What makes customers love your loyalty program? Part 3 of Papa Johns’ successful growth strategy
Welcome to the third part of our series on the Papa Johns case study, “Successful Growth Strategy of Papa Johns .” In the previous parts, we explained how we created a gamification-focused tiered loyalty program and AI-powered marketing campaigns and mini-games
to grow the revenue.
Today, we dive deeper, uncovering the secrets behind Papa Johns’ continued success in fostering unwavering customer loyalty. Get ready to discover advanced strategies and real-world tactics that will not only captivate your audience but also turn them into lifelong fans. Let’s embark on this journey to mastering the art of brand love!
The Main Problem of Loyalty Programs
One of the main drawbacks of any loyalty program in any industry is ensuring that customers understand how the program actually works. For example, many frequent flyers earn miles but have no idea how to spend them. This lack of understanding renders the program useless to many customers. So, what’s the use of a program that your customers don’t understand how to use?
In Papa Johns loyalty program, we decided to make the process as simple as possible.
Pillar 5: A loyalty program that facilitates gradual onboarding and activation, with cost-efficiency in mind
When we download a new app and can’t wait to open it and start using it, we often encounter a sign-up screen. 🙄 At this moment, your willingness to start using the app can decrease —a significant drop caused by the friction of signing up. This is a common mistake many companies make.
In the Papa Johns loyalty program, app, and website, we designed a seamless onboarding and activation process without any registration from the first screen to ensure we don’t lose a single guest due to complexity.
According to a study by Localytics*, apps with a smoother onboarding experience see up to a 50% higher retention rate in the first week. By simplifying the initial steps, Papa Johns ensures that new users can quickly engage with the app, driving higher customer satisfaction and loyalty right from the start.
* Localytics, “The Impact of App Onboarding on User Retention”
When a user downloads the app, they automatically receive Bronze status and unlock the ability to earn Bronze status rewards using points. The cost of the initial rewards has been intentionally reduced so that users can quickly experience the satisfaction of earning points and receiving their first gift.
Additionally, customers are almost guaranteed to achieve Silver status after their first purchase, making promotion feel real. This approach gives users a sense of victory and confidence, reinforcing the belief that it’s easy to accumulate points and get rewarded.
This strategy helps us address a common issue that apps face: users often churn after making their first purchase. The most challenging part is encouraging them to return and make a second or third purchase until it becomes a habit and they turn into loyal customers. With our gamified approach and explicit reward catalog system, users are continually motivated by the tangible benefits they can earn through any interaction with the app.
Tires and the philosophy behind progress bar
The idea behind progressing from Bronze to Silver status is to give users the feeling of their first success, or win. The upgrade from Silver to Gold status is designed as a ‘fight for one more order’ incentive. It encourages users to make an additional purchase, which they might not have done otherwise.
The main goal of the Gold tier is to motivate users who typically make only one transaction a month (about 70% of users) to make one more purchase. When a user is upgraded to Gold status, they are informed that their previous purchases have already been counted, making it easier for them to achieve the next status level.
The main problem with costs on rewards
Another significant philosophy that we discussed earlier and will now elaborate on is the aim to minimize promotional costs related to customer acquisition and retention, while reducing dependence on discounts. Papa Johns developed a cost-effective rewards catalog that allows guests to receive gifts based on their status and also to use their accumulated rewards for other purposes.
In the following part, we’ll explore how to correctly create a rewards catalogue and avoid running into financially negative results.
Pillar 6: Engaging and cost-effective rewards catalogue
Another significant philosophy that we discussed earlier and will now elaborate on is the aim to minimize promotional costs related to customer acquisition and retention, while reducing dependence on discounts. Papa Johns developed a cost-effective rewards catalog that allows guests to receive gifts based on their status and also to use their accumulated rewards for other purposes.
Drawing from insights gained in our initial loyalty program, we optimized the rewards catalog to emphasize low-cost complimentary items. This strategy enhances the program’s cost-efficiency by encouraging frequent redemption without replacing main dishes.
Our goal is to manage gift expenses by offering inexpensive complimentary items. These gifts from the catalogue are intended as complementary menu items rather than substitutes. They do not reduce the check size but aim to enhance user experience with a sense of joy.
Low-cost menu items:
- Engages customers by making loyalty rewards easily attainable
- Priced to encourage point redemption over expensive rewards
High-cost menu items:
- Reserved for higher-tier customers.
- The point cost is higher than that of low-cost rewards
Charity / Donations: Rather than ordering pizza for yourself, you have the opportunity to donate your points to charity, benefiting families in need.
- Platinum customers can donate the equivalent of one large pizza.
- Papa Johns matches with 3 additional pizzas, providing a meal for a family in need.
- Papa Johns distributes the pizzas and shares updates on social media
Digital / Experience rewards (coming soon):
- Redeemable by higher-tier customers
- Include unique promo codes for partner apps
Merch (coming soon):
- Super-cheap items like sticker packs at stores
- Expensive status items like the “Platinum Club” mug
Business results: cost-efficiency in action
What’s the point of any new update if it doesn’t bring about a business impact? In addition to delivering an unforgettable user experience for Papa Johns’ guests, it has also positively influenced the revenue growth of Papa Johns UAE itself, which is our primary goal. These metrics demonstrate how the brand’s incentive and reward strategy has increased customer loyalty and achieved related goals.
Our hypothesis that most of the rewards would be redeemed for low-cost menu items was correct. Despite the option to receive a free pizza using collected points, users preferred to redeem rewards for complimentary meal items, such as potato wedges. This behavior resulted in the average check amount not only remaining stable but actually increasing.
Are you ready for growth?
Do you want to start a game-changing loyalty program for your restaurant? Regardless of the size of your business, we offer you the chance to experience the best world practices and build real connections and relationships with your audience. This will not only make your guests truly love your brand but also boost your restaurant’s revenue. If you’re ready to grow, leave your contact information here. Our team will conduct a free business analysis of your restaurant and unlock the potential you can achieve by effectively engaging with your most valuable asset—your guests.
