Lessons From Subscription Services On Engaging And Retaining Customers
Author Macala Wright speaks to three successful meal subscription brands to identify consumer preferences and how to cater to them, breaking down tactics to drive engagement in a competitive landscape
In 2012, meal delivery companies became a thing. You could get pre-portioned meal kits or prepped food sent directly to your door. Time-pressed customers who dislike cooking more than ever flocked to them in an effort to find easier ways to obtain high quality food. In 2017, the fresh-food meal-kit delivery market was valued at approximately $4.65 billion, and is now forecast to reach around $10 billion in 2020. To meet the needs of hungry consumers, over 30 meal subscription services have come to market, largely driven by profit projections from analysts and large venture capital investment.
For many of these companies, obtaining and sustaining success has had its challenges. But where there are challenges, there are also solutions. By focusing on data, creating more specialized meals in order to meet dietary needs and continually using customer feedback to improve the food experience, smart meal delivery companies are getting creative in how they tackle the biggest challenges in this sector of the food industry. These three companies are developing their customer acquisition and retention strategies, catering to and retaining happy customers:
Hungryroot is a healthy, personalized grocery service that sends customers weekly boxes with ready-to-eat and pre-prepped foods that can be combined to create tasty meals in under 15 minutes. Founded in 2015, the company successfully refined its growth strategy with VC investment in 2018, and recently opened a temporary store in New York City. With an extremely diverse, health-conscious and national customer base, the company’s continued success has come from putting the dietary needs and taste preferences of its customers at the forefront of acquisition and retention strategies.
“Variety, flexibility, and personalization are paramount to Hungryroot subscribers,” says Ruth Spencer, head of brand marketing. From the taste of individual products to suggested food combinations, Hungryroot’s customers have the ability to tell the company what they like, what they don’t like and what else they want from the service. This feedback has given Hungryroot the ability to understand customer eating habits and create menu choices to accommodate almost any diet, including vegan, vegetarian, gluten-free, dairy-free, nut-free, and soy-free.
When it comes to acquiring new customers, Hungryroot has found that balancing its advertising yields consistent results. The company currently uses Facebook and Instagram ads, paid search and email marketing as its primary channels. They’ve also started to see promising results from influencer and affiliate marketing. “Once a new customer has signed up, we’ve seen a consistent high rate of retention from all channels, which speaks to the value that we are providing for customers, post-checkout,” Spencer says.
By leveraging customer data in smart ways, they’ve been able to develop targeted marketing strategies based on dietary preferences and geographic locations of their current customers, in order to acquire new ones. Their retention strategy is directly correlated to customer feedback and service practices. Once you try it, you may not leave it. So, may I suggest the cashew cheddar and mango cultured coconut cream?
Founded in 2013, Freshly has raised a total of $107 million in VC funding. While their funding is impressive, with major investors like Nestle, their growth strategy is balanced across all of their marketing channels, and relies heavily on engaging their time-pressed customers in product development.
According to Adam Gassman, senior director of growth marketing at Freshly, the company’s marketing strategy takes into account short term acquisition, but it primarily focuses on the long term, which is retention. Freshly takes an integrated marketing approach that balances brand and paid performance. Gassman believes that leveraging formulaic ad journeys has been a critical success factor.
“The goal is to identify a relatable customer pain point, then message the brand as the solution to making that problem less burdensome,” he says. “We live in the numbers all day long and push where we see opportunities and pull back where we see inefficiencies. We never let a bad ad or campaign run too long, but always give a new test a set budget to gauge its efficiency and ability to scale.”
Because of the continual optimization of their campaigns and scrutiny of audience behavior, Freshly is seeing that their attribution model needs to be as dynamic as their customers’ online patterns. In addition to using data to effectively drive their marketing efforts, the company credits its success to the focus of listening to and using customer feedback to improve the experience with the brand on a daily basis.
“Our customer service team is there for support, not sales,” says Nate Champion, senior director of strategy for Freshly. “From assistance with account management to meal recommendation to even providing help with nutrition we make sure all of the customer's needs are met in all aspects of our business.”
Freshly also takes dietary preferences a step further, factoring in the taste and ingredient preferences of individual customers. Their goal is ultimately to be able to offer a range of meals to a variety of audiences. In terms of quality of ingredients, shipping efficiency, overall taste and cost, Freshly takes the lead among meal delivery services. Advanced customer segmentation in their marketing is strong enough to make any data analyst blush.
While there is a large percentage of the population who hate to cook, there are a growing number of people who are willing to cook at home, if they have the right portions, ingredients and instructions to prepare what has come to their door. Enter Green Chef, the first USDA-certified organic and certified gluten-free meal kit service on the market. The company is almost a hybrid between the meal prep and the meal delivery kit. Recently acquired by HelloFresh, Green Chef has seen steady growth in its customer base because of two critical factors: food supply transparency and offering highly customizable choices.
Supply chain transparency has led to an extremely loyal and vocal customer base. The company has enabled their customers to provide feedback on all aspects of their food so they feel included in the menu creation process. “As a data-obsessed brand, customer feedback is extremely important to us and we are always refining our offerings to make sure our customers are receiving the best possible at-home cooking experience,” says Dana Murrell, principal chef at Green Chef.
Feedback and community driven menus have also led Green Chef to become one of the most customizable meal subscription services on the market. Their individual and family plans feature menus for keto, paleo, vegan, gluten-free and pescatarian diets, plus people who eat meat. Given the fact that these diets are harder to shop, cook, and plan for, this gives them a unique marketplace position to maintain their customer subscriptions.
“We’re constantly innovating at Green Chef to give home cooks the best experience in the kitchen,” says Murrell. “We also recognize that consumers genuinely care about what goes into their food and where it’s sourced. Green Chef is committed to supporting local farmland, family farms, and craft economies to bring the highest quality ingredients to our customers.”
Driving Growth and Customer Acquisition
In looking at the successes of Freshly, Hungryroot and Green Chef, there are three main tenets of success that any meal company can employ when developing a successful retail strategy:
1. Put the customer at the center of all you do. Include them in menu planning, share food sources and be a resource to help them understand and meet their dietary needs.
2. When you develop a vibrant, loyal community, make sure you base your digital marketing strategy on the social, demographic and geographic information available when developing and executing new strategies.
3. Always define your goals by channel and make sure those goals dovetail with the other goals you’ve set for each channel. The tactics and execution of the programs should naturally align and show you where your greatest gains can be made.
While data is always an essential part of any successful strategy, human interpretation of that data is where scale can be found. And when it comes to your customers, being honest, listening to them and accommodating will win every time. That’s something you don’t need data to tell you.
Lead image: stock photos from Photographee.eu/Shutterstock