How can an idea so good not work in increasing loyalty?
During my days with one of the top three pizza companies, my team came up with a brilliant loyalty building idea. “You buy 10 pizzas and after that, you can buy pizzas for the rest of the year, at a special price of $7.” Now, to put things into perspective, those days, a large pizza was valued at $10 and this was a 30% off offer, without any coupons. Also, I had followed the cardinal rule of loyalty programs, as this offer was the best deal the customer can get from the pizza company.
Before rolling it out, I was in a focus group where the idea was presented to loyal customers.
During the focus group, I was my usual self. I was romancing the customers, making them feel excited by being there and getting their feedback. It was evident that this idea was working, as nearly every customer was buying more pizzas from my company and was not even thinking of going anywhere else. Isn’t that the ideal goal of a loyalty program? But there was something missing. Is there something more a brand should seek other than customers buying more?
I got the answer when, towards the end of one of the focus groups, I asked the respondents, “What else can we do to make sure that you never ever buy pizzas from anyone else? Do not hesitate. Do not hold back!” An older woman in the group said “Son, looks like you are not that smart. In fact, you may be a little slow to get things.” I had no clue where she was going. She went on, “Look son, not once, not twice, not just five times, but ten times (she showed her ten fingers as she said this), I have shown you that I can afford to buy your large pizzas for $10. I had no problems with the price. But do not get me wrong; I like the fact you reduced the price to $7. But you know what it made me realize? It made me realize that earlier, you were really really ‘hosing me’ at $10. Even now, you are making a lot of money at $7. So the deal made me question everything about your restaurant.”
Wow, that was some insight. By reducing the price and offering a ‘sweet deal’ only to people like her made her doubt my brand and in fact, weakened the connection between her and my restaurant. That means, I gave up profits for my brand to fail in her eyes. After the price drop, she was visiting more often as she was handcuffed by the $7 price point. But the connection was not strong enough to survive if I could not offer that $7 price point in the future.
I paused and then looked at her and asked, “What one thing can I do for you that will make you come to me every time you order a pizza?” She was ready with her response. “Treat me special. Find out about me. Give me things that I want. Give me things that you do not give everyone else.” “And what might that be?” I asked. She gave me a look and the only way to describe that was, “wait and be patient, I am telling you.” She went to say, “If I am truly so special, why not put my pizza at the front of the line every time I order. Put me and the rest of the people in the group first.”
Another wow. How could I miss it? I have experienced every time I have flown. Even on a flight which is delayed, the super fliers get to board first, effectively saying ‘na na boo boo, you cannot have this’ to the rest of the customers. Yes, special means getting things that the person feels are special and that are not what everyone gets.
MY REFLECTIONS ON THIS LEARNING, LOOKING BACK:
I am sure that the results (measured by increase in sales) achieved by my marketing team using the ‘after 10 pizzas, get a large at $7’ idea is one of the best loyalty ideas to ever hit the pizza industry. But did the team put this idea to sell more pizzas or reward the customer?
Marketing had identified an idea that was easy to track and implement. And in some ways, since it was topped with a deal that was so “incredible” that result, measured by sales increase, was bound to happen. But in the process, the brand’s connection with the customer was not getting any stronger. It was just transactional where the barrier to leave was high. But we were also eroding the brand equity as the loyal customer was now looking at us as a $7 pizza company. Is that what was the intended positioning of the brand?
Looking back, I would like to ask myself the following questions, if I had to do it all over again:
- Was it a true gift or a bribe?
- Did we give the customer what was easy or convenient for us to give?
- Did the customer feel special getting the gift?
- Were we excited all the way from our heart to give the gift?
- What kind of future expectation did we set? May be after 20 pizzas, get a large at $6?
- Was the whole idea driven by driving short term transactions without understanding the consequences of us becoming a $7 pizza company to our loyal guests?
Based on all these reflections, I see this “loyalty idea” similar to me telling my date, “Now that we have gone out on 10 dates, I want to buy you free dessert on all future dates.” I am sure the response to the free dessert offer will not be favorable, nor will it increase her loyalty (connection) with me. The dating example truly puts in perspective the grandma in the group saying “Son, looks like you are not that smart. In fact, you may be a little slow to get things.”