What You Can Learn About Customer Retention From Domino’s Pizza

What You Can Learn About Customer Retention From Domino’s Pizza

In mid-November, Domino’s Pizza released a new TV commercial showing a customer getting out of his parked car in the driveway of his home. Suddenly, a tree weighted down by snow next to the driveway crashes onto the car. The man panics for a moment, worried that the Domino’s carry-out pizza sitting in the backseat may have gotten damaged.

Fortunately, as he’s seen removing the box from the car and opening it, he discovers that the pizza survived the accident unscathed. But, as he carries it toward his house, he slips on a patch of ice on the sidewalk and the pizza flies into the air, landing face down in the snow.

Luckily though, as the commercial concludes, the customer is seen back at the counter of his local Domino’s getting a fresh pizza at no-charge because Domino’s new Carryout Insurance promises a replacement if a customer’s pizza is ruined after they leave the store.

I love this commercial because it exemplifies a key ingredient to delivering an extraordinary customer experience; making a difference in the lives of your customers especially at times when they (or even you) may not think you have that responsibility.

If I drop my pizza after I’ve left the store and all the cheese sticks to the top of the box, should I reasonably expect the store to replace it at no additional charge? No. Of course not. It’s not their fault I’m clumsy. I wouldn’t even think about returning to the store for a free replacement. Who does that?

But, that’s what makes Domino’s Carryout Insurance so genius. They are defying the status quo of placing blame on the consumer and adding insult to injury by forcing their customers to make another purchase.

Instead, Domino’s offers the customer a little comfort by saying, “We respect you as more than just a transaction. We’re all human and we make mistakes. Not to worry. We’ve got your back.” Consumers will probably label this policy as a pizza replacement program.

Domino’s, on the other hand, most likely celebrates this move as a customer retention solution. And, here’s why.

According to the Harvard Business School, increasing customer retention rates by 5 percent increases profits by 25 percent to 95 percent.

Pizza has got to be one of the most highly competitive food products in the world. There are tons of franchise and local pizza restaurants in every city. And whose mailbox doesn’t get hit with pizza coupons at least once a week?

That could well be why Domino’s is looking for even the smallest way to make a difference in the lives of its customers. They know you can’t create loyal customers if there’s nothing special about your business.

It is imperative to search for ways to stand out in a crowded marketplace. How many pizzas will Domino’s get stuck replacing over a month’s time? That’s not important. What is vitally important, though, is how many of Domino’s customers (and others like me) will be doing what I’m doing right now—telling their friends and family about the very cool way this business takes care of their customers?

Domino’s cost to maintain this program is negligible compared to the rewards. It’s a very inexpensive way of making and keeping customers happy—to increasing customer retention rates by that valuable 5%—to getting a bigger slice of the pie. In an article on HelpScout.com, “The Frugal WOW: How Small Gestures Create Lasting Loyalty,” marketing strategist, Gregory Ciotti writes,

“The essence of the ‘frugal WOW’—is the creation, practice, and implementation of small gestures that create lasting loyalty.”

We all love it when someone does something unexpected for us. It makes us happy and feel better about ourselves and others. And, that “something” doesn’t have to be epic. It’s the thought that counts often carries greater value if it gives your customers the feeling that something positive happened to them.

What “frugal WOWs” can you provide to your customers that will make them feel valued, special and important? What little differences will set your business apart from the competition and produce customer loyalty and increased retention?

“In an era when companies see online support as a way to shield themselves from ‘costly’ interactions with their customers, it’s time to consider an entirely different approach: building human-centric customer service through great people and clever technology. So get to know your customers. Humanize them. Humanize yourself. It’s worth it.” — Kristin Smaby, “Being Human is Good Business”

Get More Personal Than Ever Before

Treat customers as part of your business’s extended family.

Research studies have found that 64 percent of consumers point to shared values as the main reason they have a strong relationship with a business. Loyal customers are the result of mutual respect, trust and care.

As humans, we tend to gravitate towards other humans who genuinely have our best interest at heart. That type of relationship makes us feel valued, special and loved.

Just like Domino’s, create a solution for your customers—a solution they’ve not yet discovered they need or that they never thought possible.

Jake Sorofman, researcher at Gartner.com says,

“Increased competition is eroding traditional product and service advantages, making customer experience the new competitive battlefield. With an overabundance of alternatives and ubiquitous access to pricing and product information, consumers have little reason to remain loyal to a particular brand.”

In other words, if you don’t deliver the personal experience your customers demand, they’ll simply look for it somewhere else.

One Good Deed Leads To Another.

The cool thing about loving your customers is how it generates a trickle-down effect. If you truly love your customers, your work will reflect that love and your customers will be more inclined to reciprocate by loving you back.

Reciprocity, a shared loyalty, creates an emotional connection where customers will more likely feel a subconscious need to repay an unselfish gesture by sharing their experience with a friend or by continuing to do business with you—and it’s the reason loyalty is so very valuable to a business.

The first time Domino’s saves me the embarrassment of serving my family a pizza that landed face up on the sidewalk, they will have won a customer for life. Not because they replaced it, but because they treated me just like any other, vulnerable human being.

It is 6-7 times more expensive to acquire a new customer than it is to keep a current customer. If loyal customers feel that they are getting excellent value, quality and service from you and they feel a connection to you and your brand, they are less likely to stray towards the competition.

Average Ain’t Gonna Cut It.

In an article describing what it takes to be remarkable, Wharton Professor Jonah Berger says it only takes something like black toilet paper to get people talking.

“Toilet paper? Hardly seems remarkable. But a few years ago, I made toilet paper one of the most talked-about conversation topics at a party. How? I put a roll of black toilet paper in the bathroom. Black toilet paper? No one had ever seen black toilet paper before. And that remarkability provoked discussion. Emphasize what’s remarkable . . . and people will talk.”

“Frugal WOWs” rely on the same principle. They aren’t “valuable” to customers for any monetary reason, but they are valued and remembered because they create an experience that customers aren’t expecting and where they find some benefit.

“You mean Domino’s will replace the pizza I dropped in the street free-of-charge even though it wasn’t their fault? Who would have thought?”

Coming up with a “frugal WOW” for your business isn’t as hard as you might think.  Provide a service that is far above and beyond what customers will receive anywhere else in your industry. And like Domino’s—make a difference in the lives of your customers. Defy the status quo and whenever possible be willing to correct a problem—even if it’s not your fault.

I’d love your thoughts. Please share your “frugal WOWs” in the comments.

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