How HelloFresh scales DTC with consumer insights

Nataly Kelly (00:00): Welcome to Inside Insight, where marketing strategy meets consumer truth with your host, Nataly Kelly. Did you know that 65% of a retail company's revenue comes from repeat customers? This is especially relevant now as a recent Zappi survey found that nine in ten consumers are cutting back, buying fewer non-essentials, and ordering less takeout. At the same time, nearly half say they're cooking at home more. For meal kit companies, that's a huge opportunity. The success with subscription meal kits isn't just about getting people to try the service; it's about turning first-time users into part of their regular cooking routine. I'm Nataly Kelly, and joining me today is Patrick Roney, Consumer and Product Insights Lead at HelloFresh, the company transforming how people cook, eat, and connect at home. We're going to chat with Patrick about how HelloFresh uses insights to build lasting relationships, personalize experiences at scale, and turn everyday customers into loyal advocates. Hi, Patrick. Welcome to Inside Insights.

Patrick Roney (01:21): Thank you, Nataly. Thanks for having me.

Nataly Kelly (01:24): Lovely to have you with us. So let's start with something light. Please introduce yourself and share a bit about how you define loyalty at HelloFresh.

Patrick Roney (01:32): Yeah, so your loyalty for us is really, we know the adage—like it's easier to retain a customer than to reach a new one; everybody knows that. But for us, as we look at loyalty, I kind of see it as an outcome metric in general. Because at the end of the day, it's rooted in delivering an outstanding customer experience. If you're able to meet consumers' needs at the intersection of where they are in life, ultimately, we'll create that sticky relationship of retaining customers and retaining loyalty. But that means you have to deliver on convenience for our category. Convenience, personalization, high quality ingredients, cuisine and recipe variety, great tasting meals, and a seamless customer experience. If you can hit on all of that, it just ultimately taps into something that creates a sticky relationship and ultimately drives loyalty.

Nataly Kelly (02:21): Yes. And I imagine personalization plays into that as well because of the dietary preferences within a family. I remember I was an early customer of HelloFresh, and that was definitely something I was trying to appeal to—who is a vegetarian with two kids and the husband is a carnivore. Like it's come a long way and evolved a lot over time, I think.

Patrick Roney (02:43): And you have to. You have to evolve because your household is not uncommon. We see that and hear that a lot. And so you have to be able to cater to those evolving trends in consumption; you have to evolve to be able to cater to individual needs within a given household. So it really comes down to: do you have the right breadth and variety to meet all those individual needs?

Nataly Kelly (03:08): That makes so much sense. So I have a question for you about promotions and trial offers. So I'd love if you could tell us a little bit about how HelloFresh uses promotions and trial offers to let new customers experiment with the service.

Patrick Roney (03:21): Yeah, that's a great question. So they're incredibly important for us as a brand, and they're important for the category because there is a lot of skepticism around the category. Is it right for me? And I'll tell you, we've done a lot of work, too, to discover that there's a lot of misconceptions as well around what a meal kit is. You know, there's 50 reasons that are actually false of what people believe a meal kit is. So all of those ladder up to a barrier to entry into the category. So you have to incentivize, you have to create those opportunities to create trial tactics to bring them in and ultimately make it easier for them to experience it for themselves. But, you know, at the end of the day—and we're talking a lot about loyalty today—getting them in is fine, but retaining them is the key part. And that's going to be everything I talked about earlier about convenience, quality, variety, personalization, and taste. You have to deliver on that, because once the promotion ends, they're going to start asking themselves, "Is this worth it?" And if you're not firing on all cylinders around those kind of key elements of the experience, they may make a decision that, "You know what, this isn't worth it for me."

Nataly Kelly (04:37): That's really interesting. It's like getting them in the door is only half the battle. Then, keeping them there is completely dependent on having a great customer experience.

Patrick Roney (04:47): Yeah, for sure.

Nataly Kelly (04:48): So once someone has tried HelloFresh, what strategies help encourage them to do that—to order again and to stay loyal—and what messaging seems to resonate the most and how are you validating it?

Patrick Roney (04:59): Yeah, great question. So the strategy, at the end of the day—once they are in, so once they come in through the conversion funnel—the strategy is ultimately meeting their needs. And we do a ton of work around what are the needs, particularly for individuals at dinner time, because that's really where we sit most, and making sure that we're delivering a high quality customer experience. Because again, like I said earlier, if you're not meeting those customer needs, loyalty will not be there, and retention is going to be a challenge. So at the end of the day, reordering without canceling or pausing becomes difficult and becomes an issue when you create a relationship with a customer where they start to realize that it doesn't really fit into their lives. So if you can fit into their, like, solution for dinner on the table each week and meet that need to be able to do that again, you're meeting their needs and creating that sticky relationship. But if that doesn't happen, you know, messaging around that, you must deliver on the product experience. So, you know, I think messaging is a key component around what the offer is. But I keep coming back to if the experience isn't optimal, if the product isn't great, if it doesn't taste as good as they expected, if it isn't as healthy as they hoped it to be, and ultimately, like, the quality isn't there, you can sing anything you want. At the end of the day, if we're not meeting the needs in a way that they're expecting us to for the price they're paying, then loyalty will be challenged.

