaurants, the less one visits fast food restaurants, and the less one eats. The sweet spot, obviously, for our industry is younger men and women and young families who rely on restaurants, sometimes inexpensive ones or fun ones or family-engaging ones, to spend their food service dollars. We’ve got to be there. We’ve got to get our voice out there and make it a relevant voice, whether it’s TV or social media. We’ve got to improve our facilities and our operations to make the guest experience the best it can possibly be.

In addition, we have to do all of the other basics — from offering exciting products, to pricing ourselves well, to user-friendly packaging, to the appropriate corporate presence online — to give our customers the information they need to make decisions about our brand. I don’t see how a brand like Dairy Queen would have any choice but to…in a sense what we have to do is pull a Benjamin Button. We have to age backwards — take the whole brand and get young while still retaining all the magic of 70 years worth of heritage and equity. That seems so incredibly appropriate to the Dairy Queen brand.