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Domino’s Pizza Fixes Fundamentals and Inspires Brand Loyalty

In the pizza world, Super Bowl Sunday is the deep-dish equivalent of Black Friday. It’s the day of mind-boggling sales numbers, never-ending transactions, and the one day of the year when a company can win—or lose—in the game for customer engagement and customer loyalty. Win and it wins big. Lose and that company is scarred for life.
 
For Ann Arbor-based Domino’s Pizza, the opportunity to make an impact on Super Bowl Sunday happens 11 million times—which is the number of pizzas the company sells to frenzied football fans. But along with the massive numbers comes a plethora of pressure, which exists every other day as well, according to Stephen Kennedy, Director of Loyalty for Domino’s Pizza.
 
“Pizza is a fun, emotional category,” Kennedy said during the session, “Creating Connections That Inspire Brand Loyalty,” on Monday during the inaugural Customer Expo. “You can transition someone’s day from bad to good, or you can mess up a Friday night family dinner. And if you screw up someone’s birthday party, you’ve pretty much screwed up for life.”
 
Kennedy shared insights on how to learn the right recipe for creating a compelling loyalty program that is both simple for customers to understand, yet innovative enough to stand out. Kennedy was joined by Kevin Murphy, Vice President of Client Services for Epsilon; and Tad Fordyce, Senior Vice President of Loyalty for Epsilon, who talked about what’s trending in loyalty.
 
For most Americans, pizza is a staple of life. Nearly 220 million pizzas are consumed annually, with 80 million coming from the Big Four—Domino’s, Little Caesar’s, Papa John’s and Pizza Hut—and the remainder from independent stores or local mom-and-pop pizzerias. While people love their pizza, however, they don’t necessarily love a particular brand. Many view pizza brands as interchangeable, which creates challenges for a loyalty program, Kennedy noted. Domino’s has learned how to overcome the challenge, although it wasn’t easy.
 
After losing market share—or as Kennedy noted, “share of stomach”—the company sought to build up customer loyalty and a rewards program, but first realized it had to fix itself first.
 
“One of the things we learned is you have to start with the fundamentals and fix those first,” Kennedy said. “Our product prior to 2010 was not good. We needed to fix our pizzas. Along with that, our retail environment was bad. People would show up at stores that had not been updated in 20 years.”
 
The chain was built as a delivery business, Kennedy noted. It had little interest in foot traffic, so it purchased real estate that was off the beaten path and cheaper. Getting pizzas out the door to the delivery drivers became the mindset of team members, so when someone walked through the front door and wanted to order they were a little unsettled.
 
Customers also had the perception that Domino’s pizza was premade and frozen, which is untrue, according to Kennedy.
 
“All of our pizzas are handmade,” he said. “We don’t even have freezers in our stores.”
 
To become more customer-facing, Domino’s redesigned its stores to show the baking process and that everything was fresh. It’s since redesigned 90 percent of its stores.
 
While fixing the food and stores, the company simultaneously began its rewards program and taking orders digitally. In fact, the company does so much business digitally, half of its corporate employees are in IT and it considers itself an e-commerce business that sells pizzas.
 
The rewards program, Kennedy said, is focused on its repeat customers, rewarding those who visit often, instead of those who spend the most.
 
“If some administrative assistant at some company orders 30 pizzas once, that’s not who we want to reward,” Kennedy explained. “We want to reward the people who come back multiple times a year. Those are the folks who are truly loyal to us. And we reward them with what they want, which is free pizza. That was the genesis of the name of the program, Piece of the Pie. We did a lot of research and everybody came back and said we would like free pizza. That’s why we come to Domino’s. Just make it simple, make it valuable, and be genuine about it, otherwise, it seems like bribery.”
 
Cumulatively, the changes have rebuilt Domino’s. The company has gained 3.7 percent of market share in the past few years, which is a considerable gain financially in the multibillion-dollar pizza industry.
 
But it must continue listening to its customers, adapting to new technology and changing, Fordyce said.
 
“Every customer has an experience,” Fordyce said. “With loyalty programs, you have the chance to optimize that. Focus on them first. They opted in. They’ve got a track record of interactions with the brand. Build an emotional loyalty with them. Emotional loyalty is going to be the Holy Grail. There are companies that are doing it well—Amazon and others—and customers are now expecting it. They want to be part of that experience, especially the younger generation.”
 
How that will be done is also changing.
 
“We are about to embark on a real shift with the Internet of Things,” Fordyce said. “The number of Internet-connected devices is going to grow significantly within the next three years, which is going to create all new touch points and challenges in how to consume the vast amount data that is going to be collected and how to respond to it in real time.”

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