Every business owner yearns for customer love; that’s the bedrock of any business. Nevertheless, in business, getting clients’ love may be easier than keeping it.
Nurturing the love of your faithful buyers often requires that you revamp your organization and reinvent yourself to suit the needs of your clients. Otherwise, competitors may woo your customers away by better listening to them.
Domino’s CEO, Patrick Doyle in an interview with Kai Ryssdal, revealed how businesses can strengthen customer love – even growing their business by finding new customers to love. The Domino’s story is a practical example of how even large and successful organizations are at the mercy of customer preference when seeking to grow. Their story reinforces the importance of continually asking, “Who are your most loyal customers today, and how are you meeting their needs?” But even more importantly, the question “Who will be the customers to provide the next growth spurt, and how will you change to meet their needs?” needs to be answered.
In the 70’s, 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, Domino’s identified two unmet needs, “low price” and “fast delivery” and they ran with it. 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 marketed their ‘30-minute or less guarantee’ aggressively. In fact, many credit them for popularizing free delivery. These actions moved “low price” and “convenient delivery” away from the customer’s area of unmet need to 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. By 2009, Domino’s growth had stalled. A market study showed that Domino’s pizza taste was the least among national pizza chains.
Domino’s took a step and that step is now a 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 propelled a new relationship with a whole new set 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%. We were up 9.9% for the year.” The new customer-oriented strategy was credited with turning the fate of Domino’s around. Even in the face of recession, Domino’s stock price soared, and they have remained healthier. Shares are now trading at $209.92.
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 the hard way that listening to your customers is a great way to identify new avenues for growth, and they’ve continued this practice. Today, with 13,811 outlets spread across the world, Domino’s is the second biggest pizza maker in the world behind Pizza Hut. They continue to expand in the US and around the world.
In summary, 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 to choose from. Domino’s adapted and succeeded by becoming loveable to a new group of customers. Sooner or later, all organizations will need to refresh their strategy in order to continue to grow. Remember, change is the only constant in life. 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 your love relationship with your customer… and maybe find a new flame as well:
- Who are your most loyal customers today?
- Are you still meeting their needs?
- How do you get feedback from your customers?
- Who will be the customers to spark your next big growth spurt?
- How must you change what you provide to better meet their needs?