Chili’s: Why Simpler Loyalty Is Driving Bigger Growth (#806)

Paula: Hello and welcome to Let’s Talk Loyalty and Loyalty TV, a show for loyalty marketing professionals.

Paula: I’m Paula Thomas, the founder and CEO of Let’s Talk Loyalty and Loyalty TV, where we feature insightful conversations with loyalty professionals from the world’s leading brands.

Paula: If you work in loyalty marketing, join us every week to hear the latest ideas and insights for loyalty marketing specialists around the world.

Aaron: Chili sold close to 30 million margaritas last year, and that’s more than any other restaurant brand in the United States.

Aaron: The brand has just closed its 21st consecutive quarter of same sale store growth, and the loyalty program sitting underneath that, well, it’s spent the last two years getting simpler, not bigger.

Aaron: Welcome back to the Wiser Loyalty series on Let’s Talk Loyalty.

Aaron: Brought to you each month through the partnership between LTL and the Wise Marketer Group.

Aaron: For those of you who don’t know me, I’m Aaron Dauphinee, the Chief Marketing Officer at the Wise Marketer Group, where we publish the Wise Marketer, the industry’s trusted source for news and information for a little over more than 25 years now.

Aaron: We also operate the Loyalty Academy, which is home of the first professional designation, now in its 10th year, which is the Certified Loyalty Marketing Professional or CLMP program.

Aaron: Lastly, we run both of these businesses alongside our WMG research and advisory practice.

Aaron: But enough about us, let’s talk about our guests, since casual dining may be one of the hardest categories for loyalty.

Aaron: Visit frequency is low, margins are thin, the consumer has been trained on discounts for 40 years, and the experience is delivered by people rather than an app.

Aaron: The reflex in that environment is to add more points, add more tiers, add more offers.

Aaron: But Chili’s went the other way.

Aaron: My guest is no stranger to Let’s Talk Loyalty.

Aaron: Longtime listener should recall his conversation with Paul Thomas from the fall of 2023.

Aaron: I have with me Nicholas Kerr, the Director of Loyalty and Growth Marketing at Chili’s.

Aaron: Welcome Nicholas, it’s lovely to have you joining me today.

Nicholas: Great.

Nicholas: It’s good to be back.

Nicholas: I’m one of those long time listeners, and I guess this is my second time caller, so happy to be here.

Aaron: I love it.

Aaron: I love it.

Aaron: For any listeners that happen to be outside the US, Chili’s Grill and Bar is a casual dining brand that’s operated by Dallas-based Brinker International.

Aaron: They have roughly 1,600 restaurants across the US and international franchise markets.

Aaron: They also operate alongside its sister brand, I hope I’m saying this right, Maggiano’s Little Illy.

Aaron: My Chili’s is the brand’s loyalty program.

Aaron: It’s free to join.

Aaron: It’s built around a benefit on every visit rather than a points balance, and it’s delivered through the Chili’s app and the ZS tablet, tablet tablet in the restaurant.

Aaron: So that’s a nuance that we want to dive into later as well.

Aaron: But a quick top line on Nicholas before I dive into our conversation more.

Aaron: Nick, Nicholas Kerr is leads loyalty and growth marketing for Chili’s at Brinker International.

Aaron: He came to casual dining from some of the most engagement literate businesses in tech and gaming.

Aaron: People will know these names such as Microsoft Awards.

Aaron: And then of course, the mobile gaming loyalty platform, His Play, which is what would have been his focus in our previous podcast with him actually.

Aaron: So in any case, he’s brought that discipline to a category where the loyalty moment happens in a tablet and not a screen.

Aaron: Over the past two years, he’s had to be deliberate in simplifying the My Chili’s program.

Aaron: He’s layered gamification onto it through the Margarita of the Month Club.

Aaron: And now is extending the playbooks to Maggiano’s.

Aaron: So Nicholas, real quick, what have I missed?

Aaron: That’s key for today.

Aaron: What else should our listeners know about you, about Chili’s or about the My Chili’s program before we get into it?

Nicholas: Yeah, thanks.

Nicholas: I think you covered a lot of territory there, Aaron.

Nicholas: The one thing I’d say is like this has been a real team effort.

Nicholas: And the simplification that you mentioned actually started just before I joined.

Nicholas: So while I was actually interviewing for the role here, Brinker had started to pull back from all of those discounts and the points and everything that you mentioned that a lot of the other restaurants are leaning into.

Nicholas: And that’s one of the things that made me so excited about the opportunity in those experiences that I’ve had before, Brinker.

Nicholas: I’ve really seen the value of pulling back from transactional loyalty and really leaning into the brand and into emotional loyalty.

Nicholas: And yeah, I was super psyched to see that they were already doing that.

Nicholas: So it wasn’t something I was going to have to convince them to do.

Nicholas: I was like, get me on board.

Nicholas: I want to be part of this journey.

Aaron: Oh, I love that.

Aaron: When someone’s already set the foundations at a kind of ethos level, then it’s easy to hop in and add your expertise.

Aaron: Very good.

Aaron: Listen, one of the things that we do through the Wiser Loyalty series and certainly with all the Let’s Talk Loyalty hosts is we want to give listeners a personal window into the guest a little bit before the professional conversation begins.

Aaron: So really quickly, what book are you currently reading and what’s the most meaningful takeaway from it so far?

Nicholas: Yeah.

Nicholas: So I was wanting to find a new book and I sort of thread on X, and someone had asked for their favorite books, and so people were piling on.

Nicholas: One that kept on coming up with this book called Die with Zero.

Nicholas: I was like, what is this book?

Nicholas: What is this thing piled?

Nicholas: I found out it’s actually a financial advice book, and I was intrigued.

Nicholas: I got it and I’ve been listening to it, deep into it now.

