Chipotle shifts from mobile acquisition to engagement as CRM push brews
After spending a few years building a database of mobile customers, the chain is increasingly focused on beefing up insights with wallet offers.
While Chipotle’s Queso cheese sauce is getting panned, the accompanying marketing push has the potential to elevate the launch thanks to a major media buy and commitment to a burgeoning strategy around mobile wallet offers.
Chipotle has spent several years building a database of opted-in mobile customers through national sweepstakes and promoting SMS offers on its website and direct mail. In the past year, however, the company has pivoted to focus more on engaging these customers so it can gather meaningful insights about the large audience that can be used to optimize future efforts. The approach is intended to support a planned CRM platform launch.
“We spent two-plus years just focusing on acquisition…,” said Kam Bozich, senior digital marketing technology manager at Chipotle during a Mobile Marketing Association SM2 Innovation Summit session this week in New York City. “Now, we’ve shifted into engagement and retention, with a lot of the program involving a bigger game or richer experience that also ties into an offer or some kind of traffic driving element.”
While Chipotle sales are growing, they recently missed analysts' expectations, so Chipotle is betting on Queso to drive traffic to its locations and to reinvigorate a brand image that is still suffering after a series of food safety mishaps.
However, with other chains like Del Taco also introducing a cheese dip, it is Chipotle's mobile strategy that actually could provide the bigger differentiator.
On Monday, Chipotle debuted a TV ad for Queso that is part of the largest TV ad buy the company has ever done. At the end of the ad, viewers are encouraged to test “Queso” using a short code to receive mobile offers, which can be saved to Apple Wallet or Google Wallet.
Wallet offers have been around for a few years but have not taken off in a significant way. This may be starting to change thanks to the convenience offered by loading loyalty cards, airline boarding passes and movie tickets into wallets.
Mobile wallets are location aware, which means that after customers put an offer or other content like a boarding pass in their wallet, they receive a message on their lock screen when they are close to a location where they can redeem it, even if they don’t have the brand’s app on their phone.
Chipotle, which began testing began wallet offers a year ago, reports that initially, it had a 10% wallet install rate but, over time, it now has a 42% install rate on Apple.
A friendly offer
The chain’s first effort around wallet marketing was the Burrito for a Friend program, which was launched last year as a test in partnership with Vibes. For the campaign, Chipotle invited a small population of its mobile database to create a customized digital card for a friend and share it through their native messaging app. Recipients who entered their mobile phone number and ZIP code received a buy-one-get-one-free offer delivered as a mobile wallet coupon while the original subscribers who shared the offer received an offer for free chips and salsa.
Unique tracking links and codes were integrated into each offer to gain insights as consumers saved and redeemed the coupons. The effort helped Chipotle drive overall mobile subscriber growth that was 2.4 times higher than in the previous year and grow mobile wallet installs by 2.4 million. Redemption rates were 40% for the BOGO offer and 7% for the free chips and salsa.
Burrito for a Friend also won a bronze Smarties award in relationship building/CRM at this week’s MMA event.
“It was a pilot and was hugely successful for us,” Bozich said. “Burrito for a Friend was an opportunity to try something new. It came out of the idea that we wanted to take the power of Burrito Buck, a program for employees and translate that into a digital experience.”
Learning about mobile users
Part of the appeal of wallet offers for merchants is their high redemption rate and the ability to track meaningful insights on users. Vibes reports that retailers, on average, see a higher than 50% redemption when someone puts a coupon in a wallet.
By collecting users’ ZIP code when they opt-in for offers, Chipotle can also get a sense of where an offer is likely to have its biggest impact so it can inform locations in those areas to be prepared for an uplift in sales. Conversely, it can send offers in an area it has identified as needing to boost sales.
Through Vibes, Chipotle is able to watermark offers that have been redeemed by an individual, enabling it to send an SMS reminder to those who haven’t redeemed it yet when the expiration date is approaching.
Vibes can also track where opted-in customers are engaging with an offer across email, social and text messaging all the way through to purchase. This enables brands to create a profile of customers based on their behavior and then target look-alike audiences to acquire new customers.
Following the Burrito for a Friend program, Chipotle made wallet offers part of its major summer promotion called Savor.Wavs, which provided a digital experience enabling users to see and hear what their own unique Chipotle order sounds and looks like, with each ingredient assigned a unique sound created by musician RZA.
Once users completed the web form that went along with the experience, they could enter their mobile number and ZIP code to get a BOGO wallet offer.
Chipotle reports it delivered millions of offers, with a 67% redemption rate. The chain’s existing mobile database accounted for 30% of participants.
The chain is currently working with its internal business intelligence and analytics teams to track the transactions generated by the promotion when there is a credit card number attached. By looking at transactions over 30 and 60 days, Chipotle can start to hone in on who its best customers are and who are casual fans and then segment its mobile database to customize future offers.
“Our goal is to be smarter and be able to understand our mobile subscribers from a purchase history perspective so we can send them an offer if we haven’t seen them in six weeks,” Bozich said.
Chipotle doesn’t currently have a CRM platform but is focused on data in advance of plans to put one in place and set the stage for a comprehensive loyalty program down the road, per Bozich.
Looking ahead, Chipotle is also focused on how to enhance the mobile order-ahead experience through its app, which is being redesigned in partnership with Deloitte Digital. While order-ahead is currently offered in the app, the chain has avoided heavily promoting the app because it was starting to run into some of the same issues that have plagued Starbucks, where mobile ordering has driven higher volumes for locations that have, at times, resulted in long lines.
To address these challenges, Chipotle worked on its backend operations, creating a second make line just for mobile orders. Now it is focused on improving the app.
“The new mobile app will roll out in a few months,” Bozich said. “Then we will have a massive marketing support behind it.”