Loyalty programs can be a challenge because in Brazil's anti-coupon culture. Pizza Hut is overcoming this hurdle with a combined loyalty and prepaid card.

For the past six years, Pizza Hut has offered a subset of its patrons a $22 gift card that can be used on later visits for discounts and free food. One in six people who has been offered the card buys it, and the vast majority use it before the discounts expire.

"Restaurants will get rid of a salad after two weeks if it's not working. So the fact it's been around for six years is telling," says Neissan Monadjem, CEO of E-Safetransfer, the loyalty and prepaid card company that works with Pizza Hut.

The card can be used eight hours after it is obtained, and the discounts expire in 30 days. Of those who bought the card, 5% used it right after the initial eight-hour period and 91% by the end of the 30 days. Seventy percent reload the card to use again.

Only 4% of enrollees never come back to use it, "and even then they're profitable because you've gotten the $22 for the registration," Monadjem says.

A mobile version and hybrid gift/loyalty cards are coming in the next phase, Monadjem says.

E-Safetransfer manages the program customization and card supply, while Pizza Hut handles the marketing and enrollment. The program works because Pizza Hut limits the number of people it approaches, and also positions the initiative as a way to build currency with the pizza chain rather than as just new way to use a coupon.

"People don't necessary like coupons because of the connotations with saving or budgeting money," Monadjem says. "We're convincing people to convert their cash into an electronic currency. They aren't getting a discount but more buying power." 

Pizza Hut tells its staff to offer the card to only one of every 12 patrons. This process avoids the appearance of a scripted campaign in which every customer gets the same sales pitch, Monadjem says.

"If there's two tables of six, only one person will get the offer, so you aren't being annoying," he says. "And since the $22 goes onto a prepaid card, the compensation is immediate. You're creating an encouragement for them to come back."

The upcoming mobile app will likely work in conjunction with the plastic card due to the country's limited smartphone penetration, Monadjem says. Brazil has about 20 million smartphone owners out of a total cell phone market of about 220 million devices.

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