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Domino's Revamped Loyalty Program Drives Growth and Market Share

In September 2023, Domino’s rolled out significant changes to its loyalty program, aiming to boost both delivery and carryout retention.

Nearly a year later, the results have exceeded expectations, driving growth and market share in a competitive industry. Here’s why it was a hit:

Key Takeaways from Domino's Loyalty Refresh:

  1. Lower Barriers to Entry: Minimum spend to accrue points was halved from $10 to $5, making the program more accessible [1].
  2. Faster Rewards: Points can now be redeemed sooner, increasing engagement and encouraging repeat purchases [1].
  3. Carryout Focus: The program was tailored to boost their carryout business, a strategic priority for Domino’s [1].
  4. Emergency Pizza: Dominos launched a members only ‘Emergency Pizza’ campaign.

From October 2023 to February 2024, members could redeem a free 2-topping pizza, driving new sign-ups and engaging existing members.

The Proof is in the Pizza: Results

We’re seeing headlines reporting an over 2 million member surge across domino’s membership base, let’s dive deeper:

  • Orders with loyalty redemptions in the first half of 2024 were twice as high as they were under the old program in the first half of 2023 [2].
  • Q2 2024 saw a 4.8% increase in same-store sales, with carryout sales up 7.9% [1].
  • Domino’s outperformed major competitors, with U.S. same-store sales outperforming Papa Johns by 760 basis points and Pizza Hut by more than 1,200 basis points in Q1 2024 [1].

Domino’s CEO Russell Weiner stated, “Our objectives for the program were to drive new users, particularly carryout customers, and increase the frequency of light users,” and affirmed that “The loyalty program is delivering what we’d hoped” [1].

Why It Worked

  1. Lowered Barriers of Entry: By reducing the minimum spend, Domino’s made it easier for customers to participate, especially appealing to carryout customers who tend to spend less [1].
  2. Faster Gratification: Allowing customers to redeem points sooner taps into the psychological need for immediate rewards, encouraging more frequent purchases [2].
  3. Targeted Approach: Focusing on carryout customers addressed a specific business need while providing value to a key customer segment [1].
  4. Campaign Exclusivity (Who doesn’t want free pizza, right?): The “Emergency Pizza” promotion created a sense of urgency and exclusive value for members [2].

As Domino’s CFO Sandeep Reddy noted, “This is a multi-year driver of comps for us” [1], highlighting the long-term strategic importance of a well-designed loyalty program.

By implementing these strategies, businesses can work to cultivate stronger brand loyalty, increase customer frequency, and drive sustainable sales growth in their organisations, even in challenging economic times.

Sources:

[1] Maze, J. (2024, July 18). How Domino’s upgraded loyalty program helps it win market share again. Restaurant Business.

[2] PYMNTS. (2024, July 18). Domino’s Loyalty Refresh Doubles Members’ Pickup Orders Amid Consumer Hesitance.

 

 

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