• by Karlene Lukovitz  @KLmarketdaily, December 1, 2010

Building customer loyalty and lifetime value through cross-channel, one-to-one marketing is the marketer's equivalent of the Holy Grail. This is certainly true for restaurant brands, given the need for every competitive advantage in winning share of consumers' scaled-back eating-out budgets.

But achieving one-to-one marketing cost-effectively can sometimes seem as elusive as finding the legendary Grail.

Papa Gino's, Inc., the privately owned parent of the eponymous pizza chain and the D'Angelo Grilled Sandwiches chain -- which together have more than 370 locations, primarily in the Northeast -- set about its own one-to-one quest late last year, in conjunction with launching a new loyalty rewards program and investing in new technology.

The company had data for hundreds of thousands of customers, including opt-in emails collected via its existing online rewards and ordering systems -- and replacing an outdated physical punch-card system with a magnetic-strip swipe cards for in-restaurant rewards redemptions added the ability to capture customer data for those transactions, as well.

However, targeting and tailored messaging capabilities were lacking. "We'd been sending email blasts, but on a broad, generic basis," says Michael McManama, SVP brand development for Papa Gino's, Inc.

The ultimate goal: Create measurable, highly interactive customer relationships on a large scale in order to drive memberships/ activations for the new rewards program, and then build usage frequency. To achieve those objectives, the company wanted to send targeted, personalized offers to loyal customers, and employ transactions and other customer behavior data to respond immediately with subsequent targeted offers.

Part of the corporate strategy is driving maximum sales from cross-promoting and motivating/rewarding customers of one chain to also buy from the other. Under the combined rewards program, each $1 spent on either Papa Gino's or D'Angelo items equals one point, and the company loads $5 onto a card each time it reaches $50/points. "If you have lunch at D'Angelo during the work week, then order pizza from Papa Gino's on the weekend, you're building points on your card through both restaurant concepts," notes McManama.

Papa Gino's worked with Conversen to build a cost-effective database/ campaign-management system. The system provides an integrated customer record view across data sources and filters data for segmentation purposes, generates the personalized messages/offers, tracks responses and updates the customer record in real-time. The company worked with loyalty marketing agency/online solutions provider Open-i Media to create the strategy for aligning message creative and timing with audience segments.

Papa Gino's first campaign employing the new capabilities focused on this year's NCAA Final Four weekend. The company sent an email offer to a targeted group of sports enthusiasts, offering rewards bonus points for ordering within a given time frame, then tracked open and purchase rates. The NCAA effort yielded positive results and provided a clearer profile of best customers that reinforced Papa Gino's focus on sports marketing, according to McManama.

Since then, Papa Gino's has implemented similar, successful campaigns around sports events such as Red Sox and Patriots games -- as well as a rapidly growing number of other campaigns and strategies.

Two email-focused efforts launched within the past week, for example, are rewarding best customers/highest-frequency purchasers with points and perks, and reactivating customers who have not purchased within the last 60 days by offering points/rewards for purchasing within a set time frame, reports McManama.

Sweeps tied to the rewards program have been very successful, he says. Program members can earn one automatic sweeps entry for each card swipe/transaction, or by using their membership code numbers to enter as often as daily on the sweeps site or through links on the chains' Facebook and Twitter presences. For example, a current "Swipe and Soar" sweepstakes is offering a grand prize of two round-trip JetBlue flights for any destination served by the airline, weekly giveaways of pizza, subs, chips and drinks, and daily/weekly awards of bonus reward points.

To drive awareness of the rewards program and activations, Papa Gino's includes messaging for the program within TV, radio, newspaper FSI and online advertising, as well as social media and on-package promotions.

At the end of its first year, marked in early November, the new rewards program -- driven with the one-to-one marketing capabilities -- has exceeded all targets, including new membership/activation and sales goals, and email open/read rates that are beating the industry averages, according to McManama.

On the email front, the efforts have underscored the role of three targeting variables in determining response: offer, subject line and, first and foremost, recipient/customer segmentation, he says. The ability to target customer groups based on behavioral/transaction and other data with relevant, appropriate offers and messaging and respond immediately with the next targeted offer may sound somewhat fundamental in theory, but it's revolutionary in practice, McManama observes.