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How to Scale Your Food Delivery Service with Promotion Marketing?

Mike Sędzielewski
Mike Sędzielewski
September 27, 2021
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How to Scale Your Food Delivery Service with Promotion Marketing?

In the DTC world, marketing strategies based on incentives and rewards have been on the rise for quite some time now. Due to the pandemic and recent privacy changes by Google and Apple, loyalty- and retention-focused marketing efforts 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.

You probably noticed it too. When you visit some fashion leaders, like Shein or Pomelo, you get a picture of how prevalent, dynamic, and omnichannel sales promotions and other similar marketing tactics have become the standard these days.

Shein main page with multiple discounts showing the prevalence of promotion marketing
Pomelo coupon promotion example
Pomelo marketing example with site-wide discount

No wonder DTC companies outside the fast fashion sector, including food and grocery delivery services, 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.

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But effective marketing campaigns aren’t straightforward to build. They require blurring the lines between art and data – and for that, you need flexible technology.

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.
  • Promotions aren’t 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.

And legacy ecommerce platforms, while fine for standard digital channels like the good old web, come short when set against ever-changing DTC customer trends. So, you end up with your in-house development team.

But things aren’t any better here. Engineers are busy with other priorities and you end up waiting several sprints to disable a single coupon code. Let alone finding the time for more advanced solutions for your marketing strategy and sales promotions.

Fortunately, there’s something between rigid ecommerce platforms and slow time to market caused by building your solution in-house – a headless promotion engine

And here’s how three forward-thinking food and grocery delivery companies use it to increase conversion rates of their acquisition and retention-focused sales promotions.

BAEMIN – Coupon-hungry food delivery market in Vietnam

BAEMIN (subsidiary of Delivery Hero) is a leading food tech company in Vietnam that focuses mainly on food and grocery delivery for restaurants, supermarkets, and own food brands.

The Vietnam market has tremendous potential for growth in the food delivery space. However, a typical customer is coupon-oriented or, should I say, price sensitive. The BAEMIN team had no other way than to address it and they did address it in a very impressive way.

Their long-term loyalty and retention marketing strategies include creating coupons 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 coupons as both incentives to drive more traffic and rewards to drive more orders to the app. This sums up to millions of coupons delivered with different channels, including in-app messages. The sheer scale of their promotional marketing is somewhat typical of the food delivery sector. 

With this scale, how does BAEMIN ensure their marketing budget is secure from fraud? For one, unique coupon codes are already an effective tool. Second, their headless promotion engine enables them to impose some order structure and volume limits on every specific code. With audience segmenting the coupon can be redeemed only by the targeted customers.

For example, 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 promotional rules which was made possible with their dedicated promotion engine:

  • 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 to 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. 

Over time, the headless promotion engine has become a critical tool for their day to day operations and bringing their food delivery app to new locations. 

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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, drive repeat orders and increase retention.

Mr Yum loyalty program visual

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. 

Sounds easy, right? The biggest advantage comes with coupon validation rules and the follow-up promotional campaigns. 

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, coupons that work only for specific food and drink categories. There are also tailored offers such as two-for-one cocktails and automatic discounts for VIPs and friends and family.

Additionally, business owners can protect their budget by limiting the number of coupon redemptions to any given number.

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. The points to dollars equation is determined by a venue and can be tailored to suit. They can see how many points they earn for each order, with the total automatically updated in their Mr Yum account.

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 packages with home delivery. 

In 2019, the company already had 2000 active subscribers. 2020 brought on a market opportunity for Cerveza Siempre, 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. 

Cerveza Siempre referral program

Here are the referral program rules that ZX Ventures defined. Note which referral rules they applied to reduce 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, that includes food & beverages subscription businesses).

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.

Read the ZX Ventures case study here.

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.

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