Everyone yearns for customer love. However, in business, getting customer love may be easier than keeping it.
Nurturing customer love often means having to change your organization, reinventing yourself to rekindle that special feeling. Otherwise, competitors may woo your customers away by better listening to their needs.
After hearing a recent Marketplace interview with Domino’s CEO, Patrick Doyle, I started thinking about how to grow your business by strengthening customer love – even growing your business by finding new customers to love.
The Domino’s story is a textbook example for how even large and successful organizations are at the mercy of customer preference when seeking to grow.
The Domino’s experience reinforces the importance of continually asking, “Who are your most loyal customers today, and how are we meeting their needs?”
But more importantly, “Who will be the customers to provide the next growth spurt, and how must we change to meet their needs?”
In 1973, Domino’s began offering its 30-minute delivery or free pizza guarantee. By 1985 Domino’s was the fastest growing pizza chain in the US. Persevering with single-minded focus, Domino’s cemented their value proposition in 1986 with the “Avoid the Noid” campaign.
At that time, fast delivery and low price is what mattered most to millions of hungry pizza eaters. Even the Teenage Mutant Ninja Turtles knew they could count on Domino’s to deliver on their value proposition.
We can draw a picture to represent Domino’s original strategy. Domino’s identified two unmet needs, “low price” and “fast delivery.” They were already at parity with other pizza places in terms of topping variety, and they may have felt like they were at a disadvantage in terms “great taste,” but no one was really doing it well among the big pizza chains.
They aggressively marketed their 30-minute or less guarantee, and they are credited with popularizing free delivery. These actions moved “low price” and “convenient delivery” away from the customer’s area of unmet need, or Yellow Zone, and into the Domino’s Green Zone (its competitive advantage!).
Domino’s market share and volume increased tremendously until… it stopped. Doyle stated:
“This is a company that had built the whole brand around fast and reliable delivery, and Marketing 101 says you focus on your point of differentiation. We kept talking about delivery and 30 minutes or less, and it just stopped working. We realized that everyone in the world who wanted fast convenient pizza was already buying from us, and the people who wanted a great pie simply were not.”
Over the years, the pizza market had changed. Everyone got better at delivery, but, more importantly, companies like Papa John’s entered the market with a value proposition based on “great taste” that appealed to a growing segment of consumers:
To make matters worse for Domino’s, the availability of premium frozen pizzas like DiGiorno’s made the need for quick home delivery less relevant and also neutralized Domino’s price advantage.
Fast forward to 2009. Domino’s position had eroded and growth had stalled. It’s stock price was under $10. A market study showed that Domino’s pizza taste was tied for last place among national pizza chains.
What they did next is now marketing legend. They talked to customers, and then they shared what they heard with the world. It wasn’t pretty. Customers said things like “the crust tastes like cardboard” and “the sauce tastes like ketchup.”
This strategy launched a new relationship with a whole new group of customers. The new customers still valued convenience, but they didn’t care as much about price. Instead, they valued great taste.
Domino’s reformulated the crust, sauce, and toppings after extensive testing. Doyle remarked, “Our sales that first quarter we relaunched were up 14.3 percent. We were up 9.9 percent for the year.”
The new customer-focused strategy was credited with turning Domino’s around. Even in the face of recession, Domino’s stock price soared, and they have remained healthier. Shares are now trading over $100.
Most traditional Domino’s customers still find Domino’s to be a low price and convenient option. Those original customers that left have more than been replaced by the growing number of new customers who are pleasantly surprised by Domino’s improvements.
Domino’s learned that listening to customers identified new avenues for growth, and they’ve continued this practice.
Both traditional and new customers benefit from Domino’s acceleration into online ordering – now 50% of their transactions occur online. It may not be delivery via hover board, but moving the ordering process to mobile and online, with the goal of ordering in 30 seconds or less, is the 21st century evolution of convenience that was once characterized solely by quick delivery.
Today, Domino’s business is healthier than ever. They are the second biggest pizza maker in the world behind Pizza Hut, and they claim to make one out of every eight pizzas sold in the US. They continue to expand in the US and around the world.
How can you apply Domino’s experience to your own organization? Domino’s growth stalled when it ran out of new customers who valued its low price and quick delivery. Customers seeking great taste had many competing alternatives from which to choose. Dominos adapted and succeeded by becoming loveable to a new group of customers.
Sooner or later, all organizations need to refresh their strategy in order to continue to grow. Today’s market is no longer about defending one strategic advantage over the life of your product but instead requires that you evolve with your customers to maintain your competitive advantage in the market over time.
Ask yourself these questions to rekindle customer love… and maybe find new love as well:
- Who are your most loyal customers today?
- Are we still meeting their needs?
- Who will be the customers to spark your next big growth spurt?
- How must you change what you provide to better meet their needs?