Apr 22, 2015 | Customer Retention Strategies That Work

How To Compete with Fast Casual Pizza...And Win

Divya Narayanan by Divya Narayanan

Pizza marketers - now more than ever - need to be ready to compete with emerging fast casual pizza concepts. Follow these three simple steps to retain your current customers, grow sales, and win.

fast-casual-pizza

Every pizza business in the U.S. knows the story of Chipotle: a new entrant into a crowded market that experienced meteoric growth. Sadly, most of us forget about the burrito restaurants that Chipotle put out of business. Without a competitive marketing strategy in place, those restaurants were defenseless when customers started choosing Chipotle over their brand.

Preparing For The Fast Casual Pizza Infiltration

Lesson learned. And pizza marketers – now more than ever – need to be ready. A host of fast casual pizza concepts are determined to become the “Chipotle of Pizza” – offering affordable, gourmet, customizable pizza in a matter of minutes.

So, how should your pizzeria compete? Your first instinct is likely to throw money at the problem. They’re making pizza faster - let’s buy a fancy (and expensive) new oven! They have 40+ toppings - let’s offer more pizza specials! They’re at lower price point - let’s blanket the market with coupons to win customers!

As often is the case with first instincts, here’s what to do: slow down. Take a deep breath. Focus on making changes that will appeal to your most loyal customers.

Here’s why: you can compete (and win!) by protecting your current customer base. By finding out who your best customers are, understanding what they love about you, and leaning into your strengths, you will retain their business. You’ll also be able to identify “at-risk” customers and target them with smart, cost-effective promotions that will prevent them from going elsewhere.

Best of all, by using your existing customers to craft your competitive marketing strategy, you don’t have to reinvent the wheel. All you need are three steps; 1) identify your best customers using data, 2) solicit customer feedback, and 3) launch targeted promotions.

1. Identify Your Best Customers Using Available Data

Your best customers are the reason that your pizza shop is successful today. The top 25% of customers represent 2/3rds of a multi-location pizza restaurant's sales and the top 50% of customers represent more than 80% of total sales. There’s no excuse for losing these customers to those pesky fast casual pizza competitors.

But how do you identify these customers? You need to embrace your love of data (it’s easy, I promise)!

Data = power. Data = who your best customers are, where they like to go, how often they visit, and what types of marketing will convert.  Good customer data = absolutely critical to your competitive marketing strategy because it will help you make decisions and personalize your marketing in the context of YOUR customers. 

Though every pizza marketer who’s been to a marketing conference knows about data – the majority only have a surface level understanding. And that’s exactly how you can get ahead. “Data”  goes beyond a list of your customer’s email addresses. You need four types of data:

  1. Demographic - e.g., zip code, date of birth

  2. Behavioral - e.g., preferred location, preferred time of day

  3. Transaction - e.g., average spend, average frequency

  4. Feedback - e.g., overall customer satisfaction

How can you get data? Well, we know it’s not as simple as just asking. In our give-to-get world, you need make the data exchange worthwhile for your customers.

And the way to do that? Create an effective rewards program. Not discounts mind you, but benefits for customers who choose your brand.

The upside is that the same act of providing rewards and incentives to your best customers for information helps you retain their business and solidify their commitment to your brand. Meanwhile, your customers get great perks and benefits simply for eating at their favorite pizza restaurant (oh, and they won’t go elsewhere). Win-win.

2. Understand What Customers Love About You

As you put together your fool-proof competitive marketing plan, take a hard look at your customer experience. Do you really know why your loyal customers keep coming back to your restaurant? Do you know really know why some of your customers go somewhere else?

When you’re living, breathing, and experiencing your pizza shop every day, it can be difficult to be objective. We’ve all been there - your pizza shop is your baby!

So, start by surveying customers at random after a transaction for an objective opinion. Review the themes that come up from your customer feedback - do you have high-quality food? Do your customers enjoy your ambience?

Find out what you do best and continue to do that better than any of your competitors. Identify service improvements that will increase your sales and proactively make those changes rather than waiting for issues to boil over. Test the impact of those changes on your overall customer satisfaction metric (we suggest the Net Promoter Score).

And remember, your job isn’t done when you do this once. Your customers are evolving and changing every day! You need to always have an understanding of your customers and make continuous tweaks to their experiences to keep them coming back. That’s your biggest job as a successful pizza operator.

Here’s another reason to survey your customers: they’re already reviewing your restaurant online!

You don’t need anyone to tell you that your online reputation matters - but let’s do it anyway. A study of San Francisco restaurants showed that a half-star improvement on Yelp made a restaurant 19% more likely to sell out (that’s just a half-star improvement!).

If your online reputation strategy is focused on getting rid of bad reviews, then, with all due respect, you’re going about it entirely the wrong way. You need to deliver a consistent, awesome customer experience every single time someone walks in the door. And if you slip up (you will), you need a system to catch bad experiences before they end up on Yelp. By doing so, you can proactively improve your Yelp rating (and, of course, make more money). Back to the article.

If you’re curious, our friends over Bain have shown that businesses that offer industry-leading customer experiences consistently grow more than two-times faster than their competitors. That’s real ‘dough’ for your bank.

Great customer experiences are the most important tool in your fast casual competitive arsenal. A customer who loves your restaurant will bring in their friends and family through free word-of-mouth advertising. Renowned pizza operator Chef Santo Bruno says it best:

"Treat people right, make them feel at home. Give them a glass of wine while they’re waiting. Don’t curse at them. Tell them how great they look, how beautiful they are. Make them your friend. Don’t forget their names. This is the best marketing."

3. Launch targeted promotions

Here’s a surprising fact: 72% of a restaurant’s customers only visit once in six months. Even if we look at customers who have visited a restaurant many times, we find that 70% have not returned in four months.

They’re still eating pizza of course - they’re just going somewhere else. Said differently, your fickle customer is at risk of becoming a competitor’s loyal customer. Yikes.

Let’s look at this in two ways. On the one hand, fickle customers are frustrating! On the other hand, they represent such a big opportunity to win-back sales from your competitors. They’ve already tried your pizza and they were curious enough to walk in the door. They’re that much more likely to visit your pizza shop again (and return!) than a brand new customer.

Here’s how you can bring at-risk customers back. First, find out who your at-risk customers are (remember step 1, use data!). Then, send them a special, targeted promotion with an expiration date to encourage them to come back (and soon). Track redemptions and their spending over time to determine your return on investment.

If you’re offering an exceptional customer service and leaning into your restaurant’s strengths (see step 2) - you’ll bring customers back again and again.

Restaurants who approached marketing in this way saw an 800% ROI after 3 months!

A Final Word

By following the three simple steps above, you will protect your existing customer base from your fast casual pizza competitors. Be ready with a fool-proof competitive plan, and you won’t just survive, you’ll win.

Go To PizzaLoyaltyProgram.com Now

 

 

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