Rewarding your Customers
- qualicominnovations
- Jul 29, 2016
- 3 min read
Earlier this month, well-known fast-food Mexican grill restaurant, Chipotle, announced their new Loyalty Membership Program called Chiptopia. Although it's only a temporary program that's available this summer from July to September, Chipotle's chief creative and development officer is looking to perhaps create a more permanent rewards program for their customers through this "trial run". So how exactly does Chiptopia work?
Similar to Starbucks, Chipotle's summer rewards program has three different "status levels": Mild, Medium, and Hot. To gain a "Mild" status, you have to purchase 4 meals in 1 month, "Medium" status, 8 meals in 1 month, and "Hot" status, 11 meals in 1 month. "Points" are accumulated per meal per day, and each customer is allowed only a maximum of one visit. So if you decide to purchase four meals in one day (for the family of course), all your meals only count as one visit/one meal. At the end of each month, purchase totals reset to zero and you'll have to restart the next month. Rewards are redeemed for each achievement of a new status.
Now Chiptopia is an amazing thing for their most loyal customers, because it means you get rewarded with free food for going to Chipotle so often it's basically breakfast, lunch and dinner for you (don't think that's healthy so if this is you I recommend you stop doing that. Sorry Chipotle). But critics have pointed out the consequences of having a temporary rewards program. According to Megan Flynn, EVP of Program Developmenet at Excentus, creating a loyalty program and having to take it out a few months later can be "disruptive." Another expert, Robert Passikoff, founder of Brand Key, calls Chiptopia "a continuity program—an initiative designed to get customers to purchase one more time, not drive loyalty." Passikoff has a lot of criticism for Chipotle's new venture. Loyalty, by Passikoff's definition, is when a brand is able to best meet a customer's expectation to the point that the customer is more likely to do business with that brand again, versus its competitors. Chipotle failed to meet customers' expectation of providing fresh, safe food, he notes, and free entrees won't repair that overnight. Passikoff then continues to say: "While many loyalty programs are still just undifferentiating rewards programs, it's best to think of a loyalty program as a program with rewards and not a rewards program...Loyalty, when done well, embraces a set of elements in its value proposition that goes broader than rewards, in a way that supports the brand and engenders loyalty to the brand not just to the program."
Many experts have compared Chipotle's "rewards program" to a cup of guacamole on the side of a burrito bowl, and that's not entirely a good sign (although guacamole sure is delicious). Chipotle has a lot to do in terms of upgrading their loyalty platform, including getting their infrequent customers to find value in their rewards program. It's a lot of meals for customers to indulge in to be rewarded, and a lot of money to spend in order to get that free entree - is it worth it? On the other hand, a number of experts have noted Chipotle's attempt in "working on their long-term relationships by capturing data on their customers to better understand their needs and motivations and to customize future marketing efforts, making them personally relevant and valuable.” This is a good mindset for Chipotle to have but the steps in actually achieving a more loyal customer platform is still under construction.
Now comes the question of: are you thinking of creating a loyalty membership program? You definitely should. Millennials are 2.2 times more willing than boomers to pay a premium for products and services if they can also earn loyalty and reward points. 81% of consumers are more likely to continue doing business with brands that offer loyalty programs. 75% of consumers say loyalty programs are part of their relationship with brands. It's obviously one of the best things to do in getting your brand out in the market and creating a customer platform, but don't lose sight on what a loyalty rewards program actually means and what you're trying to achieve with one.
On a side note, Retailarc does offer a Loyalty Membership System feature for our POS solutions, so if you're interested in one, give us a call! Maybe we can help you out!
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