Nicholas: There were a couple of really interesting themes that came through to me that were super interesting for me, but then I also like paralleled them to what’s going on in loyalty and what am I doing at my Chili’s.

Nicholas: One was really just the idea of…

Nicholas: So the whole concept is when you pass away, you should aim to have basically a zero dollar balance.

Nicholas: And I was like, wow, that’s pretty radical.

Nicholas: But the first theme was around just really like, we’re not saying don’t leave anything for your kids.

Nicholas: What we’re saying is give it to them when it can be really most productive and meaningful for them.

Nicholas: As you can.

Nicholas: But the other biggest takeaway for me was this concept of the importance of experiences.

Nicholas: And as you age, the number of experiences you can go out and enjoy diminish.

Nicholas: And the point being, enjoy those things that are going to be really great experiences when you can and figure out the timing of when you want to try and do them.

Nicholas: Because the importance of experience isn’t just the experience itself, it’s the memory of the experience.

Nicholas: And so as I was reading that, I was sort of thinking about behavioral economics, which I know you’re familiar with and Daniel Kahneman, right?

Nicholas: And one of Daniel Kahneman’s favorite expressions was, we don’t choose between experiences, we choose between the memories of those experiences.

Nicholas: And so in the book and from an individual standpoint, what they’re saying is, you’re going to get to continue to enjoy the memories of those experiences as you age, and share those with your family and talk about them.

Nicholas: Do you remember that trip we did?

Nicholas: Do you remember that ski vacation?

Nicholas: Do you remember that mountain we climbed?

Nicholas: And that’s going to be really important when you’re older to continue to help to enjoy life and really make those connections with people.

Nicholas: And so I think about that in terms of loyalty and delivering those experiences to our guests, because as Daniel Kahneman said, our guests aren’t choosing between experiences.

Nicholas: They’re choosing between the memories of those experiences that we deliver.

Nicholas: Did we make the guest feel special?

Nicholas: Did they have a wonderful time that they, next time they’re thinking about dining, that they come back to us?

Aaron: Oh, I love that.

Aaron: I mean, it really resonates for me personally because I’ve had conversations with my friends and family that suggest that one of my goals is to make sure I have enough experiences and make those memories versus remembering an item, a couch or a car, gosh forbid, when I pass on, so this resonates.

Aaron: But also, I also love what you just said about the idea of getting it to people before they move on or demise.

Aaron: When you think about that from a loyalty context, getting them the benefits and the status before they get a certain tier and kind of early up to create a memory that they tell about could be something that’s parlays into what that construct is talking about.

Aaron: Thank you for sharing that.

Aaron: Appreciate it.

Aaron: Let’s dive into the questions because we’ve got a number and I’m excited to hear your thoughts and get your perspective.

Aaron: You’ve built loyalty and engagement online, Intelcom, and mobile gaming before landing in casual dining.

Aaron: What transferred cleanly into restaurants and what did you have to maybe unlearn once the loyalty moment was happening at a table rather than on a screen?

Nicholas: Yeah.

Nicholas: The sorts of things that transfer cleanly were a lot of the basics that we talk about and you talk about on the podcast all the time around the importance of building brand love, the importance of leveraging things that only your brand can deliver, the importance of simplicity in the program, delivering frictionless experience for the guests, making redemption super simple.

Nicholas: And then back to the thing we were discussing earlier about the higher ROI that you get from driving emotional loyalty than transactional loyalty.

Nicholas: So that was all sort of table stakes and we think about that all the time with my chilies.

Nicholas: But it was really interesting.

Nicholas: I’ve never been in the restaurant space before.

Nicholas: So the big thing that I had to unlearn or de-emphasize was the laser focus that I’d had on a daily basis at Microsoft and Display around building a daily habit, right?

Nicholas: So we were in online services, gaming, mobile gaming, those sorts of things that we want users to use every single day and just build that habit.

Nicholas: And so the way I think about it is what we were trying to do in those spaces was like automate behavior.

Nicholas: And getting back to Daniel Kahneman, who I love, he’s got that concept of system one and system two thinking.

Nicholas: And in my Chili’s and at Chili’s, we’re still in that sort of system one space, but rather than automating behavior, what we’re trying to do is automate the answer.

Nicholas: So we want Chili’s to be the automatic answer that our members have to as many relevant questions as possible so that when they are trying to satisfy a craving or that the kids are nagging them about something that they love at Chili’s, or if they’re thinking about like a date night, that Chili’s is always that answer.

Nicholas: We want to be in that consideration set all the time.

Aaron: Let’s talk about that.

Aaron: Let’s double click down on that a little bit more because that distinction of habit versus staying into the consideration set.

Aaron: In casual dining, a guest might eat out several times a month, but choose Chili’s only a handful of times of year.

Aaron: What is the program actually built to do?

Aaron: Manufacture habit to come back to Chili’s or make sure you’re just in the running when that decision gets made because you know that they won’t always pick Chili’s every time they go out to eat.

Nicholas: Yeah, that’s right.

Nicholas: As much as we’d love our guests to come to Chili’s every single day, that’s just never something we’re going to achieve.

Nicholas: We have a lot of mega fans of Chili’s and they come in weekly or monthly, but by far the bulk of our guests come in quarterly or even annually.

Nicholas: So while we do put a lot of effort into increasing frequency, even more of the effort that we’re trying to do is focused on building that brand love and just ensuring that Chili’s is top of mind, or as I mentioned, the automatic answer to as many questions as possible.

Nicholas: Right.

Aaron: That’s a perfect answer.

Aaron: That’s very helpful.

Aaron: Thanks for clarifying that.

Aaron: In our prep conversation, there was a line that you said that I really liked and I’d like to bring it back for everyone.

Aaron: It was, quote, marketing brings them in and operation brings them back, end quote.

