Do you feel special? A closer look at loyalty cards
During my days in working in the Pizza Industry (I started my career at Pizza Hut and eventually was the VP of Marketing & Operations Services at Papa John’s), one thing always baffled me. Why did the pizza category have the highest deal rate among any restaurant category? (A deal rate simply means what percentage of customers felt that they buy the pizza at a price lower than the menu price.)
In order to understand why the pizza category had become so deal/discount oriented, I developed the following hypothesis:
1. For a customer, brand switching is very easy when ordering a pizza. To switch, a customer simply has to dial a different set of 10 numbers when ordering over the phone, or go to a different website for online ordering. That’s all it takes to switch brands!
2. Consumers are always looking for who has the best deal or value offering, that day. As brand switching is so effortless, the brand offering the best value on a given day has the best chance of getting a customer to switch to the brand.
Brands feed this “consumer addiction to value” by providing ongoing value offerings and discounts like this:
30% off Pizza Loyalty Card
One specific practice caught my attention. It was a common practice to reward a frequent user with discounts. That simply means if you order 10 large pizzas on a calendar year, you get a special card that allows you to buy pizzas from the company for a 30% discount. When I performed some detailed focus groups with consumers, I learned the following:
1. Consumers are okay with buying the pizza at its regular price. (Did the consumer not prove this by buying pizzas at regular price 10 times?)
2. Getting the lower price made the customer realize that they were getting hosed by paying more than the fair price for the first 10 pizzas. (Whoa! What a way to start a relationship!)
3. Giving the consumer a 30% discount for all future pizzas that year was deep discounting.
But did the consumer want the 30% off Pizza Loyalty Card?
It is amazing how one gets the answer to every question when they talk to the customer. Of course asking the right question is very important.
When I was moderating the focus groups I asked the customers if the 30% off pizza loyalty card would get them to come back to the pizza place over and over. The customers looked perplexed. “Did we not prove to you that we have been to your restaurant to buy at the regular price more than ten times?” Good point, I thought. Then I asked, “So what do you want?”
It took the customers just a second to say, “Every time I order, put my pizza in the oven first, before everyone else’s.”
I asked myself, was the customer talking about a first class experience on a plane?
“Remember my favorite order and deliver it without any mistakes.”
“Give me something more that I did not order, e.g. breadsticks or cheesesticks. Or even some extra dipping sauce.”
“Remember my name. When I call, your phone should ring with a different ring tone.”
So what did the customer really want?
As we cleaned the focus group room and sat down to de-brief, it dawned on me that the customer wanted to be treated special.
Years later, I was revisiting the humbling learning experience from the focus groups. Then I got it. On a given day the customer buys just pizza one time, and we, in the store sell to hundreds of customers on any given day. The customer wants to feel that we are only making their pizza. Instead, they get an efficient, process-oriented response, in which everything is mechanical. There is no personal touch. That is where things break down.
This is what resulted in the birth of Marperations™. Marperations™ is a place where we put the customer first. There is no operations or marketing team in Marperations™. Instead everything is focused on guest experience and meeting the guest’s expectations. For a minute, forget the efficiency mantra of operations, forget the branding preaching from marketing; instead, be present with the customer and smile and ask… “What can I do for you?”
1. Every customer interaction – which is usually in the exclusive domain of operations – is actually marketing to a significant extent.
2. Every advertising campaign – which is usually in the exclusive domain of marketing – sets the expectation that governs every sale and is therefore in the operations realm.
3. Linking marketing and operations is critical to presenting one unified message to the customer. This occurs from the start of the marketing communication to the actual sale of the product or service.
4. The better a company’s operations run, the easier it is to market its product or service.
5. The better a company’s marketing runs, the easier it is to perform the business of operations.