LOYALTY PROGRAM

PIZZA HUT

By:

Abrar Kavdekar

Aditya Sable

Anubhaw Arunraj

Apoorva Purohit

Neethi Menon

INDEX
Serial no. Content Page no.
1. Objective 1
2. History 2
3. Analysis and Findings 3-4
4. Recommendations 4-5
5. Conclusion 6
6. Personals contacted 7
 History
Pizza Hut was founded in 1958 by brothers Dan and Frank Carney in their hometown of Wichita,
Kansas. Since then the Pizza Hut franchise network continued to grow through friends and
business associates, and by 1964 a unique standardized building appearance and layout was
established for franchised and company-owned stores, creating a universal look that customers
easily recognized. In 1974 with 314 stores nationwide, the Pizza Hut Inc. went public on the
New York Stock Exchange under the stock ticker symbol NYSE: PIZ.

Pizza Hut is one of the flagship brands of Yum! Brands, Inc., which also has KFC, Taco Bell,
A&W and Long John Silver’s under its umbrella. Pizza Hut is the world’s largest pizza chain
with over 12,500 restaurants across 91 countries. In India, Pizza Hut has 140 restaurants across
34 cities, including Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, Pune, and
Chandigarh amongst others. Yum! is in the process of opening Pizza Hut restaurants at many
more locations to service a larger customer base across the country.

Loyalty programs
Customer loyalty programs are marketing efforts to encourage customer loyalty. Various
companies provide customer loyalty programs through loyalty cards, rewards cards, points cards,
advantage cards, club cards or by promotional offers. Loyalty programs tend to reduce
costumer’s tendency to switch brands. There are many examples – statistics - and time-tested
reasons that point to why loyalty marketing works.

Reasons for customer loyalty programs:

 It’s 7-10 times more expensive to acquire new customers than it is to keep existing
customers coming back.

 Repeat customers spend 33% more than new customers.

 Having an up-to-date and working customer database can double the value of your
business.

Studies show that customers who belong to a loyalty program visit twice as often and spend 4
times as much as those that don’t.
 Objective of the study
The Objective of this report is to find out how Pizza Hut is employing Customer Loyalty
Programs. We also intend to find out the need of Customer Loyalty Programs and various
techniques that are being used to retain customers and thus to increase the market share and net
profit of the company.
ANALYSIS
&
Findings
How Pizza Hut employed Loyalty programs
Pizza Hut uses loyalty programs depending on various types of customers and their needs. It
offers various discount schemes to customers that visit regularly by providing discount coupons.
While these discount coupons are for individual customers, there are also offers for corporate
lunches, birthday parties, kitty parties etc. In light of the reasons mentioned above these loyalty
programs naturally help increase the net sales of the company. The idea is to provide good
customer service in order to create customer loyalty.

The emergence of these loyalty programs is because of customer’s tendency to switch to other
pizza places such as Dominos, Papa Jones etc as well as other substitutes in search for quality
product, service and value.

Pizza Hut had to come up with loyalty programs that were compelling to customers and also
cost-effective. The company gathered insight to identify customer behavior patterns. It
interviewed Pizza Hut customers, reviewed existing research, built an analytic data mart based
upon thousands of customers and performed a customer potential analysis. But it is difficult to
employ single loyalty program for all the customers. Pizza Hut or any other company for that
matter needs to first find out the needs of customers in various segments and then work
accordingly.

Customers that visit Pizza Hut can be segmented into following categories:

 Best customers.
 Customers with potential to become best customers.
 Customers who switch often or those who simply have low frequency.

For best or regular customers the benefits are through various discount coupons which they
receive every time they walk into any of the Pizza Hut outlets across the country. The idea is to
make them feel special and to make sure that they are getting proper value for money. They are
also encouraged to organize parties, corporate lunches, kitty parties for women and birthday
parties for kids. Pizza Hut provides a floor space where these parties are organized and serve
food depending upon the requirements. Food is mostly with Pizza and other side dishes along
with desserts. To communicate the loyalty program, Pizza Hut uses direct mail, text messages,
e-mail, Web sites and in-store promotions. Pizza Hut also issues VIP cards to its best customers
which they can use to avail further discounts.

Pizza Hut has also introduced Gift Cards for various occasions. These Gift Cards are like any
other prepaid cards that can be used for goods or services offered by the Pizza Hut. These cards
can be charged with any denomination starting from Rs 250 to Rs 5000. Once charged,
customers can gift them to their friends and family members. These Gift Cards can also be
personalized with personal notes and wishes. Currently these Gift Cards are available only in
Bangalore and Mumbai but they will be launched in other cities as well. At the corporate level
these cards can be given to employees in recognition of their work. It can also be used by
marketing professional in different firms as a promotional give-away along with products.

Pizza Hut also let customers to earn rewards every time they dine at any Pizza Hut restaurant.
These Celebration Reward Cards can be asked from the server at the Pizza Hut restaurant and
can be later used to avail discounts accordingly.

