MarketWatch’s Tonya Garcia addresses a loyalty program that Domino’s Pizza Inc. has implemented. This rewards program involves giving out 10 shares to 25 rewards members each month in order to generate more loyalty. The total number of shares given out will be 3,000 and according to the director of loyalty marketing at Domino’s Pizza, Steve Kennedy, this number of shares will not dilute current shareholders’ value.
The issue with this program stems from a cost-benefit-analysis perspective. Even though this demonstrates a considerable amount of attention and rewarding spirit towards customers, the potential costs of the concept do not match up with, even the best case of, the returns. Vivaldi consultant, Jenifer Ekstein, offered her expertise on this matter, stating that, “Loyalty programs should build customer loyalty while also increasing customer retention. Only giving away limited shares a month to a small portion of the customer base makes this type of loyalty program unscalable unless Domino’s intends to offer more stock, which would dilute the current shareholders’ stocks.”
Read the full article on MarketWatch here.