Domino's Pizza has been known as one of the leading pizza brands in the whole world. Now in its 25 years of existence, it already has 627 stores in britain and the Republic of Ireland. Just in the first 1 / 2 of 2010, its gross profit has climbed to 237 million Euros. One of the reasons for Domino's Pizza's successes is its loyal customers. Through their different customer retention programs, this leading pizza chain has been able to prove that indeed customer is the key to a successful business.
A lot of businesses are striving these days. Because of the challenging economy and extreme competitive market, a lot of companies have been racking your brains on how in which to stay business. Customer retention and loyalty is one of the strategies that companies are actually utilizing to earn more profit. Studies have shown that keeping one existing customer is five to seven times more profitable than finding one new customer. Also, customer profitability rate usually increases in a retained customer (Kotelnikov, 2010). Hence, it is important to retain loyal customers for a business to continue earning.
Knowing customers' satisfaction rating is not the reliable way to ensure that customers should come back. There are many instances a customer is satisfied with something but will easily buy a competitor brand. In a report made by Professor Robert Peterson of the University of Texas, he discovered that in most surveys, 85% of any company's customers said they are "satisfied', nonetheless they are still willing to obtain another provider. This proves that there is no significant proof that client satisfaction is the same as repeat purchases (Griffin, 2002).
What companies should focus on is not merely customer satisfaction but customer loyalty. Customer loyalty is an idea which is geared more towards behavior rather than attitude. A loyal customer, won't randomly buy a product, but will be biased in purchasing the product she is loyal of. It'll be the hobby of the loyal customer to keep purchasing the product of her choice frequently and she will also recommend this product to her family and peers. A thought under customer loyalty is customer retention. This is the length of relationship of a customer buys a certain service or product over a time frame (Griffin, 2002). A company can retain customers when their customers know that they are buying value. Customers always want superior service plus they want to be assured that all their needs will be fulfilled through buying a certain product. Value is established when a company is able to fulfill these needs and present the client excellent service. By giving customers a great experience, improved financial performance plus more loyal customers will definitely follow.
A ripple effect is surely to occur whenever a company has loyal customers. Several economical effects will surely benefit the business. Through repeat buyers, revenues and markets will grow. With sustainable growth, a business will be able to establish its business and retain the best employees. These employees then will be motivated and begin caring for the business. They will be enthusiastic about cutting costs and enhancing the grade of products which increases customer value and productivity. When productivity and loyal customers increases, it'll be hard for other brands to compete with business. Through these chains of events, it might clearly be observed that retaining loyal customers is the key to a successful business.
It has been said that by gaining 5% more loyal customers would lead to a 25% and 100% upsurge in profit (value) per customer. Because of this huge gain, companies should attract and keep customers who are inherently more loyal as they prefer long-term relationships, profitable customers they spend more and pay their bills on time and customers who value your product because they think it is better than other competitors. (Reichheld, 1996)
It isn't easy to attract customers these days. Simple marketing and sales information is insufficient to persuade customers to buy a certain product. Customers now want to be in control and receive the marketing information that they want, when they want it and on their own purchasing terms. Technology is currently also being used to nurture customer relationships. Websites call centers, social networking sites and short messaging services are are just some of the unique and innovative ways of interacting with a customer (Griffin, 2002). Customer data is now able to be stored in databases of computers which not only show the customer's name and address but also more personal information of every customer such as birthdays. Through knowing more about the customer, they companies are able to establish a romantic connection with their clientele that hones customer loyalty. This technique is generally known as "mass customization".
Domino's Pizza, the number one pizza delivery company in the UK, has used this tactic which includes given their profit a large boost. Domino's Pizza was started by two brothers, Tom and James Monaghan. They bought a small pizzeria for $500 in Michigan which they named "Dominick's Pizza". After 8 months, James quitted the business this provides you with Tom the freedom to change their business' image and named it "Domino's Pizza". His business, after learning about franchising grew, and the first UK store was established in 1985 in Luton.
Domino's Pizza gives a huge importance to customer loyalty. To be able to be the best pizza delivery company in the world, one of the principles is to adopt great care of their customers. That is why they value comments from customers. According to Robin Auld, sales and marketing director of Domino's Pizza in UK, getting customer feedback is essential in making both negative and positive changes within a business. It will be assists with differentiating and evolving their brand.
To be able to reach their an incredible number of customers, Domino's Pizza has used technology with their advantage. Television advertisements in top shows such as Britain Got Talent, Simpson's and the globe Cup have greatly helped in making their brand recognized to consumers. And their mode of pizza delivery service has been a hit. Indeed for customers who don't want to cook and want an easy meal, they could easily dial the Domino's Pizza hotline and order their favorite pizza. They just have to wait for 20-25 minutes and their pizza is right at their doorstep. Pizza delivery is great business for Domino's since due to the economical crisis, people would prefer to stay at home than dine out.
Delivery is now also available via Domino's website. A person can now order from the web site, pick their own toppings and get automated notifications of what is happening to their pizza. For instance, after ordering, a notification will be delivered to the client that the dough of the pizza is currently being made. Customers are actively involved in the pizza making process no longer just ready because of their pizza to be delivered. Ordering Domino's Pizza via interactive TV is also available these days. By simply clicking the remote, viewers can scroll through the menu and payment options. This sort of marketing which is very easy to access has given indeed raised their profits.
Domino's has also been one of the first brands to use Four square as a customer retention tool. Four square is a mobile interactive networking site where customers can certainly give their feedback on Domino's product and service.
