Photo: Chewy.com
Chewy is barking up the right tree when it comes to customer loyalty
Chewy’s customers have been singing its praises since the online pet products retailer launched in 2011. The company has built a loyal following with the fundamental understanding that pet parents regard their fur babies as significant members of their families.
The retailer has connected with Millennials and others by offering a wide selection of products, including prescription meds. Early on, the retailer jumped on the free two-day delivery bandwagon with a $49 minimum purchase requirement.
Of all the items that set Chewy apart, however, none may be more important than its direct 24/7/365 customer service operation that empowers employees to go above and beyond for their customers. Examples include sending a customer flowers to congratulate them on a wedding that was mentioned on a call. Another representative sent an unused keyboard from the company’s supply closet when a customer mentioned having a broken device.
In a 2019 interview, Chewy co-founder Ryan Cohen told Business Insider, “I thought if I could deliver the same kind of personalized experience as the neighborhood pet store, but do it online and deliver a really convenient value proposition, that we could build a really big business.”
Chewy has succeeded in building its sales, which has benefited from conditions created by the novel coronavirus pandemic, as more consumers have gone online to purchase food, toys and other items for their pets. The retailer posted a 45 percent gain in net sales for the third quarter even as it continues to search for a path to profitability.
CEO Sumit Singh has banked the company’s hopes on attracting a growing number of new customers while gaining a larger share of sales among all shoppers. Mr. Singh has said in the past that Chewy was capturing less than half of the pet-related purchases made by its customers.
The key to Chewy’s success continues to be its “neighborhood pet store” mentality. The Associated Press recently reported on the retailer’s practice of sending oil painting portraits of pets done from their profile pictures on the site. Chewy sends more than 1,000 free paintings every week.
“I just want to buy everything from them,” said Danielle Schwartz, who received a portrait of Stinky, her cat. “They’re a big company. I was shocked that they did something so personal.”
- The cofounder of Chewy explains how he created a $10.2 billion empire selling pet food to millennials who treat their animals like their firstborn children – Business Insider
- Retailers get real with high-touch service – RetailWire
- Chewy Announces Third Quarter 2020 Financial Results – Chewy, Inc./Business Wire
- Are Chewy and PetSmart better off apart? – RetailWire
- Chewy sends pet paintings to keep customers from straying – AP News
Discussion Questions
DISCUSSION QUESTIONS: Do you see the customer service ethos at Chewy as being key to reaching the retailer’s market penetration goals? What do you see as the biggest impediments to continued growth and eventual profitability for Chewy?
Poll
BrainTrust
Yes, I do see the company’s customer service ethos as key to its success. Its keys to profitability are more scale and efficient picking systems.
I’m a Chewy customer and sometimes it seems like their orders are picked and packed by hand. They can be more efficient.
I have been to their customer service center and it’s really impressive. I truly wouldn’t change a thing there. The profitability issues have to be in the supply chain.
The “neighborhood store” mentality captures the essence of what loyalty marketing is: paying attention to your customers and treating them accordingly. Like you know them and care about them. Chewy’s focus, starting at the top and extending through the organization, shows that loyalty marketing is a lot more than a typical and all too prevalent transactional program. It’s what separates leaders like Chewy’s from the laggards and those companies that simply “check the box” with a loyalty program.
Unfortunately, one of the top reasons I shop with Chewy is one is its biggest obstacles to growth: I love having big, heavy stuff (cases of canned food, big bags of dry food) for my fur babies delivered right to my door quickly. I also love having the ability to adjust my auto-ship dates. When it comes to toys, clothes, etc., I generally switch to Amazon or impulse grabs on my rare trips to an actual store. I’m sure I qualify for Chewy’s least favorite customer group yet I have to believe others are similarly situated, and motivated.
Chewy spends a lot on customer acquisition, which is one of the reasons it takes a big loss. However the business model relies on retaining existing customers and increasing their spending over time – which is where a strong customer service ethos comes in. By and large this is working as retention rates are pretty solid. Ultimately, Chewy understands that for most owners pets are part of the family – and its initiatives that play into these feelings create a strong sense of loyalty.
Chewy is a superb example of a human-centered, customer-centric brand. They understand the significance emotion plays in customer purchase intent and decisions, then leverage their ability to create genuine customer connections to build loyalty and expanded market share. Chewy’s approach to empowering their customer service agents is a highly effective page right from the Zappos playbook. This long-term vision and strategy will result in sustained brand relevance.
The only thing more important than getting your delivered prescription order correct is getting your delivered pet food order right. At least, that’s true for most pet owners. To meet pet owners’ requirements Chewy has to achieve Amazon-level service standards and better. The corner will turn for Chewy’s profitability when customers reach the same level of comfort for higher margin impulse shopping (toys, treats, etc.) that they have for their lower margin everyday food needs.
What an amazing example of a customer-centric organization! Chewy is doing all the right things in terms of solving their target audience’s pain points and going above and beyond to make them feel special. A customer-centric organization always helps build strong customer loyalty!
Pandemic challenges notwithstanding, experience still matters, and Chewy’s experiences help highlight this point. I don’t know if personal touch service alone can fuel their growth aspirations, but their ability to maintain standards and discipline bodes well for their ability to apply that same discipline to other areas of the business that can fuel growth.
Personalization in 2021 will be key to building lasting customer relationships with every brand. Zappos remains a leader in personalization by getting to know each customer no matter the issue.
Chewy has taken this philosophy one step further by acknowledging their customers’ passion and love for their pets. Showing you care is essential for any brand today.
Any company that doesn’t lead with compassion and invest in better communication platforms with its customers will fall far behind the competition moving forward.