Caroline and I have been talking a lot lately about the differences between True Loyalty and transactional loyalty … she had an experience the other day that showcases this difference.

Caroline and her sister/roommate Emily started ordering pizzas from Home Made Pizza Company a few years ago. (Home Made Pizza Company prepares fresh, uncooked pizzas that you can pick up at their store to cook at home.)

Here’s the short version of what happened when Caroline went to pick her recent pizza order:  When she arrived and gave her name, she also presented her completed punch card that showed this, her 10th, pizza should be free.  When she got her pizza she saw it was made with the wrong ingredients. The employees working in the store were not very helpful about re-doing the order, and it took about 40 minutes for the new pizza to be made, without much communication during that time about the status of her order. At the end of the ordeal they started to ring her up on the cash register, and she reminded them about the 10th pizza free. “Oh yeah,” was the response and they gave her the pizza for free.

If Home Made Pizza Company wants to create loyalty, they can’t delegate that loyalty building to a program. Loyalty is not created by programs. It is created by humans.  You can give away the 2nd pizza free, but if your company is not good at basic human interaction with customers, you will not create loyalty.  On the other hand, businesses with the best loyalty don’t build it with programs, they build it with relationships.

I don’t know much about Home Made Pizza Company, but I can see from their website that they have 21 stores and a few more on the way.  At that size, they probably have a corporate office, where the 10th pizza free promotion was created.  True Loyalty is not created in corporate offices.  It is created in one-on-one interactions with customers.  Transactional loyalty is like caffeine; it will give you a short burst of energy, but you’ll pay for it later.  Keep the program, if you want, but not at the expense of creating True Loyalty.


  • Bonnie Larner
    Nov 17, 2008 - 14:38 pm

    *Businessses with the best loyalty don’t build it with programs, they build it with relationships.*

    Couldn’t agree more Steve. Question is, why is this so difficult for business to believe/accept/implement?

    Perhaps if marketers related the relationship idea to CEO’s friends and family- treat people who support your business exactly as you would treat your friends and family – they might identify with it more? Don’t have the answer. Only the question!


  • Steve Yastrow
    Nov 18, 2008 - 00:00 am

    Bonnie – you are totally right that businesses need to look at marketing through the lens of real life relationships, not through the kaleidoscope of brute-force marketing tools.

  • shane Colton
    Nov 26, 2008 - 11:00 am

    Steve — Our free pizza Loyalty Program was started by our Founders when they opened their first store in 1997, years before we ever had an office with more than 2 people in it. It’s pretty tough to hear Caroline’s experience used as a launch pad for your service philosophy — sounds like what she went through at the store was a simple mistake. Happens everywhere, every day. As for the employees being somewhat difficult, that’s the kind of thing everyone here at HomeMade hates to hear about given the time and energy we put into training our employees to treat customers the way they’d like to be treated.

    What you didn’t mention or probably didn’t know is that every time a customer comes in for the first time and signs up for a HomeMade Loyalty Card, they receive a message from the Store Manager the next day asking them to comment on their experience. We get a whole lot of comments back — most good and a few bad — all of which we take to heart and use to make adjustments accordingly. Not only that, I respond to each of those comments personally in order to keep the lines of communication with our customers open. If they’re unhappy in any way, we comp their meal. If they’re happy — fabulous, I just write back to let them know they’re being heard and to encourage them to stay in touch down the line to let us know how we’re doing.

    Maybe it’s not groundbreaking — indeed, it’s the way any sane company should conduct themselves when trying to embrace their customers and attract new ones — but it’s something we like about ourselves even as we’re constantly looking for new ways to improve the system.

    Here’s a post from another blog to referring to what I’m talking about:

    Anyway, thought I’d let you know where we’re coming from. As for Caroline,
    as always, she can send us a message at to let us know about her experience and I’ll get back to her.


  • Steve Yastrow
    Nov 26, 2008 - 11:38 am

    Shane –

    Thanks for your comment. Yeah, it’s tough to control every customer interaction in a multi-unit service business, which is why getting front-line employees to recognize their personal roles in building customer relationships is so important. Wouldn’t it be amazing if every employee interacted in the way Mike (from Ben’s blog post on churchofthecustomer) did? Wow. (I’ll admit, one of my favorite parts of consulting is getting front-line employees to “Be the Brand” and take a personal role in customer relationship building. Very rewarding work)

    I see that you guys have the right ethos, and I think you illustrate my point well: Loyalty is a human concept, not a promotional concept. When Home Made Pizza does it in a human way, it’s powerful. When the human piece didn’t happen, as with Caroline’s situation, loyalty just became a program.

    I’d love to hear more about you guys. Please get in touch if you’d like to.


  • Buy 18, get your 10th free
    Nov 26, 2008 - 12:11 pm

    […] a related front, check out the thoughtful comment from Shane of Home Made Pizza Company on this post I wrote about their slip into “Get your 10th free” transactional […]

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