Examples & Tips for Food Delivery and Restaurant Promotions
The popularity of food delivery services is constantly growing. The pandemic and the fact that people are getting lazier are the primary reasons food delivery is increasingly popular. If that's the case, are promotions and discount codes still needed?
How promotions work in in D2C (direct-to-consumer) business?
In the D2C world, marketing strategies based on incentives and rewards have been on the rise for quite some time now. Due to loyalty- and retention-focused marketing efforts, incentives have become more important than ever before.
And VCs have noticed it:
Enhanced loyalty and rewards programs will improve personalization: Loyalty and rewards tech funding increased nearly 60% in Q2’21 to $413M, and deals rose by 25%. Companies that gather and process consumer data will power loyalty programs across retail and other consumer businesses.
How D2C companies compete with promo codes?
No wonder DTC companies outside the fast fashion sector, such as food delivery businesses, want to incorporate these marketing tactics into their long-term strategy. Having an ability to switch on and off promotional campaigns on a daily basis gives marketing teams a much needed boost. For some industries, such as food and grocery delivery, the fierce competition makes promotional experiments and innovative approach to marketing essential.
Promotions in food delivery – how to do it well?
Effective marketing campaigns aren’t straightforward to build. They require blurring the lines between art and data – and for that, you need flexible technology.
Why a promotion engine makes a difference?
Here are two reasons why:
- Marketing campaigns can only stand out if they are personalized – marketing personalization is achieved by mixing customer preferences, touchpoints, timing and your budget in the right proportions. Just connecting these fields to build promotional experience without increasing the risk of fraud requires bespoke marketing software. But there’s more.
- The action can't be set and forgotten – you need to iterate, make tiny bets and see what works best. The sheer number of channels, products, customer segments, brands, and finally locations, calls for some programmatic help.
Legacy ecommerce platforms, while fine for standard digital channels like the good old web, come short when set against ever-changing food delivery trends. Especially if you end up with your in-house development team. Engineers are busy with other priorities and you can wait several sprints to disable a single coupon code. Fortunately, there’s something between rigid ecommerce platforms and slow time to market caused by building your solution in-house – a headless promotion engine.
Examples of promotions in the food industry
Here’s how three forward-thinking food and grocery delivery companies use promotion marketing powered by a robust Promotion Engine it to increase conversion rates of their acquisition and retention-focused sales promotions.
1. BAEMIN – Coupon-hungry food delivery market in Vietnam
BAEMIN (subsidiary of Delivery Hero) is a leading food tech company in Vietnam that focuses on food and grocery delivery for restaurants, supermarkets, and own food brands. The Vietnamese market has tremendous potential for growth in the food delivery space. However, a typical customer is coupon-oriented or, should I say, price-sensitive.
BAEMIN's long-term loyalty and retention marketing strategies include creating discount codes for both mass segments and exclusively for specific audiences. They use calendar-based themes to launch big sales events and even more contextual campaigns. Finally, BAEMIN uses promo codes as both incentives to drive more traffic and rewards to drive more orders to the app. This sums up to millions of coupons delivered.
How does BAEMIN ensure their marketing budget is secure from coupon fraud? For one, unique coupon codes are already an effective tool. Second, their headless promotion engine (Voucherify) enables them to impose some order structure and volume limits on each specific discount code. With audience segmentation, the coupon can be redeemed only by the targeted customers.
One of their flagship campaigns last year featured the most popular restaurants located near a user’s delivery address. To make it scalable, the team combined several promotion rules:
- The order structure limit to include only applicable merchants.
- Order volume to set a minimum order amount to use the coupon.
- Campaign budget constraint to set a limit on redemption per customer per day.
Also time-based limits helped them achieve their lofty growth goals without straining the budget. A recent Family Day campaign where users could redeem coupons up to 7 days after the coupon claiming time. The promo scarcity level has been bumped even more with a limited number of coupons available. With this urgency combo, the sales promotion went well with an uplift of 15% in users' traffic and about 10% uplift in orders generated for the participating merchants everyday.
The headless promotion engine has become a critical tool for their day to day operations and bringing their food delivery app to new locations.
2. Mr Yum – Connecting offline to online food delivery
Mr Yum is one of the most innovative players in the mobile ordering space. They made it big in the restaurants & hospitality market with a disruptive QR-based POS platform. Then, an integration with Afterpay followed, enabling Mr Yum customers for the first time to offer a buy-now pay-later option – a new marketing strategy in the food delivery sphere.
Recently, the platform has upped their game again. Restaurants working with Mr Yum can now use a mix of personalized coupons and point-based loyalty programs to acquire new consumers, to drive repeat delivery orders and increase customer retention.
It’s possible because Mr Yum leveraged their mobile app to display personalized incentives and retention-focused rewards. The marketing personalization comes with different flavors thanks to customer-, product-, order- and time-specific sales promotions. For example, a restaurant or a food delivery app can launch a public -10% off coupon to invite first-time customers to try out their services.
Boomerang, that’s what Mr Yum calls their headless promotion engine, gives local restaurants the ability to upsell customers by making the coupon valid only with an order $50 and more, or only for specific food and drink categories. There are also tailored offers such as two-for-one cocktails and automatic discounts for VIPs. Additionally, business owners can protect their budget by limiting the number of coupon redemptions.
