Case Study: Pizza Chain Uses Customer Data For Targeted Offers
Merchant: Patxi’s Pizza
Location: California and Colorado
Size: 12 Locations
Bottom Line: Merchants should be taking full advantage of any data they’re able to collect from a customer loyalty program.
One hot topic within the small business community is what merchants should do with the data they’re able to collect from their customer loyalty programs. At Patxi’s Pizza, a pizza chain with 12 locations in California and Colorado, marketing manager Jordana Heinke believes she has found the answer. Heinke uses the purchasing data she gathers through her company’s mobile loyalty program to send highly-targeted offers to her most frequent customers. “We can immediately see changes happening with volume of interest and redemption if we change a reward,” Heinke says. “It helps us to figure out what incentives are more effective than others.”
Since its debut in February 2013, Patxi’s Pizza’s mobile loyalty program has helped the company increase both transaction volume and spend averages. “At the beginning of the program, we looked at our average check size and used that as a benchmark tool. From there, we took a look at the data after several months and then several more months, collected more data, and we could see that there was an uptick in not only average spend, but frequency and visits, especially after the first reward was redeemed,” Heinke says.
Patxi’s program is card-connected, which means customers need to use the same credit card or debit card each time they eat at Patxi’s in order to earn rewards. Heinke says she has spoken to some customers who were hesitant to sign up for a loyalty program using their credit cards, however those typically aren’t the customers her business is most interested in reaching. “We’re targeting people who are excited about technology,” Heinke says. “[Most] people are familiar with these types of loyalty programs. Maybe they’ve linked their card to something else previously, so it doesn’t come as a huge shock to most of our customers. There are a few that might feel a little bit turned off by it, but again, those aren’t necessarily the people we’re targeting.”
Heinke is quick to point out that her company doesn’t store any credit card data on its servers, and neither does the vendor that powers the program, Thanx. “It’s very safe for the user because nothing is being stored. It simply links their card, so for future orders, anything that comes up on their credit card that they spent at Patxis immediately gets credited on their Thanx app,” Heinke says.
Partnering with Thanx was a strategic decision, motivated in large part by the company’s willingness to allow Patxi’s to customize its loyalty module. “We wanted something that was going to be really agile and flexible as we grow, because we might want to offer different types of rewards, a) to different types of customers, b) to different markets, or even c) by store,” Heinke says. “Some stores might need more help with their lunch business and some might need more during happy hour. The ability to change rewards on a dime was really what drew us to Thanx.”
Now that Patxi’s program has been running for nearly a year, Heinke says she’s becoming more confident in its success. In addition to offering rewards like cash back and two-for-one beers, she’s created a program for Patxi’s VIP customers that couldn’t have been possible without the data she’s collected through Thanx. The VIP program targets about 2% of Patxi’s most loyal customers, with membership based on how much a customer has spent during a preset amount of time. “That program is going to be really valuable because it gets them excited. It gets them bringing a friend in,” Heinke says. “It’s a nice referral tool.”
Over the course of the next year, Heinke is planning to continue Patxi’s quest into mobile. The company will be launching a new online ordering module in all of its 12 store locations, along with an app that customer can use to get pizza on-the-go. Heinke says she’s also experimenting with mobile pay and digital wallet services.
Patxi’s Pizza is an example of a business that’s taking advantage of the data its mobile programs generate. In addition to rewarding frequent customers and encouraging those customers to spend more at each visit, Patxi’s is using the data it gathers to make smarter marketing decisions. Although the company has received some pushback from customers who are hesitant about participating in a card-connected program, Heinke says the majority of customers — and in particular, the young, tech-savvy customers her business is most interested in courting — have no reservations about linking their credit cards in exchange for the chance to earn automatic rewards.
Stephanie Miles is an editor at Street Fight.