Birthday parties for kids can be organized at Pizza Hut restaurants. Customers can choose from
available themes for organizing these parties. These parties are backed by a friendly host along
with various other attractions such as games and gifts. Customers can also design and send
invitations through them.

Corporate lunches can also be organized where customers can have a lunch and discuss about
issues with their clients and colleagues.

For customers that are identified as potential best customers and for customers with low
frequency the loyalty program basically revolve around distribution of discount coupons. They
are also made aware of various parties that can be organized for small occasional gatherings. So
that they can experience the offerings along with family and friends who may visit the restaurant
in future.

In order to further improve on the services being offered to customers and to tackle its existing
competitors, Pizza Hut has come up with Pizza Hut Delivery Outlets (PHD) throughout various
cities across India. These outlets mainly concentrate on delivery of pizzas to its customers on
time. This is one area in which Dominos has done really well and is known for its thirty minutes
delivery span. They also make sure that hot Pizzas are delivered to customers on time and if in
case this is assurance is not met they get the pizza for free.

In order to tap customers in lower income groups, they have come up with lower price pizzas so
that it can generate more revenue. In earlier days of its launch the Pizzas were mostly for middle
and high income group customers but with the launch of lower priced pizzas it has increased its
customer base.

They have also come up with combo meals to give customers a wholesome lunch or dinner
experience. These combo meals include pastas, other side dishes and a variety of desserts to
choose from.

Customer feedback programs were put into place in order to measure the customer experience
and also to uncover opportunities so, that the issues of the customers are addressed properly and
they are persuaded to visit often. 

Pizza Hut's program is a success for both its best customers and other customers as well.
 Recommendations

Although Pizza Hut is performing well in the current scenario of Pizza business and other
substitutes available, in order to increase their market share further and to keep up the value
proposition being offered to its customers it needs to look into some of the important issues.

One such area is how it taps the corporate customer base. It needs to take further steps so that
they can attract more corporate customers so that they can come and have client meetings and
corporate get together at the nearest outlets. It needs to offer more discounts and facilities to
these customers as they will generate more revenues. Corporate tie-ups are too low. They should
be more aggressive in more tie-ups with corporate houses across the country. Also, corporate
discounts which are presently starting at INR 2 Lacs Shall be decreased to increase the market
share.

Currently, Pizza Hut is only accepting their own promotional coupons; they should rather think
to also accept “SODEXO” coupons.

Pizza Hut also needs to look into its pizza delivery services. Although they have come up with
PHDs but its competitors are still a bit ahead of them. Dominos has made its mark mainly
through its timely delivery of pizzas to its customers. It needs to hire trained staffs who can
deliver pizzas on time and it needs to set up more PHDs at other cities throughout the country.
By delivering pizzas to the customers they can further improve on the aspect of customer loyalty.

The presence of Pizza Hut in potential small towns is still a matter of concern. This is a kind of
market where its competitors have also failed to cater. So, they can further increase their market
share and look for customer loyalties from these centers.

In the United States, Pizza Hut has come up with a fee based loyalty program called VIP (Very
Into Pizza). This loyalty program has increased the company's incremental orders by 93 percent
from members over a matched control and raised incremental net sales 65 percent. They can
launch similar initiatives in India as well as other countries to make sure that customers stay
loyal to them.

They can further include some of the regional dishes in their menu to make sure that customers
also have a variety to choose from. However, the emphasis should always be with the pizzas as
this is what they are popularly known for. These regional dishes should only be used as a way to
attract new customers.

There can be increased use of technology like SMS or e-mail service to their loyal customers. If
we look at Dominos, we see that they are quite aggressive with promotions by distributing
pamphlets and sms services. Pizza Hut should also ramp up on these efforts to attract more
customers and their loyalty.
 Conclusion
Pizza Hut has managed to perform really well in the Indian restaurant market by providing better
dining experiences and continued efforts to provide value proposition and thus maintaining
customer loyalty. They have been regularly coming up with new ideas to attract and keep
customers. To retain their customers they have come up with various loyalty programs which
include Reward Points, VIP cards, discount coupons, Gift Cards.

They are trying to further improve the services by emphasizing on PHDs to deliver hot pizzas to
customers on time. They have also come up with low priced pizzas to attract low income group
customers and have been continuously striving to retain them. They have also come up with
activities of diversifying their product range. Earlier, they were only giving Pizza’s, but now,
they have also providing customers with Pasta and pastries.

They are also emphasizing on door to door promotional activities like giving discount coupons to
its customers to further increase the customer base.

Customer feedback programs were put into place in order to measure the customer experience
and also to uncover opportunities so, that the issues of the customers are addressed properly and
they are persuaded to visit often. 

Pizza Hut's program is a success for both its best customers and other customers as well.
 Personals Contacted

1. Kailash Arya
Unit manager
Lajpat Nagar
Ph: +91-11-42609090

2. Ankit
Corporate Manager
Ph: 9999010677

3. Yudhvir
Green Park, New Delhi
Ph: 26533985

4. Raj
Manager
Ph: 9990250538