Chipotle
When I worked at my corporate job, I was a near-daily regular at the local Chipotle. The food was great, relatively healthy, and I ordered the exact same thing almost every day for over ten years. I was so consistent that the staff knew me by name and often had my order ready before I even walked through the door.
Fast forward to a few weeks ago.
After a Saturday of kids’ sports, we decided to order Chipotle online. Our order was scheduled for pickup at 7:20 p.m., precisely when I arrived.
I was greeted by a line out the door for in-person orders and more than a dozen people waiting for online orders.
I finally collected our food at 8:30 p.m., more than an hour late. The order wasn't quite right, and the food wasn't nearly as good as I remembered.
Unfortunately, this wasn't an isolated experience. Over the past several years, our orders have routinely been late, incorrect, or disappointing. We rarely eat there anymore, and after this latest experience, it will probably be a long time before we return.
And apparently, we're not alone. Chipotle's stock has fallen more than 50% from its highs as same-store sales have struggled, even as the company continued opening new restaurants.
Ten years ago, I couldn't imagine going a week without eating at Chipotle. Today, I cringe at the suggestion.
What was once a consistently positive experience has become an increasingly negative one. The deterioration didn't happen overnight. It happened one disappointing visit at a time.
Chipotle has become a case study in how businesses lose customers.
Businesses spend enormous amounts of time, energy, and money acquiring new customers. They invest in marketing, sales teams, promotions, and expansion. In Chipotle's case, that expansion meant opening more restaurants.
But acquiring customers is typically far more expensive than retaining them. And while growth gets most of the attention, retention is often taken for granted.
The problem is that customers don't remain customers simply because they've been customers before.
Every transaction is another opportunity to strengthen the relationship or weaken it. Every interaction gives customers another reason to return or another reason to look elsewhere.
Those experiences accumulate whether they are positive or negative.
Fifteen years ago, Chipotle earned my business with every fresh burrito bowl. Over the past several years, it has gradually lost that business with every wrong, late, and poorly made order.
Customer retention isn't just something you have, but it’s something you continually must earn.
So, what actually keeps your customers coming back?
Retention Is Earned
Don’t think of customer retention as something your customers do. I often hear retention described as:
“We have loyal customers.”
“Our churn is low.”
“We have many repeat customers.”
Customer retention is all about what you do. The repeated actions and interactions you perform for and with your customers.
Customer satisfaction has a half-life. It decays like a radioactive isotope that must be re-energized with each interaction, assuming you get the next one.
So what are the behaviors that lead to customer retention?
What Gets Retained?
The following are five sources of retention, ordered from foundational to increasingly powerful ways to keep your customers coming back.
The Product - It Works
A good product is table stakes. Rarely, will a customer tolerate a bad product. They might tolerate a lesser product for various reasons but not an outright poor product.
The food must taste good, the device should function as expected, and the service should deliver on its promise.
During another relatively recent visit to Chipotle, the worker at the counter asked if I wanted Guacamole. I stared down at the old, brown substance in the tub and declined with a scowl. I mentioned to the worker that they “probably shouldn’t serve that to anyone.”
If your product doesn’t live up to the minimum of what you’ve promised, don’t assume your customer will come back for more.
Reliability - I Know What I’m Getting
Say what you want about McDonald’s but you get the same below average cheeseburger no matter where you visit them. I’ve eaten at McDonald’s on three different continents and it’s been almost the same exact meal each time.
Reliability is all about reducing risk. A first time customer is taking meaningful risk trusting your business. Each time the product delivers, their perception of risk decreases. Even hiccups now and then will be explained away as a “one-off” if you’ve been consistently good up until then.
If you’re product is unreliable, a customer may perceive another visit to be as risky as trying your competitor. Being unreliable is an easy way to lose business.
Ease - You Make My Life Easier
Lunch lines at noon in downtown Columbus were always long. This was before online ordering. When Chipotle would have my order ready for me to pickup at the front, it saved me a painstaking fifteen minutes. They just made my life easier.
A large part of Apple’s appeal to customers is that their products “just work”.
You can make your customer’s life easy through a simple purchase process or when customer service is prompt and easy to reach. Even returns should be easy. Everyone has been frustrated when unsubscribing from an online service. You know the ones, where it takes twenty minutes to even find where to unsubscribe. Then you face the gauntlet of endless surveys and counter-offers.
Customers remember the feeling of ease you bring into their hectic lives. They even more so remember the frustration if part of their experience is difficult. It can be enough to encourage them to make a different purchase decision the next time they consider your business.
Recognition - You Know Me
The staff at the downtown Chipotle not only knew my order, they knew exactly how I liked it assembled. They knew to go a bit heavy on the chicken and light on the peppers. They knew about the time of day I came in, where I worked, and who my friends were.
It wasn’t just recognition, but a relationship. They were people I enjoyed seeing everyday.
What kind of relationship do you have with your customers? Are they numbers on a screen? Do you know who they are and why they buy from you? Do you know what problems you’re solving for them?
The more you know and the stronger the relationship, the greater likelihood they come back again and again.
Recovery - Things Go Wrong, You Make It Right
2015 was not a good year for Chipotle. They had several foodborne illness outbreaks including E. coli, norovirus, and salmonella that ultimately led to a $25 million fine. In spite of that, I showed up on a daily basis as I had always done. There were no lines. Often, I was the only person in the restaurant.
Some might say I just really liked Chipotle. I would argue that I understood the risks more than most due to my background in microbiology and immunology. The norovirus was location specific. I knew the E. coli and salmonella were likely linked to raw vegetables like tomatoes and lettuce. My order contained only cooked meat and vegetables as they had quit serving guacamole for several months as a precaution.
Regardless, there were risks. For the first few weeks I only paid for one meal, the rest were comped. The manager at that location knew to take care of her best customer when the company had erred.
Things will go wrong. Your business will make mistakes and not deliver the value you promised. When you do, own up to it and make it right. It’s in the difficult times you can gain the most loyalty.
The Next Step
You don’t want your relationship with your customers to be purely transactional but think of retention as a ledger. Every customer interaction creates a small deposit or a withdrawal. Build up enough positive interaction deposits and you’ve created goodwill.
But goodwill isn’t unlimited nor is it permanent. It must be added to consistently.
If you want to explore your businesses retention beyond simple metrics, do the following:
Pick one or a few repeat customers and reconstruct their last 5 to 10 interactions (purchases, returns, customer service inquiries, etc.)
For each interaction ask did you add, subtract from the relationship or was it purely transactional?
Then look a the five elements discussed above to see where you can enhance the interactions
Your business may not be high touch like a restaurant. Perhaps you sell enterprise software or you run an e-commerce site. Your opportunities might be fewer but that makes them even more important.
When I visited Chipotle each weekday, they had many opportunities to add to the ledger. After I left my corporate job, those chances declined dramatically. The fewer interactions carried more weight.
Regardless, trust and retention was earned or lost one bowl at a time.
My goal with The Leap is to provide you each Saturday with the knowledge, tools and lessons learned to help you get started and keep going toward building your future.
Whether you are making the leap to startups, solo-entrepreneurship, freelancing, side hustles or other creative ventures, the tools and strategies to succeed in each are similar.

