STRAGETIC ELEMENT-CHIPOTLE LOYALTY PROGRAM 5
StrategicElement-Chipotle Loyalty Program
StrategicElement-Chipotle Loyalty Program
Theprogram known as Chiptoia was created by Chipotle to reward theirmost loyal customers. After a certain amount of spending, over agiven period, the customers were provided with free service as a wayof appreciating their loyalty to the company. Rewarding of customersis a practice that has been used by several companies such asMcDonalds and Starbucks although they differ in strategy. The programwas launched after Chipotle had faced its biggest test when about 60people who took their meals at their restaurants were affected by E.Coli virus (Kathryn,2016).Many customers had started shying away from the restaurant for fearof the infection. Chipotle suffered 23.4 percent in their earningsand about thirty percent drop in sales (Virginia, 2016). Recovery wasthe main aim of the Chipotle at that time. The program was scheduledto run from June to October, a period of 4 months.
Metricfor Evaluating the Implementation of Chipotle Loyalty Program
Itis a metric that determines whether the overall business goal isbeing satisfied (Ronald & Gladys, 2012). For example, thebusiness goal for Chipotle was to regain their most loyal customersafter a drop in their number of clients. After running the programfor one month, the number of consumers enrolled in the program wasfound to have increased, an indication that customers were comingback to the facility to benefit from the new service (Virginia, 2016)
Itmonitors whether the strategy is meeting the intentions of thebusiness (Ronald & Gladys, 2012). For Chipotle, it was expectedthat the purchase behavior of the clients would change. Through theprogram, the customers are likely to try and exploit the free serviceintended for those who are loyal to the chain. After the end of theprogram, the type of food consumed by many clients will be identifiedas a means of determining their tastes and preferences of thecustomers.
Criteriafor Measuring and assessing effectiveness
Number of customers participating
Thenumber of consumers visiting the restaurant after the launch of theprogram is a determinant of success. If the number of visits does notchange even after the implementation, then the program is renderedineffective. Some customers are directly related to the earningswhich are the primary business objective. After one month, Chipotlehad recorded a rise in the number of clients visiting the restaurantfor meals. After three weeks, the chain recounted ten thousand peoplebeing added to the program. 28 percent of these people had visitedthe chain for the second time (Virginia, 2016). It was an indicationthat the program was paying to the restaurant.
Itwas expected that the amount of money spent by customers over aspecified duration (a period of one month after which the rewardexpires) would change because the customers would one day expect afree service. Each time a visitor had spent 6$ or more, they wouldearn points that are accumulated such that after their fourth, eighthand eleventh visit, the customers would win free entrée (Kathryn,2016).If they spend more, they will also move their status to a level wheremore perks are available. By categorizing the program into mild,medium and hot, the chain merely tries to exploit all the categoriesof visitors ranging from fewer spenders to heavy spenders.
Metricsare essential elements for measuring the success and effectiveness ofa strategy. Without these measurements, the success of a project, aswell as the performance, cannot be evaluated. In the end, evaluationhas to be done based on the outcome of the strategy. If the outcomeis not as intended or expected, then the business goal or strategy isnot satisfied.
Kathryn,V. (2016): Chipotle unveils summer loyalty program. Retrieved from http://money.cnn.com/2016/06/27/pf/chipotle-summer-loyalty-rewards-program/
Ronald,G. & Gladys, S. (2012). Strategy-Based Metrics for MeasuringBusiness Performance. Business Rules Journal, Vol. 13, No. 7.Retrieved from http://www.BRCommunity.com/a2012/b659.html
Virginia,C. (2016). Chipotle’s Loyalty Program Is Working-So Far. Retrievedfromhttp://www.eater.com/2016/7/21/12249370/base-chipotle-quaterly-earnings-chiptopia-is-working