Aaron: That’s a generous thing for a marketer to say to some degree, where does the loyalty program actually sit in that handoff and what happens when operations aren’t ready for the traffic that your marketing creates?

Nicholas: Yeah.

Nicholas: Look, that’s a line that everybody at Brinker uses from our CEO, Kevin Down.

Nicholas: It’s not my own line.

Aaron: Okay.

Nicholas: But we absolutely live it and we think about it intently all the time.

Nicholas: The idea is that we bring guests into the restaurant and we make a promise in marketing.

Nicholas: Right.

Nicholas: And operations is on the hook to deliver that promise.

Nicholas: So a lot of people might know Chili is from the mozzarella cheese pull that went viral.

Nicholas: So we promote that all the time in marketing.

Nicholas: And operations really is so buttoned down that they make sure that they really deliver the mozzarella.

Nicholas: They cook it to perfection and ensure that our guests can stretch it as long as they possibly can.

Nicholas: Just like we did in marketing, right?

Nicholas: Yes, right.

Nicholas: And that’s often where brands fail, right?

Nicholas: They show this juicy burger or something like that.

Nicholas: And then they go into the restaurant and it’s just like tiny little thing.

Nicholas: And that’s fast food for you, right?

Nicholas: So in terms of my chilies, we’ve found is that we’re most effective at driving incremental visits.

Nicholas: So in my chilies, we’re not bringing in brand new guests.

Nicholas: We’re bringing in guests that we’ve already encountered, they’ve joined the program and experienced chilies before.

Nicholas: So we make sure that they feel special through recognition.

Nicholas: And that’s a big thing that we’ve played on a lot.

Nicholas: And then we just remind them about our delicious food and drinks and make sure that we’re in that consideration set that we talked about.

Nicholas: And then we also keep them informed about new menu items, right?

Nicholas: So those are a lot of the basic things that we do.

Nicholas: But from an operation standpoint, we work hand in hand with them.

Nicholas: We are in meetings almost daily with them, talking about their plans and our plans, making sure they are aware of what our content calendar looks like so that they can identify like, oh, hey Nicholas, you’re promoting that item on that day.

Nicholas: Let’s make sure that our restaurants have enough on hand so that they can actually put that on a plate and serve it to the guest and we don’t run out.

Nicholas: So you asked about if we drive traffic that they can’t deliver.

Nicholas: We work so closely that almost never happens.

Nicholas: I guess it would be a nice problem to have, but we do everything that we can to avoid it ever happening in the first place.

Aaron: I love this because it resonates with things that we talk about and you’re a CLMP yourself, so you know this in our operations course that you need to be able to deliver on the loyalty promise.

Aaron: And the brand promise to go hand in glove.

Aaron: So I love this.

Aaron: This is a great example of an organization really taking that onus into everything that they do.

Aaron: So great.

Aaron: Thank you for that share.

Aaron: Another thing I want to pick up on that caught my attention from our conversation was this idea of, quote, ruthless simplification, end quote.

Aaron: What do you actually take out of my chilis?

Aaron: What would end and what was the hardest thing to give up internally to some degree?

Aaron: Just trying to get an understanding of organizational components and the politics of that cost, you’d in getting to a more simpler MyChilis program.

Nicholas: Yeah, sure.

Nicholas: So ruthless simplification is actually a cross-company effort.

Nicholas: Right now, we’re looking for opportunities to make it easier for restaurant operators to run their businesses.

Nicholas: I understand that we had about, I think, 120 menu items and we brought it down to about 70.

Nicholas: So that’s just a big example, an easy one to understand, right?

Nicholas: But we’re doing that both in the restaurant as well as what we call the RSC.

Nicholas: It’s our headquarters, but we call it the Restaurant Support Center.

Nicholas: So we’re always looking for opportunities to simplify things, make sure that every hour that we’re working and every hour our team members and the restaurants are working as a productive hour.

Nicholas: In the context of my chilies, what, as I mentioned, when I was interviewing for the role, we were already pulling back and that was great.

Nicholas: So what we simplified was we had been in all the way through November, 2024, giving out weekly rewards.

Nicholas: So there were free appetizer, $5 off of $25 of span, free kids meal.

Nicholas: So all our guests and our members were trained that, they will get something free each week that they can go in to Chili’s and take advantage of.

Nicholas: And that made a ton of sense when we were trying to drive traffic.

Nicholas: We were at the beginning of the Chili’s turnaround, which has been a five year journey.

Nicholas: But by November, 2024, traffic wasn’t a problem.

Nicholas: And so at the executive level, they made a conscious decision like, hey, it’s going to be tough, but let’s pull back.

Nicholas: We’ve got traffic coming in.

Nicholas: We don’t always have these windows.

Nicholas: And I know a lot of people listening and loyalty professionals that probably have experienced them themselves.

Nicholas: So we cut the cord.

Nicholas: We went cold turkey and stopped sending out those weekly rewards.

Nicholas: And naturally, there was a little bit of grumbling from the members, but they still get the date.

Nicholas: That’s a full group.

Nicholas: Yeah, free chips and salsa every visit.

Nicholas: And they still love that.

Nicholas: And they get their birthday reward.

Nicholas: But we’ve been able to introduce some things that also took the sting off and also drive that brand loyalty.

Nicholas: So we’ve introduced free giveaways, we’ve leaned into sponsorships.

Nicholas: So we sponsor Carson Hosovar of NASCAR fame and Spire Motorsports.

Nicholas: And so we’ve been able to deliver amazing experience for guests in terms of giveaways and meeting him and things like that.

Nicholas: So those are the sorts of things we’ve done that started before me.

Nicholas: And then the other thing that we introduced and simplified was that redemption experience.

Nicholas: It was super clunky on the Ziosk.

Nicholas: You had to go to your wallet, you had to select your free chips and salsa, you had to hit apply, and then you had to go back.

