Latest / The Retention Marketing Podcast with Fexingo: Email, SMS, and Loyalty for Repeat Customers / How Chewy Uses Predictive Email to Retain Pet Owners
Transcript
- Lucas: So picture this: you buy a forty-pound bag of dog food from Chewy. Standard online order. It arrives in two days. Then, about three weeks later—right around the time your dog would've finished that bag—you get an email. It doesn't say 'Hey, want to buy more?' It says 'Your pup's food is running low. Need a refill?' Luna: That sounds simple, but it's actually pretty sophisticated. They're tracking consumption rates. Lucas: Exactly. Chewy isn't just sending a generic 'we miss you' email. They're using predictive models to estimate exactly when a customer will run out of a product. And they time the email to arrive a few days before that happens. It's a retention engine disguised as a convenience feature. Luna: I've heard that automated emails generate a huge chunk of their revenue. Is that right? Lucas: Yeah, Chewy has disclosed that their automated email program—things like replenishment reminders and personalized product recommendations—accounts for roughly 40 percent of their total e-commerce revenue. That's around three hundred and fifty million dollars annually. And the key is that these emails aren't just reminders. They're tied to actual usage data. Luna: So how do they get that data? They're not selling smart bowls or anything, right? Lucas: Right. They're not tracking your dog's bowl. Instead, they're using purchase history and average consumption rates by product and pet size. If you buy a thirty-pound bag of Purina Pro Plan for a sixty-pound Labrador, they know roughly how long that lasts. And they layer on things like order frequency and seasonal patterns. It's all based on statistical models trained on millions of orders. Luna: So the model gets better over time as they see when customers actually reorder? Lucas: Exactly. And they also incorporate signals like 'this customer paused their autoship' or 'they switched to a different flavor.' The system adapts. It's not a static calendar reminder. Luna: That's smart. But I'm curious—does Chewy also have a loyalty program? Because most of the brands we've covered rely on points or tiers. Lucas: They do have a loyalty program, but it's almost secondary. It's called Chewy Rewards, and it's a simple cash-back program—two percent back on autoship, one percent on one-time orders. But really, their retention strategy is built on service and predictive emails, not points. Their CEO has said that customer service is their true loyalty program. Luna: Right, I remember hearing about their customer service—like sending flowers when a pet passes away, or handwritten cards. That's not something you can automate. Lucas: And yet, they do use email to trigger those human moments. If a customer calls to cancel an autoship because their pet died, Chewy's system flags the account for a special outreach. A few days later, the customer gets a personalized email from a real person, not a robot. And often they'll also send a small memorial gift. The email becomes the vehicle for that emotional connection. Luna: So the email program isn't just about driving sales. It's also about reinforcing the relationship at emotionally vulnerable moments. Lucas: Exactly. And that's why their churn rate is so low. For a subscription-based e-commerce company, Chewy's annual retention rate is around 80 percent. That's exceptional. Most direct to consumer subscription brands see churn rates of 30 to 50 percent annually. Chewy is basically half that. Luna: That's impressive. And I think a lot of that comes down to the fact that they're not just sending emails to sell more—they're sending emails that are genuinely useful or emotionally resonant. Lucas: Right. And speaking of genuinely useful content—if you're getting value out of these marketing conversations, and you've picked up a tactic or two that you've actually used in your own work, that's exactly why we keep doing this show. We keep it ad-free and focused on the substance, and listener support is what makes that possible. If that resonates, you can find us at buy me a coffee dot com slash fexingo. No pressure, just a way to keep these episodes coming. Luna: Yeah, it's a small gesture that goes a long way for us. And now back to Chewy's email engine—because there's another layer I want to dig into. Lucas: What's that? Luna: They also do something I haven't seen many other retailers do: they send proactive troubleshooting emails. Like, if a customer buys a new brand of food and doesn't reorder within the expected window, Chewy sends a 'how is your pet adjusting?' email with tips on transitioning foods. Lucas: Right. That's part of what they call their 'pet health and happiness' email stream. It's triggered by product category. If you buy a new flea treatment, you might get an email a month later reminding you to reapply. If you buy a new toy, you might get a 'share a photo of your pet playing' email a week later. It's all designed to keep the brand top of mind without being pushy. Luna: And those types of emails probably have really high open rates, because they're not salesy—they feel like advice from a friend. Lucas: Exactly. And Chewy tracks those engagement metrics to segment further. People who click on the 'share a photo' link get different follow-ups than people who ignore it. It's a continuous loop of data and personalization. Luna: So let's talk about the downside. What's the risk of relying so heavily on predictive emails? Lucas: The biggest risk is getting the prediction wrong. If you email someone to refill their dog's food and they already bought a bag at a local store, you look out of touch. Or if you keep emailing about a product they no longer use, it becomes annoying. Chewy mitigates that by making it easy to adjust preferences—you can snooze emails, skip a cycle, or change the product right from the email. But still, it's a delicate balance. Luna: And what about privacy? Some customers might not want Chewy tracking their consumption patterns. Lucas: That's a fair point. Chewy is transparent about their data use in their privacy policy, but most people probably don't read it. The key is that the value exchange is clear: you give us your purchase data, and we remind you before your dog runs out of food. For most pet owners, that's a good trade. And Chewy has generally avoided the kind of backlash that, say, Amazon has faced with its tracking practices. Luna: So what's the one takeaway for a marketer listening to this? Lucas: I'd say it's this: predictive email works best when the prediction serves the customer, not just the company's revenue goals. Chewy's replenishment emails are helpful. Their pet health emails are helpful. Their sympathy emails are—well, they're compassionate. If you can build a trigger that genuinely solves a problem or shows you care, the retention will follow. Luna: And the data side—you don't need a massive engineering team to start. You can begin with simple rules based on average purchase cycles and build up from there. Lucas: Yeah. Start with one product category, one customer segment, and one trigger. See if the open rate and conversion are higher than your standard blast. If they are, scale it. That's how Chewy started. Their first automated email was just a 'your autoship is about to ship' reminder. Now they have dozens of triggers. Luna: Alright, so next time I'm about to run out of dog food, I'll expect an email from Chewy. And if it doesn't come, I might be a little disappointed. Lucas: That's the sign of a successful retention program—when customers feel like the brand is looking out for them. And that's where we'll leave it for today.