Through these tools, Domino's Pizza has had the opportunity to establish great customer relations and customer loyalty which has been greatly good for their company's success.
Both qualitative and quantitative analysis will be utilized in this paper. Qualitative research is achieved through the interviews and focus group discussions. Its aim is to know deeper the opinions of the participants insurance firms more specific questions. It seeks to answer the "why" in the analysis through the analysis of things like transcripts, emails, notes, images and videos. It does not rely on statistics or number. This kind of research is utilized to know the attitude of individuals, behavior, value systems, culture and lifestyle. That's the reason in-depth interviews because of this kind of analysis have fewer participants. Some of the methods to quantitative analysis are focus group discussions, content analysis, in-depth interviews and evaluation. It also involves other unstructured material such as customer feedback forms, journals and reports.
Quantitative analysis, on the other hand, is employed to generate statistics through large scale surveys. This type of research needs a big volume of participants, usually 50 or even more interviewees. This sort of research uses structured questionnaires that uses closed questions and have a couple of responses. The purpose of this type of research is to link one independent variable to another. Approaches to this type of survey are usually on the street interviews and telephone interviews.
To be able to know the client retention policy strategies of Domino's Pizza, which is the first objective of this paper, a qualitative approach will be used wherein key employees of the most notable pizza delivery franchise will be interviewed. We will inquire further specific in-depth questions on the vision of their companies and exactly how they crafted their strategies with this vision at heart (see appendix A). 3 to 5 key employees from both the marketing and executive department of Domino's Pizza will be interviewed.
For the next objective, which is to learn the very best customer retention strategies, both a qualitative and quantities analysis will be utilized. A focus group discussion with 10-20 participants in the youth generation (18-35 year of age) will be held which is guided by specific questions (see appendix B). These participants should be loyal customers of Domino's pizza who've regularly been ordering from the pizza franchise for at least 2 years. A quantitative study may also be done by giving out a structured questionnaire about the feedback of customers regarding Domino's Pizza's customer retention strategies (see appendix C). The third objective of knowing why the chosen successful client retention strategies work to customers may also be discussed in the focus group discussions.
To prove that the customer retention policy of Domino's Pizza works, a quantitative research studying the increase of profit that Domino's Pizza had over the years depending on the customer relation approaches will be studied. Charts and graphs will be used to start to see the increase of profit in relation to their customer retention policies.
And to summarize this paper, suggestions on customer retention strategies will be given basing on this study. This is to help budding business craft its own customer retention policies that will also hone customer loyalty which is going to be beneficial for their business' success.
Survey questions for the employees of Domino's Pizza UK.
Name: _______________________________ age:_____________________
Position in company: ___________________ years in company:__________
1. What's the vision of Domino's Pizza?
2. How important is customer loyalty to the company?
3. How important is client satisfaction to the company?
4. So how exactly does customer feedback influence the policies of the business?
5. What are the factors that Domino's Pizza talks about before crafting their customer
6. What exactly are the client retention policies that have been effective to the company?
7. How does the company gauge the success of these strategies?
8. Can it be said that the customer retention policy of the company has greatly influenced the increase of income of the business?
Instrument Title: Discussion Guide: Focus Group 1
Total Participation Time Required: ________
Total Focus Group time:__________________
The purpose of this study is to learn how the customer retention strategies of Domino's Pizza influences its customers and exactly how these strategies have made them loyal customers of Domino's Pizza.
Explain reason for the focus group discussion and just why participants were chosen.
Discuss general ground rules and discussion guidelines such as the importance of everyone giving their inputs, talking one at a time, and being prepared for the moderator to interrupt anytime to be sure all the matters are covered.
Remind everyone that information discussed will be confidential.
Issues for Discussion
How long are you customers of Domino's Pizza?
What can you say about the product of Domino's Pizza?
What can you say regarding their services?
Do you feel that their TV advertisements have influenced your buying decision?
How have their customer service policies such as delivery through phone, web and TV affect your buying decision?
What are the other factors that make you a loyal customer of Domino's Pizza?
What services does Domino's Pizza have that keeps you buying their products rather than buying another competitor brand?
What other customer retention policies do you want Domino's Pizza to do so that you can become a more loyal customer?
How important is their customer retention strategies that you can keep on buying their product?
Clarify answers that are not clear
Give observations and generalization
Thank the participants
1. Have you ever bought Domino's Pizza?
Yes____ No: ____
2. Where did you find out about Domino's Pizza?
TV Ads ____ Newspaper___ Radio___ Web___ Others___
3. How did you order from Domino's Pizza?
Phone___ Web___ Interactive TV___
4. What is it possible to say about the speed of their service?
Fast___ Just on time___ Late___
5. What is it possible to say about their pizza?
Delicious ____ Satisfying____ Could be better____ Horrible____
6. Have they called for customer feedback once you ordered?
Yes ____ No____
7. How did you give your feedback?
Thru client satisfaction survey_____ thru phone _____ thru website ______
8. In the event that you answered website, how did you give your feedback?
Via tweeter ____ via face book ___ via foursquare____ via you tube_____
9. What can you say about Domino's Pizza's loyalty points program? Does it cause you to buy more pizzas?
Yes ____ maybe_____ No____
10. What can you say about Domino's Pizza's cash return program? Will it make you buy more pizzas?
Yes ____ maybe_____ No____
11. What is more important for you in buying pizza, the grade of the merchandise or the quality of customer service?
____ Quality of product _____ Quality of customer service
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