Monday, June 25, 2018

Get It Right and Increase Brand Loyalty By 40%

Sometimes a new product introduction can help revive a brand where loyalty’s eroded. In fact, more-targeted, new product launches can increase loyalty upwards of 40%, being particularly effective in the fast and fast-casual food categories.

But you’ve got to get it right.

Chipotle got it right for 22 years, going from burrito stand to billion-dollar brand à la fresh ingredients and customization. Customers were loyal. So loyal, in fact, they were willing to pay more!

But seven outbreaks of E. coli bacterium and salmonella damaged Chipotle’s brand, customer loyalty, same-store sales, and profits.  They went from #1 to #20 on our Customer Loyalty Engagement Index (CLEI)http://brandkeys.com/portfolio/customer-loyalty-engagement-index.

So, beyond not poisoning your customers, new product introductions can be a highly effective way to re-brand a brand. If you get it right.

Which Chipotle didn’t.

Their nationwide, new product rollout of queso not only received a lukewarm reception and reviews, it was so spectacularly ineffective. Shares dipped 14%. ¡Ay Caramba!

OK, so now Chipotle is planning a new, new product introduction: Quesadillas, pretty much just a Mexican version of grilled cheese.

Hard to mess up grilled cheese, right? They already offer a children’s cheese quesadilla, but an adult version will involve meats and salsa and cheese, and toppings. And it requires a different grill.  So a lot they could get wrong.

Chipotle moved up nine spots in our 2018 mid-year CLEI metrics to #11. Shares have moved up, too, loyalty being a leading-indicator of positive consumer behavior and all, although some of the 10% increase was likely due to April price hikes.

Still, new products can help. So the critical question is, will this new quesadilla introduction help heal Chipotle’s battered brand?

If they get it right this time.


Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

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