It's all about the data.
Consolidation came for the third-party delivery space during COVID-19. Grubhub joined European food delivery company Just Eat Takeaway for $7.3 billion after a deal with Uber fell through. Then, the latter merged with Postmates in a $2.65 billion blockbuster.
What does this all mean for aggregators and restaurants alike? Christian Selchau-Hansen, co-founder and CEO of Formation.ai, offered his thoughts in a recent chat with FSR.
Can you explain how the Uber/Postmates acquisition might affect discounting and promotions offered on the platform?
Food delivery has become quite commoditized. The consolidation we are seeing is a natural evolution as companies work to establish an improved economic structure for the industry. With the Postmates acquisition, UberEats immediately moves into a strong second position behind Doordash in terms of volume. Of course, the big assumption is holding onto as many of the Postmates customers as possible. This will require maintaining aggressive promotions that Postmates has been known for as well as their subscription service. Over time, UberEats will seek to better optimize discounting in order to improve their margin structure and likely do so via highly targeted discounts and promotions.
Postmates was pretty popular on its own, and now backed by UberEats, what opportunities may Postmates now have as far as new data, more financial resources, etc.?
Postmates and UberEats will immediately combine their customer data. That breadth of data will allow UberEats to create more relevant offerings as they merge the Postmates operations into UberEats. Data will be critical to engaging their customers on an individual basis.
How can brands maintain or initiate customer loyalty as the delivery market continues to mature?
It’s hard to overstate how crucial customer loyalty is in an oversaturated market. Once a company can identify its customers and map various customer behaviors to each customer record, it needs to focus on moving past segmentation and to engage their customers as individuals. Traditional personalization through segmentation falls flat in a world where customers expect a much higher degree of relevance. Marketing messages and promotional offers need to be truly personal.
What can brands do to stand out and capture customers?
With a combined data footprint, UberEats can build a deeper understanding of what drives each customer to order. They can then create promotions tailored to address those motivations instead of sinking money into mass promotions that don’t build loyalty.
As far as loyalty goes, PROMO codes definitely aren't enough, but are they effective at all?
Promotions and discounts are effective when they’re targeted at the right customer, at the right time, and with the right offer. A $5 off or free delivery promotion may be effective to drive a short-term bump in order volume, but can hurt businesses and brand equity long term. A mass promotion targeted at the wrong customer could actually be a turnoff to the service rather than an enticement. To build both customer loyalty and a healthy business, it’s important to recognize each customer and provide them with a personal promotion—an offer that is both relevant and valuable.
If a PROMO code isn't enough to keep customers coming back, what is?
Brands must shift toward using an omnichannel personalized approach to create a tailored experience. A lot of brands are reluctant to invest the time it takes to do this effectively, but the combination of AI and ML with an offer automation engine built for 1:1 offers is very effective at doing this at enterprise scale.
What would 1:1 personalization look like for a third-party delivery service?
For a third-party delivery service, there are a lot of factors that are important for each customer. For example, what is the ideal ordering time, food preferences, product likes and dislikes, and average amount of money spent can be utilized for 1:1 personalization. Once a company understands each customer on an individual level, offers and discounts should be individually tailored. With these personal promotions, customers can be enticed to try new offerings, new occasions and expand their share-of-wallet as the value they derive from the service grows.