#3 The Story of Unified Discount Coupons in Food Delivery
How Discounting systems at food delivery companies work ?
Back in early 2019, food delivery was going through a very unique phase. There was investor pressure to get the profit books sorted so that there could be a path to profitability for these startups and at the same time growth should not be compromised. For a very long time convenience services such as e-commerce, food delivery and ride hailing had burnt investor money to get growth in their order volumes which was in the long term discount sensitive and not sticky.
Problem Statement
The problem statement for the growth team at Food Delivery Companies was how to make the discounting spend more efficient in generating growth in terms of order volumes. There are two manifestations of this :
More orders at the same discount spend
Same orders at less discount spend
Given the above context and budget constraints we went for approach #2 as mentioned above.
State of the Union Before Unified Discount Coupon
Trade Discounts
Discount % shown upfront on the restaurant listing page
Discounts are auto-applied on all orders if they meet the basket size criteria
Discounts are funded by the restaurants and are applicable on specific restaurants
Usually not higher than 20% discount as it is applied on all orders and does not have a cap
Coupon Discounts
Discounts shown deep on the checkout screen under the apply coupon section
Discounts are availed on application of coupons
Discounts were applicable to certain users on all restaurants
Discounts are funded by Food Delivery companies
Usually a 40-50% discount is given and the discount has a cap
Inception of Unified Discounting Coupon -
We combined the best of both the worlds (trade discounts and the Coupon discount) to form what is called a unified discount coupon.
What is the unified Coupon ?
A coupon which is applicable on certain restaurants where the discount amount is visible upfront and the user has to apply the coupon to get the actual discount.
What are the advantages ?
No more double discounting where a consumer can get double discounts through trade discounts and coupon discounts on a single order with confused flows.
Since both these methods of discounting combined now a higher discount % can be communicated upfront to the user instead of only being able to communicate the trade discount amount upfront.
What was the impact ?
Higher discount was communicated upfront in the top of the funnel leading to better conversions.
All coupons had a discounting cap which limited the overall spend on discounting on an order of high value.
Only 70%+ users apply coupon if they are eligible to apply the coupon on a particular order.
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What are the different applications of the Unified Coupon ?
Case #1
Problem : Food Delivery companies had to run a self funded 50% discount coupon for new users along with trade discounts on specific restaurants amounting to close to 70% discount on certain orders which was very inefficient way of spending discount money.
Solution : This was solved in the following way :
Consumer value proposition “Upto 50% off”. In this case the restaurants who were running unified discount was sharing the 50% coupon with food delivery company while other restaurants not running the discount coupon did not have any discount on them.
Case #2
Problem : Restaurants want to acquire users on food delivery platforms and inceltivize users to try their restaurant by giving higher discounts.
Solution : The unified coupon also has different user segments for a restaurant where restaurants can offer different discounts to different types of users according to their interaction with the restaurant on food delivery platforms. The various segments available for the restaurants :
New Users to a Restaurant : Restaurant has the option to target a user with a discount who has never eaten from their restaurant.
Dormant Users to a Restaurant : Restaurant has the option to target a user who has not eaten since the last x days from the restaurant with a discount who has never eaten from their restaurant.
In essence this is how demand shaping happens on the food delivery app where restaurants offer different discounts to different segments of users to transact from them.
Case #3
Problem : With the implementation of the discounting cap , users started to split the orders and average order value went down sufficiently.
Solution : The unified coupon can be configured to enable cliff based discounting enticing users to increase the average order value. Eg : 50% off upto Rs 100 above 99 + 25% off upto Rs 400 above 499
Case #4
Problem : One of the core value propositions initially for the subscription program at food delivery companies was to give extra discounts to Subscription user.
Solution : The unified coupon can be configured to give extra x% discount on top of the normal discount offered by the restaurant based on any of the above mentioned criteria’s.
Overall Learnings & Impact
Good in app communication through copies is key to unlocking high growth potential
Unified coupon helped us to get more orders at the same cost by increasing the efficiency
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