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
The Chiptopia program ran from July 1 through September 30, 2016 and consisted of monthly tiers. Each month, a visitor could purchase four entrées and get one free. This brought them to “Mild Status.”
If they then bought four more entrées (for a total of eight), they would get their second free entrée and attain “Medium Status.” Purchasing three more entrées (for a total of 11) would earn them a third free entrée and “Hot Status.”
Achieving Mild Status for all three months earned a visitor one more free entrée. Achieving Medium Status for all three months earned a visitor up to $20 in Chipotle merchandise. Achieving Hot Status for all three months would earn that visitor catering for 20 people at a value of $240.
The Program’s Published Results
We know a few details about the results of the loyalty program from an earnings call Chipotle held after the program ended.
The Chiptopia program had six million participants with 2.5 million customers earning at least one reward. Of those, 340,000 people earned a reward for achieving at least Mild Status each month, and 75,000 people maintained Hot Status all three months and earned free catering.
Chipotle also estimates that 95 percent of their best customers are back to the number of visits they were making before the health (and earnings) crisis.
But … what does all this mean? The numbers look impressive, but do they truly equate to any long-term impact? And 95 percent of their best customers are back to pre-crisis visit numbers, but what about the rest of their customers?
Digging Deeper: The Real Results of the Program
We can learn more about what these numbers mean when we compare them to our industry knowledge and expertise plus combine them with the personal experience of one of our own team members.
To that end, we’ve put together a free, on-demand webinar to look deeper into the program and its results. In the webinar, we analyze:
- The four design principles of a good loyalty program — and which ones Chipotle missed
- Why their conversion rate was very good … but their consistency wasn’t
- Which element of their program we thought was “brilliant”
- Which elements could end up costing them more than they bargained for
- Panera’s variation on this type of program (that makes rewards member purchases account for almost 50% of all transactions!)
- How Chipotle could improve their program in the future
- Key takeaways for your own loyalty program