This Week In Retention: Two Strategies to Keep Customers Engaged; A Playbook for Chipotle
May 19, 2016
We all know that the first step to retaining customers is engaging them. But digital technologies offer so many options that it’s hard to know which might work for your brand. Here, a look at two strategies proven to keep customers connected, as well as an analysis Chipotle’s retention troubles—and a possible solution–in the wake of its disastrous E. coli outbreak.
It’s All About Surprise and Delight
Our cup runneth over: The average U.S. household has 29 loyalty program memberships, according to market research firm Colloquy. And loyalty programs continue to grow: From 2012 to 2014, the total number of loyalty program members increased by 26 percent, to 3.3 billion. The downside? Fifty-eight percent of loyalty program members do not engage, in any way, with the loyalty programs they join.
“Think of the U.S. loyalty market in terms of a crowded party where half of the party-goers are standing in the corner without mingling,” said Jeff Berry, Colloquy’s research director, speaking to Loyalty360.
How, then, do marketers start a conversation with their reluctant guests? One strategy, Loyalty 360 says, is to motivate them with surprise and delight. Instead of providing the same reward over and over—which leads to fatigue and lack of interest—unpredictable positive rewards and experiences will engage them.
Panera Bread may surprise MyPanera members with complimentary bakery items, invitations to special events, or recipe books. Sephora’s Beauty Insider rewards program uses similar tactics, marrying a traditional rewards program with a bit of unpredictability. Members earn points that can be redeemed for trial products, which are always being refreshed and updated. Personalize those surprising, delighting experiences, and your customers will walk away feeling like the ones in millions they are.
Harnessing the Power of Post-Purchase Messaging
Who wants to be marketed to? Generally, nobody. What customers want is a deeper, personalized connection with brands, says research from direct marketing firm ERDM. One under-appreciated way to do that is with personalized post-purchase communications, says ERDM president Ernan Ronan. These create customer engagement, and boost retention and repeat sales.
For those who doubt the power of a non-transactional email, welcome emails have a 50 percent open rate, according to marketing education and research site MarketingProfs. Getting an email out to a customer after their purchase can be equally powerful. According to Roman, a thank-you note reinforces confidence in buying decisions, in turn aiding retention. It also shows the customer that he or she is valued for more than just a transaction. Never underestimate the power of warm fuzzies.
A Playbook for Chipotle
November’s E. coli outbreak is continuing to exact a steep cost on customer retention at fast-casual star Chipotle, and analysts are calling on the company to devise a forward-looking loyalty program that goes beyond basic promotions.
Before the E. coli outbreak, Chipotle had one of the most loyal followings in the fast casual restaurant industry, with the average Chipotle customer visiting more than twice a month. Now, more than half of Chipotle’s most frequent customers have not eaten at the restaurant in three months, according to an April earnings call reported by Bustle.
Chipotle rolled out a buy-one-get-one-free text code in February, which got customers in the door—just not the loyal ones Chipotle wanted to reach. During its earnings announcement, Mark Crumpacker, the company’s chief creative and development officer, said Chipotle was “exploring a limited-time frequency incentive designed to reward our most loyal customers for eating frequently at Chipotle this coming summer.”
While financial analysts uniformly view the loyalty program as the right lever for Chipotle’s comeback, they’re also looking for more than just a short-term plan. The Street says Chipotle should be looking at a “splashy new digital loyalty program.” Investment research site Seeking Alpha said the loyalty program should be a permanent “data-gathering, customer-focused experience (a free burrito on your birthday?) that can alert customers to specials, new store openings in their area, and customer-focused news.” It can’t happen fast enough.
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