Honesty and New Recipe Pays Off for Domino’s
Domino’s pizza used to be pretty bad. That’s what consumers told the chain
and the company used that negative feedback to promote its brand new pizza
recipe in its advertising.
After several months, the chain has achieved "historic" same-store
sales gains, according to CEO J. Patrick Doyle. Over the past quarter, Domino’s
has seen sales at locations open at least a year jump 14.3 percent.
Christopher Muller, hospitality professor at the University of Central Florida,
told USA Today, that the chain changed its crust, cheese and tomato
sauce. It "was like the world poker championship. Domino’s put everything
on the table."
"No one in the industry thought it was going to be this successful," he
said. "This changes the pizza landscape."
Mr. Doyle said he was most encouraged because the new approach is not only
driving trial but repeat business, as well.
"If we did this every quarter for seven years, we’d be bigger than U.S gross
domestic product," he told USA Today.
Discussion Questions: What do you think of Domino’s approach to addressing
negative perceptions of the chain’s products in its advertising? (Be honest…)
when you first saw the ads, did you think the strategy would work? Can you
think of other retail chains that could benefit from "honesty."
Wonder if this would work in relationships? “Hi ex-wife, ex-boyfriend, ex-employee. You were right. That old me sucked. But now I’m completely different so try the new me!” Touting their positive results seems to fly in the face of human experience.
It was certainly a novel approach to say, “the product we used to sell was not good, but trust us the one we are now selling is new and improved.” The new and improved has been a tried and true formula for many years but by “admitting” the previous product wasn’t good, Domino’s created a unique message. It appears to have resonated with customers. The article didn’t indicate what percentage of customers were first time buyers but I would anticipate that the ads generated a fair amount of trial.
Will the same approach work for other products? It depends. The cost of a pizza is fairly small so the element of “hey, I spend a ton of money on this and now you tell me it’s bad” is removed. The other element that worked in the ads favor is that pizza is something that is purchased (or can be purchased) relatively frequently so the time lag between starting the campaign and seeing the results was fairly short. I am not sure a similar series of ads would work for durable goods.
My final thought circles back to my original one – the ads were unique and created a lot of media buzz adding to their reach. The next company that mounts a similar campaign may get media attention, but likely for being an imitator of Domino’s approach.
Domino’s did what was necessary to save their brand. First, they listened to consumers. From this they gained valuable information. Second, they took what they learned and changed their product. Finally, they publicly admitted that their old product did not satisfy consumers and touted their new, improved product.
By using honesty in their approach, consumers were willing to give Domino’s another chance. The obviously liked what they tasted, as evidenced by Domino’s sales results.
There is a valuable lesson here for all brands. Listen to your customers. Admit when you are wrong. Make the necessary changes or fix the problem.
Love the question about if other retail chains could benefit from “honesty.” I think the real issue is that most of those CEOs don’t know they aren’t nearly as good as they think they are. I think it also worked for Domino’s because they never promoted quality but rather convenience.
Hooray for Domino’s for re-discovering the golden rule…listen to the customer. This demonstrates what not listening to your customer can do (destroy sales and allow you to create a poor product), and what can happen when you reverse course and listen to the customer, implement their suggestions and allow your product to reflect this feedback throughout the organization.
Oh yeah, other companies have done this to great fanfare as well…like Whole Foods, Ford, Wal-Mart and others who are growing despite a “down economy” and continually lead their industry….
I still shake my head at what corporations think are breakthrough strategies like being honest, listening to customers and so on. For that you’re being paid how much Mr. or Ms. CEO?
And Bob’s got it right. Until the customers actually experience something different, it’s all just…you know what. Locally here in Scottsdale, Dominoes are still awful, no noticeable change. And it’s not just the pizza either. On top of all that in ordering a number of pizzas for a party (one of the guests insisted Domino’s had changed) it turned out that one of the boxes was completely empty. I know this is just one outlet but the name is still on the door. I am yet to be convinced and will stay with local independent pizzerias.
The entire campaign was predicated on a new, considerably better product. If customers had tried the new pizza and hated it, the company could have cratered. This is one of the riskiest campaigns ever! Congratulations to Domino’s for pulling it off.
Any Press is Good Press.
Domino’s, like other pizza companies, have always been “in you face.” Listening to consumers and admitting to your shortcomings fits perfectly with Domino’s during a product launch. And since it’s during a launch, they can drop the ads any time they want and go back to stock advertising.
Agree that Domino’s put it all on the line, as it had no where else to go. The risk was finding out the truth–either new product perceived as better, or not. I believe it was a risk that had to be taken, or Domino’s would just watch their success with fast service and good locations fade away or just crash. Fortunately, the new product seems to deliver, and lesson relearned–quality sells.
Hooray for Domino’s! They made a mistake, corrected it and used that to show fallibility. We consumers love to give someone a second chance; especially after they publicly admit to the mistake and show they are trying to be better business models. I like what they did and applaud them for standing up and saying “Hey, I goofed; but I will do better.”
Gotta love that Bob (comment): would you really believe someone who says “I USED to lie but now I’m telling the truth”? (particularly when that lying included similar statements.) Perhaps.
Unfortunately though, Mr. Doyle’s hyperbolic closing statement–though probably intended to be humorous–suggests their sense of honesty is still a little…shall we say?…half-baked.