CX Teardown: The Food Subscription Industry

December 20, 2022
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The latest episode in our CX Teardown series looks into the food subscription industry.

It's a competitive and saturated market, with customer experience proving vital for brands to win and hold onto consumers who quickly cancel their subscriptions if their service isn’t up to scratch. 

For this webinar, Luke Moore joined two of Chattermill’s insights consultants, Katrina Berke and Ido Shapira. Read on for our key takeaways from the teardown, or watch the full episode below.

LIVE CX Teardown: Food Subscription - Chattermill

Food Subscription Services: An Overview of the Industry

Food subscription services have exploded in the past couple of years. The Coronavirus pandemic has seen great swathes of consumers turn to CPMG delivery out of necessity if they haven’t been able to get to supermarkets. And with many of us stuck at home, more and more have been turning to cooking as a leisure activity.

‘The food subscription business is one of the most hotly contested industries on the planet right now,’ Luke Moore says. ‘Demand has grown exponentially in the past few years, with 26% of shoppers signed up for one service or more.’

For today’s teardown, we are looking at six key brands: Mindful Chef, Freshly, Gousto, Blue Apron, Dinnerly, and Martha Stewart. We’ve analysed tens of thousands of customer feedback responses, looking at data from Trustpilot, Google Play and the App Store.

As a starting point, Katrina Berke finds that Mindful Chef leads on positive sentiment among consumers. Freshly and Gousto are just a little behind.

But we can use Chattermill’s machine learning capabilities to dig deeper.

Our net sentiment calculation looks at how customers truly feel about these companies across the following areas: customer care, delivery, meal ingredients, online experience, and recipe subscription.

Mindful Chef has received primarily positive feedback across all these areas. 

Other brands have their fair share of positive sentiment, but we can start to see key areas where they are having issues.

Delivery: The Most Problematic Area for Food Subscription Brands

Delivery is the most problematic area for the brands in our analysis, with all aside from Mindful Chef receiving more negative than positive sentiment.

Pick-and-pack errors are what drive negativity among consumers.

‘We can understand the frustration,’ Ido Shapira says. ‘Following a recipe that has missing ingredients sounds like a very challenging, and not a very fun, experience.’

Shapira also points to complaints about damaged fruits and vegetable tins, incorrect ingredients like cream cheese swapped for fontina, and boxes arriving with key ingredients or even recipe cards missing altogether.

Our data finds that packaging is the second biggest issue regarding delivery.

Thawed ice packs cause significant problems, sometimes bursting in transit and resulting in soaking-wet ingredients. On the flip side, Gousto and Mindful Chef are leading on the sustainable packaging front, driving a positive response among consumers.

Delivery times are another problem – brands using FedEx are seeing the most negative sentiment regarding timeliness.

Customer Care and Service UX

Beyond the product itself and how it arrives (or if it does at all), service UX is causing issues for consumers.

‘Customers, in general, are struggling to cancel subscriptions,’ Berke says. ‘To me, this is such a simple thing we can resolve and act upon.’

‘We also know that in this industry and subscription services at large, customer advocacy is a very powerful and efficient driver of growth,’ Shapira adds. ‘They will actually recommend those brands and services to their friends and family.’

Responsiveness and communication are the key issues, especially for Martha Stewart and Dinnerly.

The free text feedback we’ve analysed sees customers sometimes waiting more than 72 hours just for a response from customer care.

On the other hand, Freshly boasts impressive positive sentiment here – with some responses shouting out actual customer care workers by name.

Another key phrase in customer feedback is ‘pause’ – when consumers want to simply delay delivery for a week or two. While most brands have this functionality, and it is relatively straightforward in a UX sense, some – such as Martha Stewart – don’t seem to have this option for subscribers (or it’s not easily accessible).

What Makes Customers Recommend a Food Subscription Brand?

According to Berke, the three main reasons a customer will recommend a food subscription service are: 

  1. Meal and ingredients flavour
  2. Choice and variety
  3. Ease of recipes

The ease of the recipe ties in nicely with the customer experience. Users want straightforward recipe cards in the same way they want a straightforward online shopping experience.

Moore provides an example with HelloFresh, which saw consumers showing dissatisfaction when their meals didn’t look as good as the finished examples on the recipe card itself. Their solution? To change these photos to more realistic presentations of the finished meals.

‘It’s super important that these companies set the right expectations,’ Berke says. 'While I wish it were true, most of us aren't Michelin-star chefs. People who order food subscription boxes just want ease and comfort.’

What’s Causing Customer Retention and Churn?

Berke and Shapira also looked at the most prominent phrases when people mentioned wanting to cancel or stop their subscriptions.

According to their findings, poor service was the top reason for cancellation.

“Customer service operators are rude and do not follow through on promises for credits on missing ingredients,” was one such response.

Berke also looked at these mentions of cancellations over the last two years. Across the brands in our study, these mentions peaked at the start of 2021 and again during the Eat Out To Help Out scheme the following summer.

Diving into the brand-by-brand data, Freshly and Gousto have had more dramatic ups and downs. In contrast, the other brands have yet to follow the general social/industry trends with consistent references to cancellations month to month.

Gousto’s cancellation feedback also correlates with a peak for customers describing ‘no delivery’ – i.e. they hadn’t received their boxes at all.

And it’s easy now to see how all these CX issues can have a snowball effect. No delivery can easily lead to a poor customer service experience, leading to cancellation and signing up with a competitor.

The data also points to the actual reasons customers go to competitors. In the free text responses Berke and Shapira looked at when consumers mention switching to another brand, they most often refer to the aforementioned delivery/pick and pack issues, followed by subscription price and value for money. 

Opportunities for Improvement

Across our food subscription service data, there are clear leaders – and plenty of areas for CX improvement.

The root cause for so much churn in the sector boils down to delivery issues. 

Customers want their food to arrive intact, with all the right ingredients, and at the right time. 

If there is a problem, users need excellent customer care to remain loyal. But those brands getting that first step right are the ones seeing the best sentiment, the best retention, and the least customer churn.

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LIVE CX Teardown: Food Subscription - Chattermill

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