Nicholas: And it was not great.

Nicholas: And it took up a lot of team member time too, because they had to explain it.

Nicholas: And sometimes they couldn’t even fix it, and they had to then go to the point of sale away from the table and get a manager to swipe their card.

Nicholas: And so over the last 18 months, we’ve been working on solving that.

Nicholas: And so now it’s just a seamless experience for guests.

Aaron: Oh, I love that.

Aaron: And I mean, you’ve described one of your goals as being supermarket simple, where a guest just has to sign in and a server never has to explain how to do it, and then the benefit arrives.

Aaron: But talk to us a little bit about the server side of that, because it rarely gets discussed.

Aaron: You’ve said manager interventions, and you’ve got your own internal service quality metric, the GWAP, standing for guest with a problem.

Aaron: Both of those scores have dropped.

Aaron: So how much of loyalty design is really operations design from your point of view?

Nicholas: Yeah, that’s right.

Nicholas: So the impact of Zingrate, we finished the rollout of supermarket simple in July, so just recently, and the way we did it was very deliberate.

Nicholas: We only put it in 150 restaurants.

Nicholas: Once we tested it in one or two, we rolled it out to 150 and just stopped, and just waited for several months to look at the data, see the impact, and you touched on a couple of them.

Nicholas: The big ones were that the manager who had to go and the point of sale and swipe to solve the problem, that’s dropped 93%.

Nicholas: So we’re saving tons of team member hours across our 1100 restaurants.

Nicholas: And then you mentioned, we call it GWAP, the guest with the problem, that score has also dropped.

Nicholas: So we were able to look at the 150 test restaurants, compare it against the remainder of the brand.

Nicholas: And that score has improved as well.

Nicholas: So super satisfied with the results.

Nicholas: And I think that designing the operation of your program, but also understanding the operation of everything that goes into your business and the customer experience is critical.

Nicholas: I’ve heard it before on the podcast and I’ve said it myself a million times, if you don’t have a good quality product or service, a loyalty program just isn’t going to help, right?

Aaron: So true, so true.

Nicholas: Yeah.

Nicholas: And so one of the things that Brinker has really taken to heart is, every new employee has to go into a restaurant and work there for two days.

Nicholas: So within the first couple of months, you will find yourself in a restaurant working.

Nicholas: So I did a day in what we call the harder house and in the kitchen.

Nicholas: I prepped salads, I worked the fryer, I flipped burgers and then on day two.

Nicholas: Wow.

Nicholas: I was bussing tables on day two, shadowing a server.

Nicholas: I was putting all the batteries and all of the 50, 60 Ziosks to get the day started.

Nicholas: That just really instills the understanding of how things work.

Nicholas: I also dine at Chili’s pretty frequently.

Nicholas: In a couple of hours, I’m going into a Chili’s because I want to test some things that we’ve heard through some of the portals where team members put in feedback about things they’re identifying.

Nicholas: Let’s see, is that happening really?

Nicholas: Or is it a misunderstanding?

Nicholas: How can we solve that problem for the team member?

Aaron: Nicholas, I have to give you kudos because in marketers, we sometimes sit, not quite ivory tower, but certainly in head office or not on the front line or in amongst the consumer and we’re advocates of research and fact-based decision-making.

Aaron: So the more time that you have within the experience yourself, and sounds like you’re also an avid member of Chili’s in terms of wanting to showcase the experience so you can improve it, I think that really makes a ton of sense and we as marketers need to step out of our offices a bit more to be into that front line experience alongside our other employees.

Aaron: So kudos to you on that.

Nicholas: 100 percent.

Nicholas: Yeah, it’s critical, yeah.

Aaron: 100 percent agree with that.

Aaron: Switching gears just slightly because this is a topic that I’m personally interested in.

Aaron: I love tequila and margaritas, so let’s talk a little bit about game of vacation and the Margarita of the Month Club.

Aaron: So for those who don’t know, Chili’s has run a $6 Margarita of the Month promotion for years, right?

Aaron: But in February, you turned it into a club.

Aaron: You’ve got merch, you’ve got a field book, a way to opt in through MyChilis, obviously.

Aaron: And then what used to make you look at a menu item is now a loyalty construct.

Aaron: Talk me through that thinking and why you took that path.

Nicholas: Yeah, yeah, so this was a cross-marketing initiative, not just in the loyalty space.

Nicholas: And what we saw was, as you mentioned, for years we’ve been offering the $6 Margarita of the Month.

Nicholas: And what we identified is a lot of our guests had sort of made it a ritual, right?

Nicholas: So they would like hear, okay, new Margarita of the Month has been announced, got to go on to Chili’s.

Nicholas: And so we were able to see that literally tens of thousands of our guests were regularly coming in.

Nicholas: And so we just wanted to lean into that and recognize these guests that had already made it a ritual and see if we could amplify it.

Nicholas: So part of the marketing team made a whole merch line for Margarita of the Month with polos and caps and fun stuff and mentioned the book where you could sort of keep track of your tasting of Margarita of the Month.

Nicholas: And the nice thing was because we already had my Chili’s, we said to the team, hey, look, we don’t need to make a new club that people can have to opt into and terms and conditions and all of that.

Nicholas: We’ll support it for you.

Nicholas: We’ll be the platform that brings this to life.

Nicholas: And so that allowed us to be really nimble.

Nicholas: We created a new landing page that we could send people to that was sort of branded Margarita of the Month, but it was a my Chili’s sign up process that was identical to the existing one.

Nicholas: So super, super easy to execute.

Nicholas: So yeah, it’s been a lot of fun.

Aaron: Oh, that’s amazing.

Aaron: And knowing the program a little bit, I’m in Canada, but when I’m in the US., I actually do frequent Chili’s.

Aaron: You’d be happy to know.

