Chatime's CMO on customer loyalty and turning marketing on its head in the COVID-19 crisis

It’s a situation many brand marketers want to get to: A healthy and highly engaged customer loyalty program delivering potentially millions in sales and value to business and customers alike. And for iced bubble tea franchise outlet, Chatime, efforts to deliver just that will not only help build long-term brand equity, but provide some tools to help cope with the current COVID-19 crisis.

Originally a Taiwan-based business, Chatime has been operating in Australia for 11 years and grown its franchise network to 125 stores nationally. In September 2018, the company launched an app-based customer loyalty program, which now boasts of 500,000 members, 60 per cent of which are highly engaged.

Chatime head of marketing, Tim Paton, told CMO the program served two purposes. “The first was creating competitive advantage in a category that is at saturation,” he said. “The second thing is there is no one in our category who has had a world-class loyalty system. It’s a strong point of difference, and a way for us to also access customers outside the category.”  

The initial emphasis had been on acquiring and moving customers to the app – an ambition that was certainly achieved when the tally hit 500,000.

“But we knew we’d get to a point where we needed to understand these customers better and their individual needs, so we looked at frequency and purchase behaviour to be more intelligent with the style of communications we serve,” Paton said.  

This ambition led Chatime to partner with customer lifecycle management agency, Customology. “We had 400,000 members and so much data, I knew they could help us shape that information into a long-term loyalty offering to drive deeper engagement and more value from the program for us and our business partners,” Paton said.  

Initial insights showed members on average spent 7 per cent more than non-members. “That helped us start the communications in our network to get behind the program with Customology,” Paton said.  

Work saw customers segmented into frequency and purchase behaviour groups, which Chatime has branded internally with different names. These eight cohorts include ‘declining customers’ and ‘rising stars’.  

Through this process, Chatime realised it had a significant group purchasing just twice per year. “We asked ourselves: If we get them to buy just one more drink, what would that do to the overall network sales? By nudging different groups, we identified we’d get $2 million to $2.5 million in additional sales,” Paton explained.  

Phase one work was completed in January and illustrated what the loyalty program delivers to the wider Chatime franchise network. Having previously maintained a blanket comms approach, Chatime has since been working to set up customer pathways and runways based on how engaged the members are in the loyalty platform.

“For example, if you’re a new member, you go into a communications runway based on trigger emails and SMS, depending on your purchasing cycle,” Paton explained. “If you’ve not responded in that first three days to the initial giveaway offer, you receive a triggered email reminding you about the giveaway.

“Or if you are flagged as buying two drinks per week every Tuesday and Thursday and are fully engaged, then drop out of love or next month don’t buy, you’d fall into another customer flow aimed at nurturing you back into being active. So we’ve set up automated runways with communications and email all aligned to keep people engaged.”  

Enter COVID-19

So far, so good. But enter the COVID-19 crisis. As a business largely generating revenue from dine-in and takeaway stores largely located in shopping centres, Chatime is increasingly reliant on aggregator and delivery services to keep in the market as walk-in traffic is slashed and social distancing sees locations shutdown.

“The concerns are impossible to stack up. We’re trying to encourage franchise businesses to get into it, even not making any money, where walk-in traffic is being decimated,” Paton said.  

While many of these customer communication pathways will inevitably be paused or simply become unworkable in the short-term, Paton was able to see several benefits from the data-driven work that could help in the current environment.

One example is informing and engaging audiences with Chatime’s aggregator and delivery options.

“We’ve started pushing our delivery work via advertising with the segments identified and we’re working with our digital media agency to build look-a-like audiences to help them improve targeting around delivery advertising in the next 3-4 weeks,” Paton said. “We wouldn’t have had that without Customology helping us.”

Paton also agreed brands like Chatime will need to rely on strategic brand engagement and customer insights to help them through until such time as the COVID-19 crisis ends.

Yet given Chatime operates a franchise network of retail breweries, the challenge of surviving through the crisis on virtually no income is a brutally real challenge for Chatime franchisees. Given the company’s head office marketing budget is based on a percentage of sales contribution, Paton’s marketing plans have been dramatically affected by the pandemic.

“I’ve had to step back and reforecast. We have gone through a process of removing marketing levies so those franchises retain more cashflow, we’re reducing royalties and reforecasting everything,” he said.  

The executive team has cemented three key projects it is committed to keep in place so the company is ready to accelerate and prosper when the world comes out the other side of this crisis. One is working with Customology on the customer lifecycle strategy; the second is finalising Chatime’s first ecommerce platform and new website; the third is a consumer touchpoints project.

Then there’s the sustainability question. In recent times with the War of Waste and plastics, Chatime has been working to address plastic use across its network. This includes a commitment to reduce plastic used by the end of 2020, and the stores have also started to replace plastic straws with paper products.

Paton reiterated impact on environment is a key part of differentiation for Chatime long-term and will provide a significantly positive narrative post-COVID-19. Yet in recent weeks, it’s become clear customers are choosing to go back to plastic straws because they’re sealed in a plastic cover.

“The crisis has changed consumers’ focus – it feels like we’ve gone back years,” he commented.

It’s these sorts of immediate insights Paton said showed just how much brand strategy is being upended by the current crisis.

“Usually, you have these brand anchor points you keep pushing through. But even your core strategy can’t do the work in this climate,” he commented. “We have to keep evolving and innovating every day to just deal with this beast. As a marketer, that’s the hardest thing I find myself dealing with.”

Another is balancing the brand love, empathy and irreverent spirit the Chatime brand has always maintained, against the sensitive, negative and anxious situation its customers find themselves in right now.

“With so much negative noise out there, it’s really hard for an irreverent brand likes ours to keep moving with that brand love thought such a sensitive environment – we have had to dial it back to make sure we are bringing an appropriate tone that matches how people are feeling. It’s incredibly tough,” he said.  

“We have always said as a brand, we want to be the friend in the pub. We’ve been asking ourselves, if we’re to be that friend now, what are we talking about and how do we employ that thinking when we’re pushing messages out?”

Read more: What makes the Chatime brand tick with consumers

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