Patrick Doyle, CEO of Domino’s Pizza, discussed the importance of data analytics as part of the Economics at Work lecture series Friday. Doyle graduated from the University of Michigan with a degree in economics in 1985 and began working at Domino’s in 1997.
Doyle began by discussing the company’s revitalization under his direction and illustrated their three-step plan for success. The company began by refining their pizza flavors, improving customer convenience and developing their data analytics system. Since the implementation of these programs, Domino’s has seen dramatic progress in their business.
In 2009, Domino’s released a commercial depicting customer dissatisfaction in the taste and quality of their product. In the advertisement, Domino’s emphasized it’s desire to improve their flavor and brand.
“To date, we remain the only brand ever to go out and spend tens of millions of dollars to tell customers exactly how crappy our pizza is,” Doyle said. “We launched on Monday with that advertisement and by Wednesday we were up double-digits… it was the strongest quarter in the history of public restaurant companies at the time.”
Domino’s recognized the advantages of redesigning their stores and identifying more convenient locations for customers. They realized the effects of location on their customer’s purchasing habits and positioned their stores accordingly.
“People will not walk past five other pizza places to pick up a pizza,” Doyle said. “I don’t care how good your pizza is, convenience starts to override the quality of the food. Basically, people will not go more than a mile to pick up their pizza — for the most part, they won’t go more than a half a mile — this means we have to have more stores.”
Doyle also emphasized the value of data analytics and media design for business success.
“Data drives everything: We know who our customers are, we know what they eat, which devices they prefer, we know where they receive their messages and most importantly, we know what changes purchase behavior and have modeled all of that and know exactly what it’s going to do,” Doyle said. “Math is driving our business.”
He provided an example of research on the function of Domino’s website allowing customers to order online. Domino’s realized the difference between the term “order” and “order online” led to a 0.86 percent increase in the number of people who purchased. They also noticed an increase in online orders led to an increase in spending and a decrease in coupon usage.
Domino’s also began employing social media tactics to track customers’ habits. Domino’s negotiated with Facebook in order to use their social media site as a way to analyze customer purchases as well as promote their product.
“We had to get very aggressive with (Facebook) and say ‘unless you let us run tests on your site and track people all the way through the site, we will not buy advertising’ … I think we spend $20 to 30 million with them,” Doyle said.
Doyle discussed the effects of the above changes in the success of his company, stating nearly one-third of all pizzas delivered nowadays are from Domino’s. Domino’s ranked number one on the successful growth rates of the top 10 publicly-traded restaurant brands with eight percent growth, followed by Starbucks at six percent.
“There are specific things that we have done that I’ve talked about: math and analytics is what are driving this at a pizza company, which is kind of crazy,” Doyle said. “We are lot bigger outside of the U.S. than inside of the U.S. … We are quickly approaching one-in-three pizzas delivered is from Domino’s.”
LSA freshman Colleen Jones has attended the previous Economics at Work lectures and said this was her favorite so far.
“I learned a lot about how data analytics play into business,” Jones said. “I learned a lot about how economics and statistics can help grow businesses, which is really cool and inspiring.”
LSA junior Arjun Kishore thought the lecture was eye-opening, as it helped him recognize the importance of data analytics in economics and business.
“I felt it was really great,” Kishore said. “It opened my eyes up to the importance of data in the eyes of businesses, because I could never imagine it being so important in something like pizza, as Patrick was saying.”