Pizza Hut: Preference Driven Communications and Pizzas

The Challenge: Many companies capture large quantities of customer data. But few use the data to deliver a competitively differentiating customer experience.

Pizza Hut is asking customers to provide their preferences and using that information to deliver preference driven communications and pizzas.

Recently, Pizza Hut shifted to more personalized customer interactions by segmenting its customer base into 6,000+ groups based on characteristics, purchase tendencies, and behavioral indicators. Juliana Lim, Senior Marketing Director for Pizza Hut, says, "We now run targeted campaigns built with intelligence around customers' preferred product categories, typical purchase times and channels of choice”. 

Here’s an overview:

	Pizza Hut provided customers with a registration process to define their personal communication and pizza preferences and delivery instructions.
	Customers can order online, via traditional call-in, via a mobile site, and even via an ordering app on an Xbox 360® system.

Online registration allows customers to get exclusive deals, save “fast favs” for quick reorders, and even set pre-orders for up to 7 days ahead.

Compared with Pizza Hut's former bulk promotions, this new preference driven communication process has generated:

	A 200% jump in average campaign hit rates across customer segments,
	A 38% improvement in Pizza Hut's customer retention rate,
	A 9% increase in customer visit/purchase frequency in just seven months,
	Up to 6% extra sales generated every month since the program started.

Findings from research conducted by our company ERDM, indicate that today’s savvy online shoppers understand that in order to receive more personalized offers and communications, they must provide more detailed personal preference information. If they trust the brand… they are willing to provide preference data in order to receive a significantly improved customer experience.

Additional research findings regarding preference based engagement and why consumers see it as a benefit:

	They receive fewer communications that are not relevant.
	Provides the flexibility to change their preferences as their needs or situations change.
	Increases their awareness of product, offer and ordering options.
	Allows them to spend less time looking for products.

Takeaways

» Personalization is perceived as a service. Customers want the ability to set personalization preferences. So, tell your customers that true personalization is available and the benefits they will experience.

» Customers want to be involved in their experience with your company. Customers want to contribute to, and define their relationship with your company. Make it easy for them to do so.

» Consumers recognize that in order to receive relevant information, they must share increasing amounts of information regarding personalization and preferences. By providing a way for customers to tell you what they want from your company they will be more likely to open, engage with, and respond to, communications and offers.

40% of Customers Buy More with Personalized Messaging

The Challenge: If you are not creating a personalized preference-driven experience for your customers, they’ll go looking for that type of experience--with your competitors.

According to a study by MyBuys , an e-tailing group, 40% of respondents stated that they buy more from retailers that personalize their shopping experience across channels. Addtitonally:

  41% buy more from retailers that send them personalized emails

  39% buy more from retailers that personalize Web recommendations.

The study noted that the practice of tailoring offers and promotions to consumers based on their past shopping or browsing experiences appears to increase buyer readiness, engagement, and sales activity. These findings are reinforced by sales data from MyBuys' database of some 250 million shoppers: Customer-centric marketing delivers a 25% increase in total online sales and a 300% improvement in customer lifetime value, according to the company.

Guitar Center, the world's largest retailer of musical instruments, not only understands the value of personalized customer service and engagement marketing, they’ve actually won the “Customer Engagement Award” from Retail TouchPoints, for embracing customer engagement and implementing solutions and services that are actively getting customers involved in their own experience and buying process, while improving their bottom line.

In addition to allowing customers total access to all instruments in the store, the ability to interact with industry professionals, and a chance to take their amateur talents to the next level, to the company also endeavored to improve the in-store customer experience even more by introducing, the “Find an Expert” profile pages. On these web pages customers can search for employee/experts online by location and store to develop dialogs and working relationships with these Guitar Center, (GC), experts based on similar musical tastes and interests. Customers can regularly engage with GC experts via email, through their blogs, and in-store. Additionally, in 2012 the company introduced a Music Mentor Series, an unprecedented company-wide platform that gives customers the ability to advance and enhance their musical pursuits, right in their own communities. Activities for the Music Mentor series included free music lessons.

Key Takeaways:

•	Differentiate your company by providing personalized experiences, communications, and offers.
•	Provide clear ways of showing customers that you're listening to their feedback and creating personalized experiences. This will reinforce ongoing participation by customers.
•	Personalized follow-up emails that detail items or events specific to the customers’ interests and buying history are value-added triggers that are welcomed by customers.

Pseudo-Customization Is Annoying; True Personalization is Valued

The Challenge: A recent article in The New York Times highlighted the fact that customers find poor etailer customization "creepy”. It appears that businesses are still not providing customers with true personalization.

Today's sophisticated customers expect personalization across all points of contact. And, they expect these communications to be relevant and based on their stated preferences. A common sentiment expressed during recent Voice of Customer (VoC) research we conducted sums it up this way, "I expect more than just ‘we’ve looked at everything you’ve bought over the last X years and this is what we think you’ll like’. With today’s technology, I expect much more than that!"

Speaking with The New York Times, Patagonia's vice president of global e-commerce described the consequences of getting personalization wrong: "We saw customer frustration at being targeted outweigh any benefit. If you got it wrong once, it outweighed getting it right 10 times."

Many marketers are liable to draw the wrong conclusion, and do away with customization altogether. But abandoning multichannel customization is not an option.

Customers today view true personalization as a requirement for their preferred shopping venues, rather than as simply a perk. They're sophisticated enough to expect marketers to provide true preference-driven personalization, not just simplistic purchase based pseudo-customization.

And, per results of our Voice of Customer research efforts, today’s consumers will opt-in to share increasingly detailed personal preference information in exchange for marketer’s promise to deliver relevant information and offers.

This is not to say that traditional targeting methods are no longer relevant. Demographic and transactional data remain useful data points. But, in order to achieve necessary levels of accuracy, they must be enhanced by opt-in preferences provided by consumers.

In the Times article cited above, Mahender Nathan, Godiva's vice president for e-commerce and digital marketing, made the point well, "In conversation, if you think it’s odd that you know something about someone that they didn’t share with you, don’t use it."

The inverse holds as well: when someone “opts” to share something with you, they expect you to remember it in conversation―just as customers expect marketers to add value using the preferences they've shared.

KEY TAKEAWAYS FOR MARKETERS

» Replace Pseudo-Customization with Preference-Driven Personalization
You can only personalize a customer experience based on customer preferences if customers opt-in to share their preferences. To make sure they do so, offer a compelling value proposition.

» Supplement Transactional Data with Self-profiled Preferences
Transactional data is an extremely valuable indicator of historical customer preferences, but it's not enough. Use it, but only in tandem with self-profiled preferences.

» Understand the Reciprocity of Value Equation
Consumers will opt-in and share increasingly detailed personal preference information in exchange for marketer’s promise to deliver personalized and relevant offers, and communications across the multichannel mix.