Nataly Kelly (06:27): Yeah, definitely. So interesting, that ongoing delivery of value to keep validating that the message is on point and that they're getting what was promised. Yeah. So research suggests that it takes a few weeks to form a habit. From your perspective, Patrick, what can brands do to identify and reinforce the moments that matter most in helping customers develop consistent usage patterns?

Patrick Roney (06:53): Yeah, this is a great one. This is right, tapping into, like, just a passion area of mine. And it started back when I was at McDonald's, and I really carried it forth through my career ever since. You know, I think it really comes down to—there's a combination of meeting functional needs, which many brands can do successfully. But if you can crack the code on creating those moments where there's an emotional connection, it is so powerful. You know, for example, I've had a very busy day at work, and I know when I get home, I need to prepare a meal for the family. And if I'm able to prepare a homemade meal essentially from scratch using raw ingredients that have been delivered to me in a way that's easy, healthy, tastes great, that my family loves, that we can all sit around the table together and enjoy together and connect—in this world where connection is really, really harder and harder by the day—that creates such an emotional moment for me as the one who prepared it or for anybody in that situation who prepared it, but then also for the family to be able to kind of look at your family, like, "Wow, they're really enjoying this. I made it." And, and we're having this connection moment. So I think it's like, as brands are thinking about this, the functional and meeting those needs that we talked about earlier are incredibly important. But how you tap into the emotion is so powerful. And again, you know, I've learned this throughout my career, that if you can really hit on both—loyalty, the word of the day is really—it’s much easier to retain in those situations because you're, you're tapping into the heart, you know, not just the brain.

Nataly Kelly (08:35): That's so true. That's so true. Especially because when you're thinking about trying to form a habit, it's important that that habit be associated with something positive and that the brain remembers that feeling, you know, whether it's dopamine release or, you know, whatever, it's actually really extremely important for loyalty. So what are some of the best practices that you've seen, Patrick, in your career for using customer engagement data to make experiences feel more relevant and valuable without overcomplicating operations?

Patrick Roney (09:07): Yeah, I think at the end of the day, it's knowing how we can best optimize the experience. So, you know, having just a bulletproof sense of what's working as well as where maybe we're falling short and how do we go about fixing it. So by leaning into the customer engagement data, no matter the source—again, and no matter where somebody is in the customer lifecycle, we need to be sure that we have complete visibility to that entire journey and the pains along the path and the gains along that, and how do we diminish the pains and amplify the gains throughout that? So that is absolutely crucial. But, you know, it goes a step further too, and really kind of helping to use that type of data to identify white space opportunities and really expand the offering and create those new experiences. So not only to bring new customers into the category, but also add something new to maybe those who have been a customer of ours for a long time. I was with a woman yesterday who's been a customer since 2017, which is just amazing. And, but with that, you need to continue to invent and you need to continue to innovate and making sure that you're bringing something new to them. And even at McDonald's, you know, like, you look at, you've got the core menu, but there's always kind of those limited time offers to really kind of like, "Hey, I haven't really given that brand a chance in a while. That looks exciting. I'm going to go try it." So it's really like making sure that you're thinking about the kind of the two spectrums of your customer base. You're loyal, what do you need to do to keep them engaged and entertained, but then also the incremental of bringing new people into the category.

Nataly Kelly (10:45): Yeah, that's so interesting because I'm thinking over the course of eight years what that customer might have experienced in his or her family life. You know, when they basically have their children aging throughout that process, if it is a family situation and one goes to college, are they then a new customer for you when they leave, and how that family dynamic changes because the temptation could be that they stop—their family dynamic changes—if the product offering doesn't evolve for them. That brings me to another question. So when a customer stops using a service, what approach can help brands thoughtfully win them back and re-establish that trust?

