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How Chipotle created a recipe for enhanced customer loyalty
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- Hoping to gain an in-depth understanding of its customers, the fast casual restaurant chain Chipotle completely revamped its loyalty program.
- Wanting to be a leader in customer loyalty, Chipotle asked PwC to help it determine the best way to develop and implement an exceptional customer loyalty program.
- Chipotle’s new rewards program garnered 1 million enrolments in the first week and 7 million within seven months.
Who would have thought combining buttery avocado, a dash of cilantro, and a hearty scoop of rice and beans would result in taste-bud heaven? According to folk history, taco vendor Juan Méndez created the modern burrito accidentally: He just wanted to keep his ingredients warm, so he wrapped them in a flour tortilla.
Méndez’s impromptu idea has since become a gustatory favourite. Fast casual restaurant chain Chipotle alone sells hundreds of burritos per location every day.
But inventing the perfect rice-to-beans ratio is a lot less complicated than creating a recipe that brings together everything you need to know about your customers, including the ability to identify and communicate with them individually, reward the most loyal ones and keep customers coming back for repeat business.
The desire to gain an in-depth understanding of its customers led Chipotle to undertake a holistic rethinking of its loyalty program, including the functions, businesses and partnerships. The goal: To connect digital and mobile tech with its app to create an extraordinary customer experience on the front end, and to use data and insights on the back end to drive continuous knowledge and improvement in every part of the business. Achieving this goal required linking disparate technologies, digital and mobile ordering, a reinvented app, and changes in the way the chain’s more than 2,500 restaurants serve customers.
As one executive declared, “We didn’t just want to be the best fast casual loyalty program; we want to be known among the leaders in loyalty.”
Cooking up an 18-month program
Chipotle brought in PwC US to collaborate with its executives on the best way to implement its new loyalty program and to quarterback the 18-month effort. The approach centred on a new way of working that PwC calls BXT (Business, Experience, Technology), which brings together business strategy, customer and employee experience, and technology experts in order to get multiple perspectives with which to transform a company. This way of working1 — constantly collaborating, being open to new ideas and giving individuals the leeway to test out those ideas — can bring people to consensus and yield faster results.
In Chipotle’s case, a loyalty program was the number-one request of customers, and that meant assessing what loyalty actually encompassed — beyond a tired ‘buy nine, get one free’ punch card. The program had to support an enhanced vision of what loyalty would look like, and getting to that vision involved multiple teams based in diverse locations.
The first play involved tossing all the restaurant’s pain points on the table and drawing up a customised change management playbook. The winning touchdown: capturing new sets of data (who is purchasing what, when, where, etc.) that could be tied to clusters of individuals with similar attributes that Chipotle could communicate with on a personal level as well as strategically. For example, it was helpful to know that mobile and online orders were increasing, but to significantly improve customer experiences and drive investments, the company needed to understand the patterns around when and where those increases occurred.
That kind of data helped Chipotle make key decisions, such as creating a ‘digital make line’. The company learned that when customers get to the front of the line at a restaurant, they don’t want their order delayed by an incoming digital order. That insight into the burrito-pipeline backup helped Chipotle determine the importance of creating a secondary food assembly make line that’s dedicated to digital orders.
Getting buy-in for big changes
As Chipotle began introducing new ways of working via sweeping system and process changes, it needed to get buy-in. Recognising that it’s human nature to resist change, we assembled an integrated program team to work with all restaurant functions and create a ‘we’re in this together’ way of working, with all ideas taken seriously. Vendors and their competitors worked hand in hand and focused on providing good service to Chipotle. A detailed technology roadmap made it easier to define the design and technology requirements of the company’s loyalty program, and also merged the needs of teams located around the world, while always keeping customers’ privacy top of mind.
Getting all systems to talk to each other was complicated, as different vendors were responsible for Chipotle’s secure account creation, offer management and loyalty/CRM systems. However, a ‘special sauce’ made everything click. The plan started by coordinating data flow and timing with the vendors in order to create a seamless customer account and loyalty profile.
Then, we helped reconcile digital online ordering data (which is real time) with in-restaurant data (which can be delayed a bit) to provide a fast, accurate experience for loyalty members that lets them rack up loyalty points immediately. In addition, the company built data systems that could understand the differences between base points and promotional points (for ordering an item a certain number of times via the app or online) to ensure accurate accounting.
‘Feed’ back
To test the loyalty program, Chipotle initiated a limited rollout in 150 restaurants in three markets: Phoenix; Columbus, Ohio; and Kansas City, Missouri/Kansas. The rollout also included a command centre, where Chipotle and PwC representatives, along with the relevant tech vendors, gathered to troubleshoot the system and resolve any issues that might arise. The response to the program was positive, and the technology worked as planned.
Feedback from the command centre was incorporated into the program’s national rollout, during which nearly two dozen teams from Chipotle, PwC and the tech vendors were taken to Chipotle’s support centre in Columbus, Ohio. There, the focus was on ensuring a successful launch and quickly triaging potential issues. The behind-the-curtain problem-solvers tweaked operations; the data crunchers determined which levers to pull for promotions and rewards; and the front-of-the-house employees (cashiers and food service workers) helmed face-to-face customer interactions.
Rewarding efforts
The effort paid off. In what a Chipotle executive called “the most seamless rollout ever”, the team helped tap into the company culture to bring its more than 80,000 employees together to make digital-driven operations and customer loyalty a reality. The payoff: a 99 percent increase in digital sales, one million enrolments in Chipotle Rewards program in the first week and seven million within seven months, and US$1.4B in quarterly revenue post-launch, an increase of 13.2 percent.
Chipotle has certainly come a long way since Méndez’s first accidental burrito.
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References
- https://www.fastcompany.com/90440894/how-corporations-can-create-change-at-massive-scale
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