In 2003, Domino’s Pizza started requiring its franchisees to adopt the company’s own point-of-sale system (POS) system, internally called PULSE, instead of letting franchisees choose third party POS systems that could integrate with Domino’s IT systems.
That strategy gave the company the ability to seamlessly control the entire ordering process and add functionalities such as online- and mobile-ordering, voice ordering, and contactless payments.
At the same time, Domino’s clever marketing convinced consumers that it has the snappiest ordering process among all the pizza vendors.
How Domino’s Pizza reinvented itself
In 2009, Domino’s changed its pizza recipe and admitted that its previous version was awful in a series of brilliant commercials that featured the tagline, “We’re Sorry for Sucking.” Executives even read out vicious customer comments on camera resembling the Jimmy Kimmel ‘Mean Tweets’ show.
Domino’s (which is, incidentally, headquartered a mile from my home in Ann Arbor, Michigan) used its PULSE POS system as the centerpiece of a technology ecosystem that has helped it flourish as an “an e-commerce company that sells pizza.”
Digital sales skyrocketed as the company tapped into greater demand for convenience, and Domino’s carved a bigger slice of home delivery and food pickup market. Morningstar’s R.J. Hottovy notes that Domino’s laser-sharp focus on improving online ordering has paid off leaps and bounds:
Technology plays an important role in Domino’s efforts to develop and enhance its brand image. Domino’s global technology platform includes a digital loyalty program with a rewards system, electronic customer profiling, geo-tracking of pizzas being delivered to customer homes, and customer geo-tracking to have carryout pizzas ready just as they enter the store. Other innovations include high-speed ovens (which reduced cooking time to four minutes) and Pulse (a unified point-of-sale system,) which have re-engineered fulfillment processes to be best-in-class. Pulse integrates all orders (regardless of origin) into a seamless interface that provides detailed monitoring of every aspect of the ordering, cooking, fulfillment, and delivery processes, which reduces bottlenecks and minimizes downtimes, enabling Domino’s to offer faster delivery times than competitors.
By owning the entire customer experience, Domino’s has been able to provide a consistent experience for customers irrespective of how they order, use data to create value for customers, and iterate quickly. No wonder, then, that Domino’s share price is up 28-fold since its 2004 IPO!
Idea for Impact: Don’t outsource what you’re supposed to do best.
Smart companies understand that outsourcing can result in loss of control over key capabilities. That can impede the company’s ability to improve its efficiency in serving customers or introduce changes in response to shifts in the marketplace.