Delivering powerful user retention with food delivery loyalty schemes

Naturally, bringing new users to your food delivery app with strong user acquisition (UA) campaigns is a common focus of marketing teams across verticals. But did you know that it costs three to six times more to acquire a customer than to retain an existing customer? Of course, attracting fresh eyes (and therefore additional paying customers) to your app will always be necessary. If you are not, however, cultivating an equally strong retention strategy, we’re here to help you get started with our top tips, examples, and inspiration.

With hundreds of food delivery apps across app stores, consumers have a lot of choices— making competition among app developers fierce. Marketers have worked tirelessly in recent years to retain the strong user base that was gained over the course of the COVID-19 pandemic. Adjust data shows that the average retention rate through D30 rose by 1.4% YoY between 2021 and 2022.

Sessions per user per day are also up in 2022. In Q3, average sessions per user per day had increased 4% YoY on D0, D3, and D7.

Although 2022 has shown growth across the food delivery vertical, there is an opportunity for strengthening retention from D14 onward. This is where the value of loyalty schemes shines. Setting your app apart with gamification, loyalty programs, and recognition of valuable customers will not only improve the user experience but will also keep users coming back to your app week after week.

Let’s dive into some common loyalty scheme formats, why they work so well for customer retention, and who some of the leading players are in these spaces.

The time-limited freebie

This form of loyalty can reward engagement or purchase. Structurally, the reward concept remains the same. A user is provided with a freebie (think free side dish, free delivery, free drink, etc.) which expires within a set amount of time. The mechanism could be a virtual scratch card, prize wheel, a gift that opens with a tap, or even something seasonal like a Christmas cracker.

Hypothetical example: During the three weeks of the year when sessions per user per day are at their lowest for your app, customers can spin a virtual wheel daily to see if they’ve won a prize; if they do win, the prize is available for five days.

Why it works: A countdown timer creates a sense of urgency, and when a user is redeeming a freebie they are more likely to also make a purchase.

Grocery store Lidl introduced a scratch and win scheme with the release of their customer loyalty app in the U.K. and Ireland. After a purchase, a lottery-style card becomes available in-app which customers may virtually “scratch”, revealing two available prize options. They may choose which one to redeem within the week, or the freebie expires. To get a new freebie, a customer can simply make a new purchase of any amount.

After an incredibly successful launch of this feature, Lidl took their loyalty scheme to the next level. Supporting their local communities, Lidl introduced a partnership with parkrun, a weekly 5 kilometer run. Parkrun participants are sent an additional weekly code to redeem for one of two healthy freebie options which expire at the end of the week.

The earned ranks

Show customers that you understand the value of their orders with ranks in-app. This could be a progressive set of levels which they climb with a certain number or value of purchases, or it could be badges and trophies that are earned for various tasks that are valuable to your app, such as submitting feedback, referring a friend, or creating an account.

Hypothetical example: With every 10 purchases, a customer goes up in level between bronze, silver, and gold status. Each level makes available an additional 5% discount for every order. However, to maintain the status, the customer must continue to make at least one purchase each month or they are reverted to the previous level.

Why it works: Acknowledging a customer’s loyalty strengthens their image of your brand. Plus, customers will be more likely to spend when they would otherwise lose a benefit which they have earned.

The virtual economy

Virtual currencies are in their prime right now. This scheme allows users to earn points with each purchase. They can then redeem perks once they have accrued enough points. Boost engagement with double point items, time periods, or milestones. Want to take your virtual economy to the next level? Partner with a popular gaming app, for example, and allow users to earn virtual rewards like extra lives or game currency with their real-life purchases.

Hypothetical example: Over the past month, a customer has spent $200 in your app. They would previously have been 80% likely to drop off after D30, but a push notification reminds them that they’ve earned 15% off or one free dish with their points. The customer converts.

Why it works: Earning points is a way to let customers build toward a reward with every single purchase. From their very first order they’ll be thinking of coming back to spend with your app over other food delivery apps that are not contributing to their points balance.

Food delivery app GrubHub awards 20 points per dollar spent in-app. Points can be exchanged for rewards like free delivery, percentages off of orders, and dollar values off of orders.

The level-up

Include a progress bar at the top of your app to visually display how close a user is to reaching benefits such as free delivery, a discount, a freebie, or double points.

Hypothetical example: A three-tier progress bar shows the customer has reached free delivery, has $5 to add to cart until they get a free drink, and would receive 10% off if they spent another $35.

Why it works: Customers can visualize just how close they are to receiving a reward as they shop, without having to go to their cart.

The game experience

Replicating a board game in a ramped up version of a traditional hole punch or stamp-style loyalty card is the ultimate form of gamification. Users move along a visual journey within your app by placing orders. Or, they are able to play a non-linear game with the power of their purchases. Once they reach milestones, they are incentivized with rewards.

Hypothetical example: Each order provides the user with a bingo number or food-themed icon which they can check against their in-app bingo card. Once they have achieved a bingo, they earn a reward.

Why it works: You can’t get closer to feeling like you’re playing a game while making purchases – because that’s exactly what is happening. Users will need to make more purchases to progress through the game, and in the process will be working toward loyalty rewards.

In addition to (or in place of) a loyalty program designed as a game, there are simple ways you can upgrade your app’s gamification to improve the user experience and, as a result, retain customers past the D14 drop off. Here are a few simple ideas to implement on your food delivery app:

1. Add quests: Introduce a monthly or seasonal task for your users to complete for extra rewards. The task could be reviewing your app, ordering a specific item, or another event related to your KPIs.
2. Visualize tracking: Keep hunger (or even hanger!) at bay with transparent, live tracking of the delivery process. This is also a great opportunity to introduce an element of personal connection with the delivery driver’s name – and their favorite delivery dish!
3. Delivery entertainment: Waiting for the food to be delivered can be a low point in the customer journey. Create a positive experience much like Chrome’s infamous 8-bit dinosaur game that appears when the internet is down with a hyper-casual game available during the delivery window.
4. Side games: More food and drink apps than ever before are introducing side games for customers to play. Some are linked to rewards, others are purely for entertainment. From Circle K to Chipotle, this is not a trend to miss.