Before digital loyalty programs, restaurants had no real way of figuring out which visitors were likely to return. And, what’s worse, they had no way of effectively incentivizing visitors who could become loyal to return.
Today, identifying and nurturing potential loyal customers is more important than ever; people have a seemingly endless array of options when it comes to their meals. They can purchase ingredients at the grocery store to cook at home, or have ingredients delivered to their door using increasingly popular services like Blue Apron. For a quicker meal, they can buy pre-prepared hot food from supermarkets or convenience stores, order takeout, or go out to eat.
How can your restaurant compete?
The answer is as simple as it is challenging: Get customers to meet the four-visit milestone.
Obviously, you want people to visit, and to visit often. But your goals can be much more specific than that. Data shows that each visit increases the chance that a customer will visit again, effectively choosing you over your competitors.
I recently sat down with my fellow product manager, Joel Udwin, to talk about where our worlds collide: integrating mobile at the point of sale. We like to think that a mobile strategy is placed in the pocket of the consumer, but it doesn’t stay there – mobile engagement must integrate with in-store operations to be successful. Joel, who manages our mobile products, explains why:
Q: Why is a POS integration important when it comes to mobile engagement?
A: Wow, Paige. I thought that since we worked together, you would give me easy questions, but you just knocked it out of the park. [Chuckles] I don’t like bucketing mobile into this separate silo of mobile engagement. When we talk about mobile engagement, we are really just talking about guest engagement. At restaurants and convenience stores, a large portion of customer engagement occurs at the point of sale, where most transactions take place today. Implementing an engagement strategy without considering your point of sale is like driving a small car on an icy road – you’ll move around, but you won’t necessarily be able to control where you are going. Basically, if your engagement program doesn’t translate at the POS, your employees will be too frustrated by it to evangelize it, and your guests won’t want to use it. Successful mobile engagement programs need to work in harmony with point-of-sale technology and operations.
The only way to know if your loyalty or other guest-engagement campaigns are succeeding is to track them and analyze your results. Unfortunately, even numbers that appear straightforward can contain hidden implications.
Depending on how you look at your data, a campaign can seem like a roaring success or a misfire. But sometimes it requires further analysis to determine if your initial assessments are accurate.
In worst-case scenarios, you may discover that a campaign you decide to run again based on previous positive data had been a misfire the entire time. Not only are you producing unfavorable results, but you are also wasting time, manpower, and money.
For example, let’s say you set up a “We Miss You” campaign. These are fairly common loyalty program campaigns in which you send out an offer to people who have not visited your stores in a while to encourage them to return. After deciding that you’re going to set up a campaign for people who have not visited in 60 days, you send them a coupon for 15 percent off an entrée.
Once you’ve run the campaign and examined your results, the numbers look great. Many guests who had not visited in 60 days made visits during the campaign period and used the coupon you sent them. It seems like the campaign was a resounding success!
But was it truly successful? Sometimes results in campaigns like this are deceiving. […]
For a quite a while, Chipotle executives didn’t believe loyalty programs were for them. In fact, Mark Crumpacker, CCO/CDO of Chipotle, said in September 2015*, “We don’t believe the general supposition that loyalty will make less frequent customers more frequent.”
However, from the fourth quarter of 2015 into the early second quarter of 2016, Chipotle had a few health scares that contributed to its stock prices — and sales — to take a tumble.
In summer 2016, Chipotle was ready to rethink its stance on loyalty programs and launched its Chiptopia Summer Rewards, a three-month tiered loyalty program.
It’s reasonable to assume, based on the structure of the program (that we’ll cover next) and the business challenges they were experiencing, that
Chipotle’s motivation in creating its loyalty program was to increase visits.
Note: Before we go any further, we want to make it clear that Chipotle is not a client of Paytronix. This blog post is designed to analyze the Chiptopia program, share what worked and what didn’t, and help you think — or rethink — your own loyalty program.
The Chipotle Loyalty Program Structure: How It Worked