CFO: Domino's digital channels enhance brand, loyalty

Earlier this week, Domino's Pizza announced new online features created to expedite repeat orders. The "profiles" platform allows customers to save information and reorder their favorite items in about 30 seconds, according to the company.

This initiative is the latest in a long line of technology investments made by the company in the past couple of years. Such investments have and will continue to set Domino's apart from its smaller competitors, according to CFO Michael Lawton.

During Telsey Advisory Group's fourth annual Fall Consumer Conference Tuesday, Lawton spoke at length about the chain's technology platforms, and how they not only boost market share, but also brand consistency and customer loyalty.

Currently, 35 percent of Domino's U.S. sales come from online or mobile ordering, and that number is higher in some international markets. Mobile orders are about 10 percent of that 35 percent total, but they are growing more rapidly.

"I would expect (orders) will continue to be more heavily weighted on the mobile (side) because that's what we are seeing," Lawton said.

Digital's impact on branding, loyalty

In addition to the new profiles platform, Domino's also offers customers an Android app, iPhone app, iPhone 8 app and Windows Phone 8 (with voice capability) app. This is in addition to the brand's signature Tracker and other online features. Additionally, Lawton said Domino's digital pipeline is "far from dry."

"We just keep coming up with more things that we can do," he said. "It's doing a lot for the brand image because you can track the persistency of customers that switch from calling on the phone to an iPhone app. They keep telling us, 'This is what we want,' and we're going to keep doing everything we can to be a leader in technology."

In addition to brand image benefits, these investments are also expected to help with customer loyalty and retention, notoriously low in the pizza space. Lawton said the average customer buys pizza 21 times a year, and Domino's makes up six to seven of those occasions. Even the company's most loyal customers don't choose Domino's every single time.

"Unfortunately, most of the core customers do go back and forth to the other guy down the street. Loyalty is not strong, we think," Lawton said. "That's why we are so focused on the digital, because we think it's one of the fronts that will enhance our loyalty."

That loyalty will mostly come from the increased data available from digital platforms, which allow Domino's to create more targeted promotions based on behavior and history.

Because of the standardization of technology platforms, Lawton estimates that the smaller, regional chains and independents have lost some market share — about 1 percent annually. While many, if not most, of those smaller players now have a Web presence, the technology is moving too fast to keep up.

"We are really putting a lot of emphasis on (digital) because if you run 100- to 500-store chains, it takes a lot of money to invest in digital and do it the way we are — you can't afford to do it," Lawton said. "We think it's going to be a barrier that's meaningful. The bigger players are starting to take share as best as we can tell from some of the smaller players. The cost of doing a website that feeds the store, plus iPhone, plus Android, plus iPad (etc.), and the ongoing cost to support it is still going to be very, very difficult for anybody to match where we already are other than the biggest guys.

"Even if the smaller players do catch up, we're not staying where we. We're going to keep moving."

Editor's note: Domino's technology initiatives are a big reason the company's chief information officer Kevin Vasconi was among PizzaMarketplace's "Top 11 Trendsetting Executives in Pizza" this year.

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