Patrick Roney (11:25): Yeah, so it's a great follow-up because it goes back to truly understanding the behavior in the moment and leaning into the data that you have available to you or go seeking out through incremental work. So at the end of the day, you absolutely have to know: what are those drivers of defection? What truly is the pain point that really was the tipping point to cause somebody to cancel? Like, in our case, when a subscription re-visits, you have to know what you're trying to solve for, you know, and so continuously learning from active customers, continuously learning from defectors, continuously learning from prospects on really kind of those true barriers that ultimately could drive cancellation or prevention from coming in. So at HelloFresh, it's a really interesting time right now. We are in the midst of the biggest strategic investment the brand has ever made. And reinvesting in so many of these areas that our customers have been telling us for years. And the messaging is around—like if you were to open the app today, the first thing you see is "bigger, healthier, tastier." And we're really leaning into what customers have been telling us, particularly those who are long loyal customers who are looking for more variety. Like it could be cuisine variety, it could be new ingredient variety. So we've recently gone from 50 recipes a week to choose from to a hundred. And that's gonna grow even further next year. So having that breadth of variety to satisfy different tastes—you know, maybe you've got some picky eaters, or maybe you've got a vegetarian in the household? Well, historically, maybe there are a handful of vegetarian options. Now you have a lot more to choose from across different cuisines. And then health is such an important area too. You know, as you think about how people consume, if they're on a GLP-1 diet or medication like that, that is very prevalent today, we need to make sure that we're listening to that customer and satisfying the needs. And at the end of the day, taste is king. It doesn't matter if it doesn't taste good—nothing else matters. So making sure that we're continuing to learn from our customers and we take recipe scores from our customers, we ask them to rate their recipes, and we really just go deep into that every single week. I'm like, "Hey, this new recipe, first time we launched it, what did we learn? Maybe we should tweak the recipe this way or maybe we should just sunset it and think about some different way to approach this." So it's again, just making sure that you truly know the drivers of it, which isn't always easy, but it requires having the right tools in the right place to be able to tap into those learnings.

Nataly Kelly (13:52): That's so interesting. It's really interesting. It's making me think, you know, when I was a kid, it was popular that you would have like Taco Tuesday. And I'm thinking people have those recipes that they want to have over and over. You know, that's—that's really interesting that you're able to capture the data and use it and evolve the menu in real time or the offerings, I should say. Wow, that's great. So we're going to move into our lightning round segment now, Patrick. So I would— a few quick hitting customer insights related questions. What's one metric you think brands overrate when it comes to loyalty?

Patrick Roney (14:30): All right, I'm probably going to get some hate mail on this one, but here it comes. I'm going to say NPS. And the reason I say NPS is—I get it. I understand the measure, I know why it's used and I see value in it in some cases, but I don't believe it applies to every single category. There are some categories that are such low involvement. And to ask somebody like, "Hey, would you recommend this $1 candy bar that you purchased to somebody else," to give some 10, like the level of involvement, I don't really feel like really taps into the nature of what that question is. But then if it were a vehicle, you know, purchasing a vehicle—well, that's very different. That's very high involvement and, like, "Would you recommend this dealer or this car brand or something?" So I think NPS is probably the one that I put a lot, that many brands put a lot of weight in. But I don't necessarily believe it gets to an accurate measurement for every category. And I also find it very difficult to get to causation of the score.

Nataly Kelly (15:34): I'm right there with you, Patrick. I will tell you a quick anecdote. So having come from a software as a service background, we used NPS a lot for large, you know, five figure software purchases. And I was going through the NPS data once when I saw that somebody who I knew was very happy—a repeat buyer, upgrading, you know, cross-sell, upsell—had rated us really low. And I looked at the verbatim response, because it says, "Why did you rate the way you did?" And he said, "Because I don't know anyone who needs software like this." So he had rated as a detractor because he wasn't likely to recommend, because he literally didn't know anybody who needed this software. So the way the question is written, also I noticed that depending on the cultural background and the linguistic background of the people responding, they often had very divergent response trends based on their culture. And you can even see this in the United States in different regions—different regions of the United States will rate differently on all customer satisfaction surveys. So it's really interesting to see you can't always use it as a perfect benchmark.

Patrick Roney (16:39): Yeah, but on some brands it's, it's gospel, you know, so it's a very interesting measure.

Nataly Kelly (16:45): Very. So my next question is, what's an underused signal that reveals a customer's long term potential?

Patrick Roney (16:53): All right, without being repetitive, I still have to lean into this one. It's the emotional connection a brand can create and strengthen over time. The more you can do that, the better you are. But I just don't think many brands do that. I think you're trying to solve for a functional need in the moment but lose sight of that emotional connection. And there are many brands that do it incredibly well. If you think of like Apple back in the day and probably Starbucks is a good example. Like this emotional connection that they have—it's under tapped for sure. And I don't get the sense that most brands realize the power of that, you know, everybody's focused on the widget and making sure the widget's great and as best as can be. But if you can fit that widget into their life and it has a job to be done that is very emotional to them, like, it's just wow. The result is just going to be so much more powerful.

Nataly Kelly (17:52): Resonating on a deeper level for sure. So what's a small human touch that makes a big difference in customer retention for you?

