Keeping customers is arguably harder than getting them in the first place — but it is possible.
The pandemic created a larger customer base for the meal kit industry than anyone ever could have imagined. Only a few years ago, the biggest names struggled to turn a profit, but now meal kits may finally have a solid future even after lockdowns and quarantines become a thing of the past.
With competition more hungry for market share than ever, it’s up to you to stay a step ahead. Learn the hard lessons other meal kit delivery companies acquired while trying to get customer lifetime value (LTV) to exceed customer acquisition cost (CAC).
LTV vs. CAC
If you’re spending more money to acquire new customers (the CAC) than they’ll be spending with you (the LTV), you’ll never turn a profit. This was the bleak scenario Blue Apron found itself in pre-pandemic. They were fantastic at incentivizing new customers to come on board but lost the majority of those customers within months and even weeks. In fact, their rejoin offers were so good people were signing up and canceling just to get the benefits of signing up again. In other words, Blue Apron’s CAC was far higher than their customers’ LTV. For this reason, it’s critical to consider both your LTV and CAC.
Focus on the Long Term LTV
When meal kits first appeared, the idea was that consumers would enjoy home-cooked meals without the difficulty of going to the grocery store and assembling the right ingredients in the right proportions, which would also give the consumer more satisfaction than if they just popped a frozen dinner in the microwave. But as the meal kit delivery services quickly learned, there just wasn’t enough value for most people beyond the sign-on deals. Prices were too high for what the customer received, and there was little to no reward for sticking with the service or recommending it to others.
Getting people to stick with your service week after week, month after month, and even year after year should be your goal. Rewarding the customers you already have is as important as your efforts to win new customers. Simply existing is not enough to draw people in and keep them. As the public starts enjoying meals in traditional brick-and-mortar restaurants again, you’ll need to have a unique value proposition that keeps customers coming back over and over. Here are some areas you can focus on to ensure you’re doing all you can to stay ahead of the pack.
Quality Everything
From your packaging to the food inside, everything must be top-notch. Labels featuring excellent graphic design must be straight and well applied, boxes and containers should be strong enough to survive the shipping process unscathed and protect the food inside, ice packs should still be cold when the box arrives, all food pouches should be tight and sealed, recipe cards and other inserts should be attractive and undamaged by moisture, and all items should be arranged logically and have no chance of cross-contamination or spoilage.
As for the food itself, recipes must be developed that can be accomplished by non-professional chefs but still deliver outstanding meals. One bad experience and you can bet that customer won’t come back. Customers should be treated with quality service, as well. This even means making it easy to quit your delivery service. While this sounds counterintuitive, if you make it a hassle to cancel, you can guarantee negative word-of-mouth reviews. Instead, listen to customer feedback when they cancel, look for trends among customers, and work to institute changes that will keep them next time around.
Spread Benefits Over Time
One mistake made early on was that meal kit services would incentivize a new customer with a discount and then offer no more benefits once they were on board. Some meal kit companies offered discounts and free meals to friends or family who were referred to their service but didn’t offer any benefits to the one who suggested the service in the first place. To retain more than 12% of customers after three months, the benefits and deals should be long-lasting and widespread, so the customer has a reason to keep coming back.
For example, Home Chef recently offered deep discounts to new customers, but those discounts didn’t just affect the first meal ordered. Those discounts went all the way through the fourth delivery. Another way to incentivize loyalty is by offering a club or rewards program. These options can provide benefits to customers that can only be redeemed if they stay signed on and must be re-accrued if the service is canceled and started again.
Innovate
Since most restaurants deliver or at least can be picked up by a DoorDash or Uber Eats driver, meal kits need to step up their game beyond just an assembled, ready-to-cook meal. For instance, Blue Apron partnered with Stella Artois to create the Game Day Food Box, which pairs a four-course meal full of football party-style foods for 6 as well as 4 Stella Artois beer chalices. HelloFresh created original video content with Mindy Kaling. Many are starting to cater to alternate diets, like Keto, Paleo, and Whole30, or, in the case of Sunbasket, offering prep-free ready-to-eat meals.
What meal kit companies are starting to become is a lifestyle solution, not just an alternative way of having a traditional meal. Most restaurants aren’t going to offer the kind of personalization that meal kits can offer, and that’s where you’ll be able to make your product an indispensable part of your customers’ lives.
Optimize Your Operation
Getting your meals out quickly with a high degree of quality assurance keeps customers happy. If there’s a hiccup in your production line, it must be addressed as soon as possible. Whether you’ve got slow, inaccurate machinery or employees, it’s time to retrain or replace. Here are some ways to make the process run properly:
- Make packaging simple: If your employees are having difficulty figuring out how the cardboard is supposed to fold and where the cold packs go, maybe you need to go with molded plastic or foam that makes it obvious where food and inserts should go.
- Put operations in the right order: Don’t make your employees have to undo work to finish a package. If the pork chops go under the broccoli, don’t put the broccoli in first.
- Make sure your equipment is up to the task: If you have old or worn-out machinery, then it’s time to repair or upgrade. Machines that can’t feed packages to each other without jamming or tearing containers have no business in your packing line. You should expect a package coming off the line that looks good enough to be featured on your website, with straight labels and boxes that are intact.
Choose the Right Meal Kit Labeling Partner
If you’ve analyzed your packing line and realized that your current labeling isn’t yielding professional results, then Pack Leader USA can show you how to speed up your meal kit packaging line with a modular, accurate, and consistent labeling machine that will transform your business.
Label your meal kit components and packaging faster, check out Pack Leader USA’s full line of labeling machines for meal kits and stay ahead of the competition.
More reading:
- The Meal Kit Delivery Services Guide to Labeling Equipment
- What to Look For in a Labeling Machine for Meal Delivery Kits
- Will 2021 be the Breakout Year for Meal Kits and Fresh Food?
- Meal Kit Services: A Rise in Consumer Demand
- Labeling equipment for meal kit delivery services
- More meal kit delivery service articles