Aaron: But I know that after this, you kind of fast followed with the ideas of stickers for guests for each of the Months, Margarita, that you kind of talked about in the Passport, the book, but also a digital trophy case that kind of grades out the ones they missed.

Aaron: So there’s a bit of FOMO mechanic, Fear of Missing Out.

Aaron: And we talk about FOMO a lot in the loyalty constructs that we teach through the Laws Academy.

Aaron: And it can be a very sharp instrument.

Aaron: So how do you walk that line between motivating and manipulating to some degree?

Aaron: What are your thoughts?

Nicholas: Yeah, you’ve got to be careful, right?

Nicholas: But it is a great mechanic to lean into when you can do it the right way.

Nicholas: And we had this idea while we were standing up the Margarita of the Month Club.

Nicholas: And so we moved quickly to stand it up, as I mentioned.

Nicholas: But while we were building it and launching, we also were working on this sticker concept.

Nicholas: And so we continued to iterate on those concepts that we’d come up with.

Nicholas: And as I mentioned earlier, like recognition, it’s something that we’ve leaned into very heavily.

Nicholas: And this was another opportunity to continue to lean into it and recognize those people that we’d seen already, this ritual that they’d already come up with themselves.

Nicholas: And so the sticker idea is what we latched on to, and so when you come in and enjoy your Migrate of the Month, we’ll recognize you within a few days and send you this digital sticker.

Nicholas: And then periodically we’ll also include the trophy case that you mentioned.

Nicholas: And so you can see how you’re doing, have a good laugh about the fun stickers.

Nicholas: The Migrate of the Month is super cool.

Nicholas: They’re often very colorful.

Nicholas: They often have swizzle sticks, so they just really lent themselves to the sticker idea.

Nicholas: We’ve got this amazing CRM and Loyalty agency, Gale, who really brought this to life for us.

Nicholas: And the primary thing that we’re doing is recognizing guests.

Nicholas: And one thing we’re very conscious about is we’re not like wagging our finger at our guests and saying, hey, you missed out.

Nicholas: So we don’t want to do that.

Nicholas: We just want to say, hey, thanks for coming in.

Nicholas: Hope you enjoyed the Migrate of the Month.

Nicholas: And then we also are working on teasing Migrate of the Month so people know what’s coming up next.

Aaron: Very interesting.

Nicholas: Yeah.

Nicholas: So lots of fun.

Aaron: Nicholas, this is a bit of what I call an obvious Eddie moment, but margaritas are alcohol.

Aaron: So you’ve been explicit that you stayed well clear of anything that could encourage over consumption with this program, obviously.

Aaron: But walk us through the guardrails.

Aaron: What did you rule out and how did you build a collection mechanic that rewards trying margaritas without rewarding consumption volume?

Nicholas: Yeah.

Nicholas: We’re very conscious, like you said, about avoiding over consumption.

Nicholas: So if you get the sticker because you came in, great, we’ll send it to you.

Nicholas: There’s no bonuses if you come in and get the same margarita again, you don’t get a second sticker, there’s no tiering, there’s no status or anything like that.

Nicholas: There’s no value to the sticker either.

Nicholas: It doesn’t give you a future discount or anything like that.

Nicholas: We’re just trying to make it fun, keep it simple, and to your point, avoid trying to encourage copious quantities or drinking like that.

Nicholas: That’s just not something that we’re interested in.

Nicholas: We just want to continue to lean into this ritual that people have already created for themselves.

Aaron: I love that as well too, that’s great.

Aaron: I certainly can’t wait to get down to the US to try that myself, or off to one in the city in Toronto.

Aaron: Listen, we’ve talked a lot about different measurements that you’ve had in terms of your own unique ones with the GWAP and also the shift of trying to focus more on engagement for lack of a better term than specifically increase traffic.

Aaron: How do you measure that?

Aaron: How do you know your program is doing anything?

Aaron: You pointed to incremental visits and average order value a little bit, but how do you establish incrementality when you can’t easily hold out a control group and the brand is growing regardless?

Nicholas: Yeah.

Nicholas: It’s always a thorny problem in any loyalty program, isn’t it?

Nicholas: When we were doing Microsoft Rewards, we were able to do Bayesian time series analysis.

Nicholas: We had cookies that allowed us to track non-members and things like that.

Nicholas: That doesn’t exist in Chili’s.

Nicholas: We don’t have anything like that.

Nicholas: Amazingly, when I joined, we didn’t really have a good answer to that question.

Nicholas: But fortunately, with token data from credit cards that we got access to within the last couple of years, and just some really smart people on the team, and we’ve got talented analysts and finance team, they did just amazing work.

Nicholas: And what we were able to do, because we wanted to avoid the problem that you’re, I know, familiar with of self-selection, right?

Nicholas: So we didn’t want to look at people who weren’t in the program and people who were, because self-selection makes those numbers just unbelievable.

Nicholas: So what they were able to do, because of that token data, we had enough to do a pre-post analysis of eight months before someone joined the program and then eight months after.

Nicholas: And so they crunched the numbers for us and showed the massive incrementality with the word driving.

Nicholas: As you mentioned, it’s primarily incremental visits.

Nicholas: There is a small amount of AOV increase that we see as well, but we don’t really focus on that.

Nicholas: We think that incremental visits is really the big driver of the program.

Nicholas: So yeah, we were thrilled when we were able to go to ELT and say, hey, look, we know what we’re driving here.

Nicholas: All of the comp budget that you give us is being well-spent because you’re getting a really great return on it.

Nicholas: So that was an easy conversation to have once the team was able to pull those numbers together for us.

Nicholas: One other thing I would say is, and I mentioned them before, that Gale, our CRM and Loyalty Agency, they manage the operations of the program on a daily basis.

