Dairy Queen: ‘We Don’t Have Customers, We Have Fans’

DairyQueenTwo years ago, Dairy Queen was spending about $200,000 a year on research. Today, the brand spends upwards of $1 million to mine consumer insights.

“Previously, a lot was done based on emotion,” said Barry Westrum, EVP of marketing at American Dairy Queen Corp. “Now, decisions are backed with data.”

Historically, Dairy Queen is a brand with positive nostalgic associations, Westrum told an audience of his peers at the ANA Brand Masters conference in California on Thursday. It’s where the Little League coach used to drive his team after a game. It’s where Grandpa took his grandkids for an ice cream treat on a Sunday summer afternoon.

“The problem from a business perspective is that all of that was in the past tense,” Westrum said. “The challenge for marketing was to take the considerable equity that we have and leverage that to make the brand relevant today to inspire that transaction for tomorrow – because in the retail business, that’s what it’s all about.”

When Westrum joined Dairy Queen in 2012, the 75-year-old brand was facing seven years of consecutive negative same-store transaction growth. In Westrum’s words, that simply was not a “sustainable business proposition.”

That’s where consumer insight entered the scene. Dairy Queen started running rigorous tests in key markets to see what people wanted from the brand. The result was a series of brand activations that tapped into data insights derived from emotional connections.

A 2012 Harris Interactive poll ranked DQ at No. 2 in terms of overall brand equity, behind Subway, but ahead of direct competitors like Wendy’s, McDonald’s and Burger King. At around the same time, Dairy Queen brought on Kansas City-based agency Barkley to revitalize its brand message.

“They came to us with the idea that at Dairy Queen, we don’t have customers, we have fans,” Westrum said. “‘Fans’ is a very powerful word. Fans root for the home team. They recruit other fans. Fans pass their fanhood down from generation to generation.”

That became the core insight behind Dairy Queen’s “Fan Food, Not Fast Food” campaign, which launched in 2013.

“Of course, it had to be driven by great advertising, but it also had to be bigger than advertising itself,” Westrum said. “We changed the way we brought every innovation to market.”

First off, Dairy Queen research found that consumers – or fans – gave the brand low marks in terms of affordability. Dairy Queen reacted with its Five-Buck Lunch, a lunchtime special consisting of an entree, beverage and DQ soft-serve for $5. In short order, Dairy Queen went from being underrepresented at lunch to consumers telling the brand that its Five-Buck Lunch offer was the best value they could find in the quick-serve restaurant category.

But value wasn’t the only problem – Dairy Queen also ranked low on the list in terms of available healthy food options. DQ used that insight as motivation to take better advantage of Orange Julius, the fruit drink brand it acquired in 1987. DQ created a stunt that poked fun at fruit juices with artificial flavors by creating a fruit stand that sold nothing but fake plastic fruit. Consumers who passed by the stand were baffled. The idea: You wouldn’t eat artificial fruit, so why drink it?

With those activations under its belt, Dairy Queen moved full steam ahead, tackling its flagship product: the Blizzard. Launched nearly 30 years ago, the soft-serve sundae still makes up about 20% of the brand’s overall business.

Those who grew up on the Blizzard know the correct way to serve it – upside down. According to Dairy Queen lore, the ice cream concoction is so thick that it can be flipped upside down for up to four minutes without losing a drop. Brand research told Dairy Queen that consumers really enjoyed being served upside-down Blizzards, but the practice wasn’t consistent across all franchises. DQ responded with action. Starting in 2015, Dairy Queen has a new Blizzard guarantee: upside down or free.

For an in-house marketing team of just 40 people – and help from digital agency Barkley and media agency Spark – Dairy Queen’s output is impressive. In addition to the marketing efforts already described, the brand also launched a tongue-in-cheek Valentine’s Day campaign this year wherein creative lovers can purchase a lacquered red spoon in a red velvet case for $4.99 on the DQ website. The spoon is meant to be used to eat one of Dairy Queen’s heart-shaped red velvet cakes.

A spot promoting the Valentine’s Day promo – in which an earnest man gifts his tearfully grateful girlfriend with one of the red spoons in a cheeky sendup of sappy jewelry commercials – ran during Puppy Bowl, Animal Planet’s answer to the Super Bowl.

“We can’t afford the Super Bowl,” Westrum quipped. “But we can afford the second-highest-rated programming that day.”

Dairy Queen is also starting to develop its digital strategy. The brand recently launched an ecommerce site for its cakes, dqcakes.com, which is now responsible for 40% of its cake orders.

On the mobile front, Dairy Queen experimented with geotargeting by sending messages to consumers who had been in a McDonald’s parking lot within the past five days. If they had been, DQ sent them a Five-Buck Lunch coupon as a follow-up. Roughly 25% of the people who received the offer went on to visit a Dairy Queen store within two weeks.

“Geotargeting is a wonderful tool – especially if you can target your biggest competitors,” Westrum said.

In a similar vein, Dairy Queen recently partnered with weather.com to take avantage of shifts in temperature. Company research has shown that ice cream purchases are extremely weather-dependent. When the temperature dips six degrees lower than normal, no matter the time of year or location, Dairy Queen loses about 60 transactions per store per week. Conversely, when the temperature is six degrees higher than normal, transactions increase by roughly 100 per store.

“We send out an offer to buy-one-get-one-free on Blizzard treats when the temperature dips below normal,” Westrum said. “It’s in our media plan right now.”

All of these efforts have paid off in terms of social engagement and ROI. Since the debut of “Fan Food, Not Fast Food” in June 2013, transactions have rebounded and the brand has been profitable six out of the past seven quarters – the unprofitable quarter being due to last winter’s “polar vortex,” when ice cream sales were understandably way down. It’s also seen a 116% increase in social likes, an 80% uptick in brand-related comments and a 77% boost in social shares.

“Dairy Queen is now referenced in the social space once every 18 seconds,” Westrum said, “That’s a big deal for a brand that didn’t have much of a social presence as little as four years ago.”

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