Chipotle Wraps Up a Catastrophic Rewards Program, and Dishes Out a Lesson in What NOT to Do…

For the most part, globally recognised brands serve as inspiration for small businesses. But sometimes, instead of learning positive lessons from observing the big guns at work, small fries can clue themselves up on what NOT to do…

Cue Chipotle’s disastrous ‘Chiptopia’ rewards program that launched earlier this year. The cult Mexican fast food chain may know a thing or two about how to whip up a mean burrito, but when it comes to loyalty programmes the company’s efforts were lacking serious flavour.

In-house customer relations experts spent millions developing and launching a fresh new summer rewards program, which was hailed as one of the best in the restaurant business. It was tied to the frequency of visits, and offered customers the chance to score a smorgasbord of free food. Basically, if a customer guzzled 12 burritos in three months, they were rewarded with four free burritos. This gave the program a returns rate of around 33%.

But despite this, Chipotle’s Mexican loving clientele couldn’t seem to care less about the three-month seasonal offer. So where did Chipotle’s ‘Chiptopia’ campaign go wrong? And what lessons can brands learn from its disastrous attempt to mix refried beans with rewards?

• Failure to understand customer perception

One of the biggest factors Chipotle failed to address was that in order to launch a deliciously successful rewards program, customer perception needs to be high. Even the most tantalising of rewards programs will crash and burn if customers simply don’t want the product in the first place. The company’s main downfall was the fact that it launched ‘Chiptopia’ right after it was hit with its catastrophic E. coli outbreak scandal that saw sales drop by 30% in the first quarter of 2016. It hadn’t quite recovered, and was still struggling to earn back the trust of its customers. So, despite the fact that it spent millions on developing a stellar rewards program, customers just weren’t all that excited about cashing in on potentially contaminated burritos. YouGov BrandIndex data confirms that consumer perception was suffering on Chiptopia’s July 1 launch date, with brand quality sitting at a dismal 9.4 on a scale of -100 to 100.

• A backwards approach

In September Chipotle launched a new campaign focussing on addressing the E. coli scandal, and convincing customers that its food is safe. Ideally, the chain should’ve launched this campaign first, and followed up with Chiptopia.

• Confused customers

Chiptopia was clearly aimed at diehard Chipotle fans, as its three-tiered system was overwhelmingly confusing. While the program did help to increase loyalty from regular customers, it failed to appeal to the 75% of consumers that make up its customer base.

Unsustainable and unappealing

With a returns rate of 33%, Chiptopia simply wasn’t sustainable in the long run. It’s three month run period was clear about the fact that it was a seasonal promotion, so unless customers started scoffing burritos in July, it wasn’t worth their while to get involved. The company has since realised its mistake, and has confirmed that it’s now working on a new, more permanent program.

So, while the concept of a rewards program is intriguing, even the most established of brands can still get it oh so wrong.

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