Nicholas: So we use Salesforce Marketing Cloud for all of our CRM methods.

Nicholas: They’ve put in place for us a global control so that there’s a certain number of members who don’t get any communication whatsoever from us.

Nicholas: Then they also do a holdout on a monthly basis as well.

Nicholas: So with those two control groups, we can see the incrementality from the CRM.

Nicholas: So on a quarterly basis, we dive in deep with them and look at the performance of the different emails.

Nicholas: What were the top performers of the month?

Nicholas: What themes can we pick out?

Nicholas: We’re able to drive massive incrementality as well from just the individual email sends.

Aaron: I love that.

Aaron: A comment and then just a curious minor question.

Aaron: The comment is really a bit of a building on what you said about marketing driving sales overnight and building the brand over time.

Aaron: What you just talked about in terms of your measurement philosophy and keeping the controls out.

Aaron: That’s really going to be a strong way to defend the investment against your CFO when you’re looking on a quarterly basis because you’ve designed the measurement structure to really play into that C-suite and particularly the CFO for some reason.

Aaron: That’s my first comment.

Aaron: Kudos to you.

Aaron: The second part is really just a curiosity for me as a researcher and an analyst is why eight-month time period pre-post versus 12-month versus 12-month?

Nicholas: It’s actually a really simple answer.

Nicholas: That was the length that we had.

Nicholas: Because we only got the token data a couple of years ago, when we were doing this analysis, we didn’t have any more than eight months.

Nicholas: We wanted to compare the same time on either side.

Nicholas: Well, we’ve only got two months of pre-

Nicholas: and eight months of post.

Nicholas: Good question.

Aaron: Happenstance more than anything versus full design, but it works out in terms of the philosophy, like you say, of measuring the same amount of time.

Aaron: Very good.

Aaron: Cool.

Nicholas: Yeah.

Aaron: Nicholas, the post-visit trigger email is really a small mechanic, but as you’ve talked about it, it apparently has a really outsized effect.

Aaron: I like that it’s concrete and it’s a replicable tactic, but what’s it actually doing for you?

Aaron: Why does, I guess, that moment outperform those that marketers usually spend money on?

Aaron: Can you talk me a little bit through your thinking and results?

Nicholas: Yeah.

Nicholas: We’re super proud of these new emails that been in the market for just a little, probably under a year now, and that they address two things that we identified.

Nicholas: One is that we, like most loyalty programs out there, had all of the basic journeys in place.

Nicholas: We had a welcome journey, we had a birthday journey, because like most programs, we give away a birthday gift as part of the loyalty program.

Nicholas: One thing that we identify is we didn’t have anything that you would get if you came into the restaurant, which is the most important thing.

Nicholas: We haven’t gotten to that yet.

Nicholas: We put it in place to help address that.

Nicholas: The other thing that we were wanting to address was, we were treating every member of our program exactly the same.

Nicholas: Whether you were most frequently missed or most infrequent, you would get exactly the same from us.

Nicholas: We wanted to address that too.

Nicholas: Super proud with the way these have come together.

Nicholas: Gail did some amazing creative work for us that is so on-brand.

Nicholas: There’s actually three different emails that you might get.

Nicholas: The first that I’ll talk about is what we call the 1 percent.

Nicholas: That addresses our best top guests who eat one of our five most important menu items, which are burgers, crispers, fajitas, the triple dipper, and I know you’ll like this one, the margarita.

Nicholas: Yes.

Nicholas: Wonderful.

Nicholas: If you happen to be someone who has purchased one of those items the most in the past 12 months, you’ll get the 1 percent email.

Nicholas: It’s like a badge that recognizes you as like a CEO of burgers or something fun like that.

Nicholas: Those are resonating really well.

Nicholas: The second is if you happen to hit a random milestone.

Nicholas: If you’ve, maybe you purchased the 1,570,000th triple dipper in Delaware, you might get an email letting you know that you did that.

Nicholas: Good job, Aaron.

Aaron: Something that they wouldn’t be able to track against.

Aaron: It’s a surprising delight moment that you just arbitrarily calculated for them, it sounds like.

Nicholas: Yeah, and it’s super on brand for us.

Nicholas: It’s a very sort of Chili’s thing to do some random thing like that.

Nicholas: Like, good job.

Nicholas: Then the last one is if you don’t qualify for either of those two, you get this email that triggers, you see it a couple of days after you’ve been into our restaurant, the headline is Great Job Eating, which again, I think is a so on brand.

Nicholas: I love that when Gail sent that one as a concept.

Nicholas: I’m like, oh my gosh, you nailed it.

Nicholas: Those are the Post-Visit Trigger emails, and they just lean into that importance of recognizing someone and just saying thank you.

Nicholas: One other thing that I’d say that we deliberately didn’t do is we’re not selling anything in these emails.

Nicholas: It doesn’t say great job eating.

Nicholas: Hey now, here’s another $5 off your next whatever, right?

Nicholas: It’s just thanks.

Nicholas: We really like seeing you here.

Nicholas: One other thing in terms of driving that emotional loyalty, this is one of the ones that’s performing the best.

Nicholas: That 1 percent email especially, we’re seeing people share it on social media.

Nicholas: On my inbox on Mondays, I get what’s called the praise report, and customer support sends me this report that has verbatims of things that people have emailed in support.

Nicholas: Marketer’s dream.

Nicholas: Yeah.

Nicholas: That 1 percent email since we started it, is showing up almost on a weekly basis.

Nicholas: Just a couple of weeks ago, someone wrote in, and the very first line was, thank you for recognizing me.

Nicholas: This was a guest who had just come in, got the email, and just obviously, it landed exactly the way we were hoping it would.

Nicholas: Amazing.

Nicholas: He will talk about why.

Nicholas: This is why I come in so much, because this is the name of my server who I always ask for, and you guys always make me feel special, and everything that we’re like, that is what we were trying to achieve.

