More Misleading Stats – Handle With Care!
Is Dunkin Donuts Perks really driving a 20% increase in year-over-year sales for the chain? That would be incredible, and maybe the best performing loyalty program of all time! At least that is the claim put forth in this article from Loyalty 360. The article further goes on to state that the program has led to a 40% rise in consumer spending, and a 30% increase in visits. But is this real, or even possible?
I did a little digging, and I can’t see where those numbers came from. According to the company website, each US store generates approximately $936M in annual revenue. If open every day of the year, that is $2,564 per day. The average spend per visit is $4.86, so if you round to $5 for simplicity, that means 513 visitors per store per day. With 8,082 US stores, that means 4.15MM Americans visit Dunkin Donuts every day. Wow. But 2014 same-store sales growth was only 1.6%, against a total revenue growth of 4.9%, meaning most of the growth came from opening new stores, not from existing customers visiting more. Tougher to find current stats on visit frequency, but this report from 2008 indicated 3.1 visits per month, so let’s say 4 per month today, meaning 31MM Americans visit Dunkin every month.
Now let’s think about DD Perks. The program has signed up 2.5MM members since launching in January 2014, giving it a penetration of about 8% of the monthly store visitors. If you assume DD Perks members are responsible entirely for the 1.6% year-over-year sales increase, and the remainder of visitors have kept their frequency constant, that means DD Perks generated an average increase in visit frequency of 20% among its members. That is pretty much what Loyalty 360 reported as the rate of year-over-year sales increase for the chain, not just for a segment of the population, and nothing close to their claim of 30% increase in visit rate overall, or 40% increase in consumer spending overall. By my calculation, that is the maximum increase in visit frequency you could potentially see for a small segment of the audience, not for the chain.
In any event it seems hard to believe that even a large proportion of the chain-wide increase was driven by DD Perks, because that would discount the impact on the broader population of all of the other marketing and promotional activity of the brand, which is fairly substantial. DD Perks may yet be viewed as a success, but by some different measure.