Patrick Roney (18:00): I'll use HelloFresh as an example. Absolute flawless customer service. You have to have it because, you know, the adage is cliché, but the customer should always be treated as if they're right, you know, and there's many times we know they're not right and, you know, at McDonald's, I know it here. But they should be treated that way and they should feel that way at the end of the day. And, and HelloFresh, we, we operate almost like a tech company if you think about it. We're an app interface, a dashboard online where you're ordering food to be delivered to you. So when customers have a problem and they need resolution, they want to talk to somebody and they want that human interaction and that engagement. And having that human touch is so incredibly important in driving retention. And I talk to customers all the time and I always am so happy and proud to hear that whenever they do engage with our customer service function, it's always positive, which is great because that is what you need in that moment to ultimately retain that customer. Because it can be a pretty big situation that we need to resolve and resolve right.

Nataly Kelly (19:21): That's so important because, back to the emotional connection, if they're upset or they're angry or they're frustrated about something, you need to provide them with that resolution at the moment that they need it most to have that positive emotional connection for your brand. So, very interesting. So what's an insight you've gathered in your career that was an aha moment to how to do your job?

Patrick Roney (19:47): I'm going to give you—it’s parallel to insight, but it's almost kind of a way of working, and I learned this kind of early on in my career. But I try to preach it as I'm developing teams throughout my career. So it's not necessarily a single insight, but more so a way of working or approaching insights. And I would sum that up as correlation is not always causation. I think a lot of times we can be quick to jump to conclusions. Like, I've seen, I've been in countless back rooms and focus groups where we can walk away and just think, "We're done. We know the answer." And maybe you do. Maybe what you heard in that room is truly the answer. But I find that over time, there's been so many times where we've been wrong about things and without knowing the true causation. And so, it's easy to listen to those focus groups. It's easy to focus on a singular KPI and walk away thinking you know the true driver of what the situation is. But in my experience, I've found that that isn't always the case. So what I try to do is then lean into a way of working and really helping to develop teams in a way to be curious, innately curious and inquisitive and continue to ask the question why, and ask the question why again, and truly get to those patterns of behavior to help set strategy going forward. So whenever I'm interviewing somebody for an opening I have on any of my teams, I really try to press hard on that—on curiosity. And that's not easy to ask in an interview, but if you have that general curiosity and you're willing to dig deeper to get to the whys behind the behavior and the true causation, that gets you to the insight, and that gets you to what is driving the behavior, and that helps you solve either the problems or set strategy going forward.

Nataly Kelly (21:27): That's so important. It's like the balance between quantitative and qualitative, like digging into the why behind some of the trends you see in the data and really being curious about that. That's a really great, great thing to push on for your team—curiosity. So, one more question: in one sentence, what's the secret to building loyalty that lasts?

Patrick Roney (21:52): Solving for a customer need via an optimal customer experience in a way that nobody else can.

Nataly Kelly (21:58): Ooh, I love that. That's really great. There's so much in there. Do you want to unpack it any further?

Patrick Roney (22:05): I think the reason we all do the jobs we do for the most part is we're trying to help humans live a better life, whether it's through new products, food solutions, a vehicle. We're trying to help meet a consumer need. So that's the core of really why we're here. You have to do that in a way that's ultimately going to drive an optimal customer experience. The customer experience is critical, right? At the end of the day, you may get one purchase, but as far as repeat or loyalty or retention or everything we're talking about here, that's going to be incredibly, incredibly challenging. So meeting that consumer need through the optimal customer experience is absolutely critical. But then the last part is kind of the throw-in, the competitive piece of it, like doing it in a way that nobody else can. And you know, so a lot of times that requires scale, a lot of the times that requires a true insight that nobody else has thought of that you can truly message upon, but being in a way that it's not easy to replicate or duplicate, I think ultimately gets to that point where you can build loyalty better than anybody else. So it's kind of a three-parter. But yeah, I think it's a combination of the three.

Nataly Kelly (23:13): I think so. And you know, when you said 'in a way that no one else can,' I was thinking, "Or is it in a way that no one else has or that everyone else does?" The 'can' part is really essential because as you mentioned, it has to be something that isn't easy to copycat and isn't easy to replicate from a competitive perspective. So that's really a key difference in wording that matters hugely. Okay, that wraps up this episode of the Inside Insights podcast.

Nataly Kelly (23:42): Thanks again to Patrick Roney, Customer Insights and Analytics Lead at HelloFresh, for joining us today.

Patrick Roney (23:48): Thank you, Nataly. Appreciate the time.

Nataly Kelly (23:51): Thank you. If you'd like to contact Patrick, you can find a link to his LinkedIn profile in our show notes or at InsideInsightsPod.com, or you can visit his company website at HelloFresh.com. If you haven't subscribed yet and you want a regular stream of research and insights knowledge in your podcast feed, hit that subscribe button in your podcast app or follow us on YouTube. Okay, that's all for today, but until next time, thank you for listening to Inside Insight.