Nicholas: It feels like we’re really doing a good job of leaning into that emotional loyalty now.

Aaron: Well, in the differentiation, I mean, you’ve battled against what is effectively a loyalty faux pas of treating all your customers exactly the same.

Aaron: So to rationalize where those that matter are and get them more engaged, while not alienating the rest of your customer base, but really focusing in there, that’s a traditional loyalty tactic that we’re always promoting.

Aaron: So I love seeing this as an action.

Aaron: Thank you for that, Cher.

Aaron: That’s amazing.

Aaron: Hey, Nicholas, so you probably know this, but we’re in the publishing business as well.

Aaron: But I’ve noticed some stuff that you’ve written and had published.

Aaron: I think I’ll paraphrase this a bit, but essentially you were talking about the idea that a good loyalty program used to set a restaurant brand apart, but now it’s simply the cost of admission.

Aaron: If that’s true, where does differentiation come from next, and is your best program, even the right ambition anymore?

Nicholas: Yeah.

Nicholas: So obviously, almost all restaurant brands these days have loyalty programs, right?

Nicholas: So they’re less about acquiring new guests and more about defending your existing guest base, right?

Nicholas: And keeping your guests there.

Nicholas: And we like to talk about the concept of extending the chain of visits, right?

Nicholas: So we’re like, what do we can do to continue extending that chain with our guests?

Nicholas: And I think what sets you apart is like the things that only uniquely you can do.

Nicholas: And so, you know, what is it about your brand that is unique?

Nicholas: What is it about the relationships that you have and the assets that you have that you can use to continue to drive that emotional loyalty with your guests that your competitors can’t, right?

Nicholas: So as I mentioned, you know, the cast and hosts of our sponsorship that we’ve got with NASCAR, you know, as I mentioned, we leaned into that heavily this year.

Nicholas: We’re going to continue to do that sort of thing and just make these exclusive experiences available for our guests through things like that and through things that only the sort of Chili’s brand can do.

Aaron: Wow.

Aaron: That’s truly impressive.

Aaron: I love what you’re doing.

Aaron: This is a great, great success story that you’ve shared with us today.

Aaron: Let’s take a little bit of a corner using building on the NASCAR theme that you just talked about.

Aaron: You’re now taking on Maggiano’s as well.

Aaron: For those who don’t know, it’s a 48 chain restaurant.

Aaron: It’s a different guest profile, different occasion they would be into that particular restaurant, and certainly a brand as you’ve shared with us in the middle of its own reset.

Aaron: What do you think will transfer from the Chili’s playbook?

Aaron: If there was a mistake that you’d want to avoid, what would that be?

Nicholas: Yeah.

Nicholas: Recently, my team took on the Maggiano’s brand, which is an existing Brinker brand.

Nicholas: Now, we’re responsible for CRM for them as well.

Nicholas: They don’t actually have a loyalty program, but I think, and also they don’t have a free reward every visit, but they do have a free appetizer when you join the program, or when you sign up for the E-club is what we call it.

Nicholas: They have a birthday reward, and because anniversaries are real special visits that Maggiano’s does really well with, a lot of people like to celebrate their anniversary there, we have an anniversary reward as well.

Nicholas: I would say we definitely want to avoid getting into transactional loyalty and adding on any more elements than what already exist.

Nicholas: I think we’ve seen with Chili’s that pulling back was the right move, and I wouldn’t want to reverse course with Maggiano’s in any way there.

Nicholas: But I think something like that post is a trigger e-mail that we talked about, that doesn’t exist only.

Nicholas: So something like that could be something that we explore and it’s early days.

Nicholas: But definitely, staring well clear of transactional loyalty, I think that’s an easy lesson there to make sure we don’t make that mistake.

Aaron: Yeah, the same philosophy applied, but just with some different tactics for that different profile of customer and the different reasons for why they go to that restaurant versus Chili.

Aaron: So I love that.

Aaron: Very good.

Aaron: Cool.

Aaron: Hey, this has been, as I said, a great conversation, so insightful and wonderful.

Aaron: But before I ask my final question, I do want to take the opportunity to open the floor to you a little bit.

Aaron: Is there anything that you want multi-marketers or restaurant operators to take away from the Chili story and that we haven’t really covered yet in today’s conversation?

Nicholas: I think the only thing I would say is one practice that I learned and I’ve taken with me that I learned at Microsoft was this concept of dogfooding.

Nicholas: We always would be the first to use any new software that was developed or a new version of Bing or on Xbox.

Nicholas: We had an app for Microsoft Rewards, so we would always be the first to kick the tires on that app and catch things before our customers caught them.

Nicholas: Obviously, the term dogfooding probably doesn’t lend itself super well to the restaurants.

Paula: Not the restaurateurs, yeah.

Nicholas: I try not to tell my team to dogfood stuff.

Aaron: Yeah, for sure.

Nicholas: It comes out all wrong.

Nicholas: But the philosophy of kicking the tires on everything that our guest is going to experience and our member of the MyChilis program is going to experience is something that I try to show and lead with and encourage the rest of the team to do the same.

Nicholas: So, for example, when I joined, I signed up to the program and looked at like, what are the emails that I get over my first 30, 60 days?

Paula: Very logical.

Nicholas: Yeah, and I caught the fact that I had installed the app on my phone, just the Chili’s app, it’s not a MyChilis app, and then on day three, I got an email saying, hey, you’re part of MyChilis now, don’t forget to install the app.

Paula: Oh, no.

Nicholas: I’m like, what?

Nicholas: So either we haven’t designed the journey right, or we’ve got a data problem.

Nicholas: And fortunately, it wasn’t a program design problem, it was a data problem on our side, on the Brinker side, and we’re able to solve it.

