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Tuesday, June 14, 2016

How Chick-fil-A Rewards Valuable Customers; A Unique Spin on a Loyalty Program

How many customer loyalty programs do you, personally, belong to?  In 2015, according to the Colloquy Loyalty Census, U.S. consumers held 3.3 billion memberships. The average American household was registered in 29 loyalty programs spread among retail, financial services, travel, restaurants, and various other economic sectors!
 
Companies will explain that it’s important to ‘play the game’ because they know how much more expensive it is to acquire a new customer than it is to keep an existing one.  Further they’ll quote chapter and verse documenting how customers who are points-program members account for 3, 7 or even 10 times more hotel stays or how members purchase 20% to 90% more than non-member customers.


But Have the Programs Changed Customer Behavior?

We take the position that most of these “loyalty” points-programs aren’t really accomplishing what they should or could be.  Seldom, if ever, do the organizations running them conduct objective research that would conclusively tell them whether the programs are actuallychanging customer behavior, or whether instead the spending’s a self-fulfilled prophecy.  Meaning the customers who are already buying more are the ones who find joining programs more worthwhile.
 
Further, we have to question whether the points-programs create a level of entitlement (often leading to a sense of unfulfilled promises and unmet expectations).  At best, we wonder whether most programs are simply binding customers to brands through a form of “golden handcuffs”.

Real Keys to Business Success

Despite the programs currently out there, we believe that what most smart marketers and managers actually want are:

  • Satisfied/delighted customers who keep coming back.
  • Raving fans who generate positive word of mouth and brag to their friends, relatives, neighbors, co-workers, and even strangers about a brand.
  • Trusting supporters who are ready and willing to try new spin-off products and services.

Chick-fil-A Thinks Differently

Chick-fil-A has achieved amazing levels of customer satisfaction and sales without a traditional loyalty points program.  Instead, in 2013, the chain created its own customer recognition program, the A-List Program.  Customers cannot sign-up for membership – it’s open by invitation only.  (Most customers don't even know it exists!)  About 60% of locations now participate in the program which begins with local management identifying individuals they have come to recognize as frequent customers (and often know by name). Those individuals are personally handed a written invitation. They then go online and complete a membership form providing their name, email address, date of birth, and other information such as their favorite sports team, etc..

Instead of Points...Unexpected Delights

Once registered, member customers begin to receive customized rewards and communications from their local Chick-fil-A restaurant.  Activities are completely under the control of the local manager and can range from A-List member group dinners in the restaurant, to tours of the kitchen, to participation in a neighborhood cleanup, or serving as an informal board of directors offering advice to the local franchisee. While corporate does offer suggestions, programs are totally controlled at the local level.  Invitations can be offered to anywhere from a handful of customers at some locations to hundreds of recognized loyal customers at another.
 

Results

We don’t have access to program measurement.  What we do know is that

from a single store the program’s voluntary participation by franchisees has

grown to over half of the chain’s 2,000 restaurants in less than four years. We

have heard the enthusiasm with which corporate management discusses the

A-List Program. We see the continued growth in sales. We hear the voices of

those raving fans

And that sounds like success to us

4:45 pm edt          Comments


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Customer Experience Partners, LLC
Measurement, Management, Optimization
Contact us at: 203-655-0090 or
pruden@customerexperiencepartners.com

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