THE CLARUS Blog

How Chipotle Exemplifies the Power of Customer Loyalty During the Pandemic and Beyond

Pandemic or not, customer loyalty comes first at Chipotle.

Chipotle’s digital sales exceeded $1 billion for fiscal 2019, marking a 90% increase from fiscal 2018.

Earlier this year, the Chipotle Rewards loyalty program had about 8.5 million members. That figure is noteworthy since Chipotle Rewards didn’t launch until October 2018.

At the time, CEO Brian Niccol said 2020 would be about more than increasing member enrollment.

“In 2020, we will not only further increase enrollment, but more importantly, look to optimize the use of database marketing to incent behaviors as we build out our CRM capabilities,” he said. “Personalization and engagement are the cornerstones of our evolving loyalty strategy.”

Before Niccol assumed the helm as CEO, Chipotle didn’t have a loyalty program.

Now, loyalty is one of the keys to the company’s success.

 

Why Loyalty Is Chipotle’s Guiding Light

Differentiation has been crucial for Chipotle to spark customer loyalty.

Chipotle officials made their digital tools a priority, which has paid huge dividends since the pandemic started.

Jason Scoggins, Director, Loyalty & CRM, Chipotle talked to Clarus during the summer about Chipotle’s loyalty program progress during the pandemic.

“Over the last few months we’ve seen an increase in new members which was driven primarily by customers discovering the brand through our digital channels,” Jason explained. “We have definitely seen customers pivot to digital ordering, particularly when it comes to order ahead for pick up.”

Coming out of the pandemic, Jason said Chipotle is “really focused on leveraging Chipotle Rewards to keep those customers engaged – whether that’s driving continued behavior toward our digital channels or introducing them to our in-restaurant experiences.”

During the company’s Q3 earnings call, Niccol said Chipotle has “transformed” itself in the past few years.

“A prime example is our rewards program, which has expanded significantly since March and now has 17 million enrolled members,” Brian said. “To put this in perspective, this is more viewership than on a typical Monday night football broadcast and gives us a content distribution and engagement network that we can use to elevate engagement and awareness of brand initiatives.”

Chipotle Rewards is already proving “quite fruitful,” Niccol added.

“We’re seeing an increase in frequency across the board with consumers resulting in an extremely strong return on investment,” he explained. “However, what really excites us is that we’re in the early stages of using this valuable tool to understand consumer behavior that will allow us to enhance their journeys and ultimately drive higher sales.”

Brian said company officials leverage these insights to re-engage members if their visits decline.

 

“Over the next few years, we expect loyalty to be a key enabler of our digital flywheel as we optimize the use of this important data set,”Brian Nicoll, Chairman and CEO, Chipotle

 

What’s Next For Chipotle?

In early 2019, Chipotle had just 10 Chipotlanes, the company’s innovative drive-thrus.

By year’s end, Chipotle plans to open 150–165 locations, with more than half including a Chipotlane.

Chipotle has more than 2,000 locations in total.

The company’s focus on digital initiatives and Chipotle Rewards has reaped major dividends.

“The digital experience has just exploded with COVID,” Chipotle Chief Restaurant Officer Scott Boatwright said. “And, that business has been really sticky.”

In Q3 digital sales grew 202% year-over-year, to $776 million, and represented 49% of sales.

“Assuming this momentum continues in Q4, we believe digital sales could exceed $2.5 billion in 2020, more than double what we did last year,” Brian noted.

 

Listening to Your Customers Sparks Loyalty

Many brands say they listen to their customers to identify their pain points and act to remove those pain points through their respective loyalty programs.

It’s clear that some brands listen and respond to customers better than others.

 

“We are always listening to our customers and looking for ways to optimize Chipotle Rewards. Now, more than ever, brands need to leverage the power of their loyalty programs and build those long-term relationships with their customers.” – Jason Scoggins, Director, Loyalty & CRM, Chipotle

 

With all the uncertainty due to the pandemic, customers are being more selective with their money.

“Brands that can create personalized and relevant loyalty programs will be the ones that customers gravitate toward,” Jason added.

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