Nicholas: And as you mentioned, I just joined Maggiano’s, well, not doing, but took over CRM for Maggiano’s.

Nicholas: And so I’ve been doing the same thing.

Nicholas: And one thing that was super interesting was I joined, the email didn’t come for hours welcoming me.

Nicholas: And it comes instantly when you join Chili’s, well, my Chili’s.

Nicholas: So I was like, what’s up with that?

Nicholas: And again, discovered that there’s a process issue that isn’t working quite right.

Nicholas: And the team’s already working on it and trying to solve it.

Nicholas: So you should set eyes on your program.

Nicholas: If you’ve already done it, but it’s been a year, do it again.

Nicholas: Oh, I love that.

Aaron: That’s great advice.

Aaron: Love that.

Nicholas: Think change all the time.

Nicholas: And you might discover that some rollout of something or other broke something and try and catch it before your guests do.

Nicholas: Yeah.

Aaron: I think that’s a savvy strategy for sure.

Aaron: I love that you’re so involved with the physicality and the actual delivery itself of the program to make it better for your guests.

Aaron: So very, very cool.

Aaron: To close out our conversation, one of the things that Bill and I love to do as we end our convos is, we ask our guests to share one moment, and it can be professional personal about a genuine epiphany.

Aaron: And then that epiphany would be around why customer loyalty works.

Aaron: Do you have anything that you can share?

Nicholas: Yeah.

Nicholas: I guess the example, I’ll give you two, I know I’m not supposed to, but they’re very similar, is just some of the personal touches that you can deliver to your members.

Nicholas: So I’m part of Advantage because American Airlines Hub is here, and I got status just because I was flying a lot up to Montreal when I was working for Misplay.

Nicholas: And one time I wasn’t sitting up front in business class, I was sitting back and the front line person in the front came back to me with a handwritten note to say, thanks for flying with us and being a member.

Nicholas: And it was just handwritten.

Nicholas: And I was like, he went all to that length to do that.

Nicholas: That’s super nice of him.

Paula: Very interesting.

Nicholas: And the same thing when I was staying at the same hotel, month after month in Montreal, it was a Marriott Hot Hotel, it was the W there.

Nicholas: Oh, I know it well.

Paula: Yeah.

Nicholas: And after a few visits, I got a note and some strawberries and chocolates that were just on the bed when I opened the door, checked into my hotel and the manager had identified the fact that I was coming regularly.

Nicholas: And just those sort of personal touches don’t cost a lot, but they mean a ton to the people who receive them.

Aaron: Oh, you’ve hit a soft spot for me and I couldn’t agree with you more.

Aaron: Real quickly, I was in Dubai at a hotel for a week when I was delivering some research in that particular market and I was away.

Aaron: And the concierge of all things was organizing a zipline for me, not talking about anything else, but just asked three questions and found out I have a dog named Pepsi.

Aaron: And I arrived back after going on my ziplining excursion that she arranged for me, to the room which had a little chocolate cake embossed with the Pepsi logo, the rights infringed apart, two Pepsi colas and a handwritten card from the actual manager of the hotel saying, we know you have choices.

Aaron: Thank you for staying with us for the week.

Aaron: Hopefully this will help you not miss home so much with your dog Pepsi.

Aaron: It was certainly a surprise and delight, but they were paying attention and tracking through their system to be able to showcase, and that was on the first visit, let alone what you’re describing, where repetitively and they’re going, hey, this guy keeps coming back to our establishment.

Aaron: He has choices in Montreal.

Aaron: There’s lots of hotels in and around where that W is, because I know that area well when I worked at AMIA, and the reality is he’s still choosing to come back to us, so let’s acknowledge that for him.

Aaron: That’s amazing.

Aaron: That’s what true loyalty delivery should really be like.

Aaron: That’s a great share.

Nicholas: Yeah, and it’s the sort of thing that we tell, like you’re telling this story, I tell this story to people all the time.

Aaron: I’m actually going to steal your story and embed it into some of the talk track that we have, because I think it’s great both from the airline and then a hotel.

Aaron: So that’s two programs coming together to deliver on your trip experience over time.

Aaron: So it’s a bit of a double down, very good.

Nicholas: Yeah.

Aaron: Hey, Nicholas, really appreciate it.

Aaron: So, you know, continued success.

Aaron: We’re wishing you, you know, as you continue to grow the program at Chili’s Grill and Bar and then into Maggiano’s.

Aaron: But I just want to thank you for taking the time.

Aaron: Very insightful, as I mentioned earlier.

Aaron: I’ve learned a lot.

Aaron: I’ve really enjoyed it.

Aaron: Had a lot of fun with this conversation.

Aaron: So thank you for that as well, too.

Aaron: We know you’re a very busy man.

Aaron: And so we appreciate you taking the time, as I said.

Nicholas: It’s been an absolute pleasure.

Nicholas: I always enjoy it and we’ll continue to listen to get some more insights that I can apply here.

Nicholas: Yeah.

Aaron: And actually at some point, hopefully in a year or two, hopefully we can have you to come back and talk more about the upskilling that you’ve done and the upgrades that you’ve done to the MyChillies program as well.

Aaron: So keep that in mind.

Aaron: For those of you listening, as always, stay loyal.

Aaron: And we do appreciate that you took the time to listen to us today.

Aaron: Take care.

Paula: This show is sponsored by Wise Marketer Group.

Paula: Operating the Wise Marketeer and Loyalty Academy.

Paula: For nearly 25 years, the Wise Marketer is the industry’s longest serving publication and source for news, information and insights, which now includes its own branded industry research, insights and advice.

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Paula: The Loyalty Academy sets a global industry standard for loyalty education with its Certified Loyalty Marketing Professional or CLMP designation, which has created a community of more than 1200 marketing executives and professionals across more than 50 countries.

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