Five years ago, Donatos Pizza looked around at the loyalty programs its competitors were offering and set out to build one of its own.
The Ohio-headquartered pizza chain’s original loyalty program, created in-house, was a “pie in the sky” with many moving parts, said Erin Corrigan, director of digital marketing. “We had done a little research on best practices, but we were by no means experts.”
Program components included a punch card system, 10 points for every dollar spent, bounce-back offers, sign-up incentives and birthday rewards. The discounts piled up fast, but the impact to the brand’s bottom line wasn’t clear.
In 2018, Donatos started working with Stellar Loyalty – which later became Cheetah Digital and is now mar tech firm Marigold – on email marketing efforts, signing up for a loyalty program test in early 2019.
Marigold’s analytics work revealed cracks in the fledgling loyalty program’s foundation. Though more customers were coming in, profits were canceled out by the promos and discounts.
Donatos amended the loyalty program to revolve around earning points toward free pizza. But this second iteration produced its own complications.
“It was chaos,” Corrigan said. “We were, at that point, in survival mode.”
Test and learn
From Marigold’s report, Donatos learned that only 18% of loyalty program members were earning a reward (aside from birthdays) each year. Members redeemed less than half of the issued rewards, meaning 8% of members saw any sort of perk, Corrigan said.
Based on its findings, the family-owned pizza franchise introduced on-demand rewards at different price points, such as adding more menu items as options or rewarding customers with points for participating in occasions like National Pizza Day or completing quizzes and surveys. That way, customers didn’t have to save up points over time to gain any value.
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The testing and learning during the last five years have yielded growth for the company, with a 23% increase in program participation to 135,000 new members over the last year, Corrigan said. The share of members redeeming rewards is up from 8% to 19%, and now about a third of net sales come from the program’s 720,000 on-demand rewards members.
“It’s been really great to not be in panic mode,” Corrigan said.
Another metric the chain tracks is engagement with member badges, which recognize and reinforce online ordering, by rounding up an order total to donate to a cause or trying new menu items. At present, 76% of members are earning badges.
Next on the docket: Donatos is trying to grow the percentage of orders that can be attributed to rewards members. “We’re just getting started,” Corrigan said. “We still have some evolving to do.”
Dollars and data
A benefit of working with Marigold is that Donatos’ marketing team consolidates the customer data, according to Corrigan. Previously, the department requested IT or finance would pull that information.
This access created opportunities to identify patterns and trends, segment audiences and personalize its messages.
For instance, Donatos uses its vegetarian and gluten-free segments to target customers who purchase vegetarian options or cauliflower crust, rather than suggesting pepperoni pizza to everyone.
The Donatos loyalty program divides people into four tiers based on order frequency and tailors its messaging accordingly. Customers in the base tier haven’t purchased in more than a year; the next tier up, low frequency, visit once or twice a year; and by the time you reach the high-frequency tier, customers visit once a month or more.
“It’s about finding the people who have the potential to move up into that high tier,” Corrigan said.
To personalize its offers, Donatos relies on a blend of zero-party data – such as birthdays, favorite menu items or dietary preferences people provide to the company – and first-party data, including purchase activity, order history and which day of the week customers come in most, Corrigan said. “It’s about striking a balance between what people say they’re doing versus what they’re actually doing.”
