CASE STUDY
CAPILLARY DELIVERS 5%
INCREASE IN SALES – MORE
THAN $2 MILLION - TO PIZZA
HUT IN LESS THAN 18 MONTHS
Pizza Hut is a flagship of Yum! Brands, which also has KFC, Taco
Bell, A&W and Long John Silver’s under its marketing umbrella.
Pizza Hut is the world’s largest pizza chain with over 12,500
restaurants across 91 countries.
Pizza Hut wanted to create a competitive advantage in its market by utilizing predictive analytics to engage every customer
immediately prior to their next expected purchase. With a massive customer base and highly varied purchase patterns, Pizza
Hut turned to Capillary’s Intelligent Customer Engagement™ solutions to power automated life-cycle engagements, which
deliver the right offers to the right customers at the right times. Capillary has run over 17,000 personalized marketing
campaigns, doubling top response rates achieved on prior marketing campaigns and driving a 5% increase in sales.
Industry
: Quick Service Restaurants
Geography : Eight countries including
Singapore, Hongkong, Bahrain,
Malaysia and India
Key Challenges
> Reduce customer attrition and visit latency
> Increase customer order value through relevant
cross- and up-sell
> Engage all customers at optimal times for their
next purchases
Solution
> Capillary Customer Intelligence TM
> Capillary Lifecycle Marketer TM
> Capillary Campaign Manager TM
Highlights of Pizza Hut’s Customer
Engagement Program:
> 41% of SSTG contribution from Lifecycle
Marketing at just 4% of usual cost
> 38% and 37% respective increases in campaign
response rates and sales with only a 14%
increase in communications
> 200% more customers responding to Lifecycle
Campaigns
> Consistent 5% SSTG each month
> ROI factor of 5.34 in 2012
BUSINESS OBJECTIVE
As in any quick-service restaurant environment, Pizza Hut works to serve hundreds of
thousands of customers with unique tastes, behaviors and consumption habits. The
brand’s market is highly saturated and it had been suffering from high discount
margins, dominance of impulse buys and inconsistent repeat purchase behaviors.
Customer frequency and average spend per visit were falling and profitability was
diminishing. Serving an extensive range of pizzas and Italian dishes, Pizza Hut needed
a loyalty management solution that could predict what each customer might want
and leverage powerful automation to engage customers with the right offers, for the
right meals, at the right times.
WHY CAPILLARY?
“Getting and staying ahead of the customer engagement curve is a perennial
challenge. Reaching out and convincing customers to return to our outlets
requires much more than just a loyalty program. We wanted to know
everything about each of the thousands of customers who walk in and order
food in our restaurants every day. Capillary was onboard from the first
interaction. Their analysis of customer behaviors based on sub-groupings
and categorizations across purchase patterns and brand expectations allows
us to continuously engage our customers with personalized and timely
communications. We now serve a whole lot of happy customers.”
- Anup Jain, Director of Yum Brands
THE SOLUTION
Pizza Hut customers are now segmented into four high-level groupings based on
buying behaviors and brand affinities – High Loyal, High Value, Deal Seekers and Value
Conscious. For added granularity, these four segments are divided further on the basis
of preferred tastes, order patterns and tendencies to lapse. This second tier of
clusters is then micro-clustered even further on the basis of group sizes, frequent
order items and preferred times of order, resulting in some 17,000 customer
micro-clusters. Capillary builds targeted offers based on customers’ behavioral
trends, such as preferred menu items and seasonal fluctuations. Capillary also utilizes
© Capillary Technologies Pvt Ltd, 2013 All Rights Reserved
Compared to previous campaigns,
more than 2X increase in Average Hit Rates
due to Personalization
Only 4% of the total cost was incurred for Regular Lifecycle
Campaigns which contributed to 41% of SSTG (Same Store
Transaction Growth) indicating its high effectiveness
9%
7.35%
Hit Rate
Bulk SMS
5%
Hit Rate
Clustered
2%
Hit Rate
Lifecycle
2.92%
2.48%
2%
1%
High Loyal
High Value
2.49%
2.10%
1%
Value
Conscious
Deal Seekers
1.30%
Growth Due to Customer Engagement (%)
24%
25%
20%
14%
15%
% Cost Contribution
% SSTG Contribution
10%
5%
5%
4%
0%
One-Timers
16%
14%
OneTimerActive
Regular
Lapsed
Regular
OneTimer
Lapsed
Bulk Promotions
TCO vs ROI of bulk promotions and lifecycle marketing
Lifecycle marketing kickoff
9
7.8%
7.5%
8
7
6.4%
6.3%
6
6.0%
5
4
2.8%
3
5.7%
5.8%
5.5%
5.4%
5.6%
5.5%
Lifecycle marketing has
consistently maintained an
average of 5% SSTG
3.4%
2.5%
2
0
38%
30%
5%
Response rate improvement via lifecycle marketing
1
39%
35%
5.7%
5.2%
41%
40%
% Contribution
7%
45%
A 38% rise in test responders and 37% of test sales was
observed with only 14% increase in number of messages
sent
0.6%
0.1%
Jul ‘11
Oct ‘11
Jan ‘12
Apr ‘12
Jul ‘12
Oct ‘12
Jan ‘13
SSTG Due to Campaigns
Same store transaction growth (SSTG)
1920 Customer
Segments
15360 Customer
Segments
One
Timers
Regular
Customers
2 segments
Group
Size
Behavioral
Clustering
4 segments
40 segments
Favorite
Pizza of the
customer
Taste
Clustering
4 segments
6 segments
Life Cycle
stages
Favorite
Pizza of the
customer
40 segments
4 segments
Weekend/
Weekday
Life Cycle
stages
6 segments
Weekend/
Weekday
4 segments
17,280 Unique
micro-segments of
customers for highly
precise targeted &
personalized
marketing
demographic intelligence such as regional variations, ethnic diversity, religious
festivals and family purchases; based on loyalty KPIs, the solution identifies the right
times for each customer segment to be engaged with specific offers. Capillary’s
Campaign Manager then leverages marketing automation to deploy thousands of
campaign variations to Pizza Hut’s diverse customer base each week.
BUSINESS BENEFITS
For Pizza Hut, Capillary’s targeted life-cycle based campaigns have delivered 5%
same-store transactions growth (SSTG) and over 5X ROI. The brand now enjoys
reduced customer attrition, decreased discounting, accelerated repeat orders from
first-time customers and increased order sizes. Capillary also recently worked to
promote Pizza Hut’s pasta product line and engage customers on preferred channels
to increase purchase frequency by 28%. Capillary now works with Pizza Hut in eight
countries.
”Capillary has been our partner since November 2011. Using Capillary’s
Intelligent Retailing Solutions, we have been able to unlock insights from our
database and offer targeted customer messages and deals to drive
incremental sales growth for our delivery business. Capillary’s analytical
solutions have helped us to measure customer responsiveness to different
product segments and associated repeat tendencies, enabling us to better
design product-launch campaigns. We have also seen better ROI on our
marketing investment. The teams at Capillary are supportive and prompt; they
are a true partner to us.”
- Juliana Lim, Senior Marketing Director
CLIENTS INCLUDE: PUMA | PIZZA HUT | UNITED COLORS OF BENETTON | CHICCO | NOKIA | JEAN CLAUDE BIGUINE
JACK WILLS | NIKE | MARKS & SPENCER
San Francisco | London | Beijing | Singapore | Johannesburg | Dubai | Bangalore | Delhi | Mumbai
Visit www.capillarytech.com for more details.
For queries and more information contact us at : info@capillarytech.com
© Capillary Technologies Pvt Ltd, 2013 All Rights Reserved