The loyalty flywheel accelerates after the first order. Visitors are immediately invited to a loyalty program. They can see their points balance and redeem them at checkout once minimum requirements are met. They can see how many points they earn for each order, with the total automatically updated in their Mr Yum account.
3. ZX Ventures – Experimenting with DTC channels in the food industry
2020 was not only a year of challenges for the food industry, but also a year of innovation, new business model opportunities and marketing strategies. ZX Ventures, subsidiary of ABInbev, launched a new DTC brand, Cerveza Siempre, in 2018. Cerveza Siempre is an app-based subscription business selling beer and beverages with home delivery.
In 2019, the company already had 2000 active subscribers. 2020 brought on a market opportunity, as due to COVID-19 people visited bars and restaurants less often and spent more time drinking pre-packed drinks at home. Since 2020, Cerveza Siempre has grown their user base 5x and, partially thanks to personalized sales promotions, decreased their CAC by 70%.
They have managed to pass the 10 000 active subscriptions mark and increase customer base by 20% thanks to a double-sided referral program launched with the next-gen, headless promotion engine.
Here are the referral program rules that ZX Ventures defined. Note which referral rules they applied to reduce referral fraud and optimize the promotion budget.
- A referral is considered successful if the referee (invited friend) places an order worth at least 180 pesos.
- Referee (invited friend) gets a 150 pesos discount for the first two orders.
- Referrer (advocate) gets 60 pesos for each successful referral, no limit on referrals.
- You can become a referrer if you have placed at least one order with Cerveza Siempre.
The ZX Ventures team has also launched targeted coupon campaigns focused on customer retention, with the goal to retain the customer until she or he places at least six orders (after which the chances for churn drastically decrease in the subscription-based business models).
They have been testing various types of discounts and marketing ideas to see what works best, including:
- Reengagement campaigns for customers who cancelled their subscriptions.
- Retention-focused discounts for customers who have placed more than three orders.
- Special campaigns, for example for Father’s day.
- Welcome coupons for new users to increase conversions.
- Discounts applied if a specific type of payment is used.
What can you learn from the food industry leaders?
One thing is clear – you need to personalize your marketing campaigns with a headless promotion engine if you anticipate similar challenges as the aforementioned food delivery leaders:
- BAEMIN – to create and validate one-off coupon codes at scale.
- Mr Yum – to connect sales promotions to online and offline customer touchpoints.
- ZX Ventures – to let the marketing team roll out and kill promotions on the fly without bothering the development team.
8 promotion ideas for the food delivery business
You can use all your creativity to attract new customers with special offers in your food delivery business. From fancy promo codes to free food, there are countless options. I have collected for you 8 promotion ideas perfect for the food delivery services:
1. Welcome discount coupon
Welcome promo campaigns are an excellent way to attract new customers by giving them a special offer for the first order. Often welcome campaigns are called tripwire campaigns as they are too good to skip and easily capture new users.
2. Free delivery
Free delivery is now a standard in the food business, so you better make it a part of your standard offering with a minimum order threshold or run an open-for-all free delivery campaigns for all customers or selected target groups from time to time. Either way, free delivery should be in your promotion portfolio.
3. Offers on social media platforms
Offering deals and promo codes in social media has a lot of pros. By leveraging social media, you can engage your customers directly as they are on their daily scrolling session. Even better if your offers and ads are perfectly timed to pop up around dinner time. Also make sure to make your copy relevant and easy to understand – food is a joy of life, don't overcomplicate things.
To target brand fans, you can also run contests and giveaways on your social media channels.
4. Loyalty programs
With plenty of options on the market, focusing on customer satisfaction is the best bet for any food delivery app. There are plenty of program types that you can launch. If you're feeling overwhelmed, no worries. You can start small with a stamp loyalty program or a point-based one where users collect points and redeem them for discounts, free delivery, or free meals at participating restaurants. If you run a food delivery app, giving your merchants an option to build engaging loyalty programs (the way Mr Yum did) can make a decisive impact whether both merchants and customers will stay with you long-term.
5. Partnership campaigns
Synergy, although often overlooked, is a great booster in business. If you work closely with other stores, partner restaurants, or platforms, it is worth to spend some time exploring the opportunities for collaboration. For instance, a restaurant can offer a discount for ordering with your mobile food delivery app and in return get a lower commission rate.
6. Happy hour promotions
Happy hour campaigns work fantastic in the food industry, however now you can find them in most industries. Customers love those for the urgency they evoke and businesses run them because of the additional stream of income they bring in usually quieter seasons or times of a day.
7. Referral programs
Bringing in new customers is the primary objective of food delivery apps. There's no better way to attract high-quality visitors than word-of-mouth marketing. Referral program will not only bring in new customers, but also uncover customers willing to talk about you, so brand ambassadors. Their loyalty can be then further enhanced with other retention-focused promotional campaigns or a dedicated loyalty program.
Referrals can also be a great tactic for recruiting drivers and other staff necessary to operate your food delivery business.
8. Themed promotional campaigns
If you are in the food industry, you are in luck. Food is an infinitely creative topic that you can leverage in plenty of ways. For instance, you can inspire your promotion strategy with seasons or special themes dedicated to cuisines. For instance, you can run a -10% discount on all Italian or Chinese takeaways offered on your app.
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