The “Churn” Problem – Customer and Rider Retention in Food Delivery and Q-Commerce

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Is mobility the answer to the customer retention challenge?

 

The food delivery industry has exploded internationally, becoming a global market worth more than $150 billion, a value which has tripled since 2017.[1] This growth has been accelerated by our increasing dependence on digital solutions, desire for instant gratification, and the Covid-19 pandemic.

Despite their great growth, businesses in this industry are facing trouble when it comes to maintaining a loyal customer base. Introductory offers tempt customers to move over, and the variance of restaurant choice often has customers feeling like they require multiple apps to satisfy their needs. Standing out from the crowd is near impossible.

It’s no secret that returning customers on average bring in 70–95% of revenue,[2] meaning it’s crucial to know why customers leave and what you can do to keep them.

Millennials regularly use 25 different apps[3] which is, on average, a third of all the apps that are downloaded on their phone . This behaviour indicates that loyalty can easily be diverted.

An extensive (and fragmented) digital marketplace allows customers to pick, choose, and change providers through just a click. Introductory offers can easily overcome the inconvenience of downloading and registering a new app, so businesses are in constant need to keep their users coming back for more. One approach is to provide retention incentives but that can only go so far. Offering real, unrivaled value is where loyalty really starts to kick in .

Alayna Moxness highlights three key ways in her blog post: Solve Multiple Problems, Add Bundles, and Increase Engagement.[4] Moxness quotes a Vendasta churn study that showed customer retention over a 3-year period reached 78% when customers engaged with the app daily, a figure most Food Delivery & Q-Commerce apps can only dream of. [5]

 DoorDash, UberEats, and Deliveroo all have their own variations of delivery “passes” which allow customers to have unlimited free deliveries for a monthly fee. These passes require customers to order at least three times a month to make them worthwhile but they do achieve one thing: the pain of cancelling your subscription and with DoorDash, UberEats, or Deliveroo and switching apps outweighs the temptation of snapping up the introductory offers of their competitors.

Reducing churn and improving loyalty is not only about making it hard for your customers to leave, but making it so they need to stay. Mobility may just be the answer to this.

Food delivery and mobility go hand in hand with some of the biggest players in the market, UberEats and Bolt Food being experts in both. In fact, Uber’s delivery business in some markets is now bigger than its ride-hailing offering[6].

Mobility is a high frequency service which drives up the stickiness of your app, the frequency at which your customers are engaging, and ultimately adding value to your core offer.

Whilst few people are consuming food delivery services daily, people not using at least one mobility app in their day-to-day life are certainly in the minority.

Mobility, which can mean anything from public transit, to car clubs, to micro-mobility, is one of the world’s most consumed services at 13.2%.[7] Not to mention, transport / navigation apps are consistently in the top proportion of both apps downloaded and used regularly[8].

Today, users may need to navigate 5-10 apps[9] simply to get around their local region, travelling elsewhere imposes even more problems.

In food delivery, or grocery delivery services, the value proposition is somewhat clear. When the option to collect your food is offered, the ability to discover, rent, and fulfill an e-scooter ride through your UberEats or Deliveroo app makes sense. From this, it is very possible that the food delivery app becomes the primary way through which the customer accesses their e-scooters and shared bike services.

Why download a new app for each scooter/bike company when all the services can be accessed through your food delivery app which is already installed on your phone?

What if customers could access several mobility services through an app they had already installed? What if that app was yours? Through Iomob’s middleware solution, any business can offer Iomob’s 7000 taxi fleets, mobility in more than 270 cities, shuttles in 90 cities, thousands of parking spaces, and more, through just a single integration.

Integrating all of these mobility service providers (MSPs) yourself is a heavy lift, requiring dedicated technical integration teams as well as extensive  UI/UX design.

But by implementing Iomob’s plug and play solution, clients receive our world-class proprietary journey planner, access to thousands of mobility suppliers, and UI/UX which has been designed by a team with decades of experience and which has been tried and (user) tested.

And the possibilities don’t end there.

Rider churn, and the complex issues which accompany it, are often either ignored or forgotten.

Arguably, the two should be viewed adjacently, after all, their high rates of churn are due to similar reasons: lack of loyalty, the benefit to staying does not outway the reward of leaving, and that the whole process lacks personal connection.

Jonathan Nunn’s piece in The Economist shone a light on the thankless and overlooked work of the delivery driver.

Like users, they too are balancing several apps at a time, sometimes delivering orders from different apps simultaneously. Not only does this behaviour illustrate the lack of loyalty from user to rider, but it also perfectly demonstrates a lack of diversity in the market in that the service offered is not only the near exact same, but the person delivering that service is sometimes the exact same person.

The gig economy has received criticism for many things, including pay, rights, and conditions.

These employees receive little to no perks and are often leveraging their own resources – their bike or scooter – to fulfil tasks which are rewarded for output, not time spent.[10]

Many of these drivers resort to electric bikes or scooters to make their deliveries.

E-bikes and e-scooters are expensive and are a huge investment for delivery drivers to make. Not only this, but if they do choose the investment, they are left open and vulnerable to thefts such as those prevalent on the NYC scene.[11]

 

So, how can delivery drivers reap the benefits of the electric bike or scooter without the risk?

 

Through shared micro mobility. Micro mobility providers, like Tier, Voi, and Lime, have flooded the global market, offering often net-zero travel for competitive pricing.

These scooters and bikes require a validated license to be ridden, are insured, and also have anti-theft features like GPS tracking.

However, delivery drivers, who are using their bikes for many hours each day, are not their current target market. Moreover the unlock fees and per minute rental cost is unlikely to appeal to the career courier.

As such, it  would take some serious thought from MSPs and food delivery companies alike. But I think there is a solution to be found here, especially as enabling the use of shared mobility to couriers could potentially increase the supply of people interested and able to take on this role.

There is certainly value to be discussed, for example, food delivery companies could subsidize their couriers’ micro-mobility subscription, and micro-mobility providers could use delivery drivers to redistribute their vehicles during off-peak times of service.

The food and grocery delivery giants are reporting a lack of riders, be that due to the network decreasing, or the demand of their service increasing.[12]

An integrated mobility solution such as this has the potential to improve the working lives of existing delivery drivers, and also make the work a feasible short-term or part-time role with little initial investment required.

To their riders, food delivery and q-commerce giants could offer a wide range of micro mobility, encouraging more riders. With our platform, there is no need to be restricted to a single e-scooter or bike sharing provider.

Instead, you can offer micro mobility across 10+ providers, accessed through the food delivery rider’s app at a subsidized rate. All this, delivered through one integration. A solution exclusive to Iomob.

 

 

 

 

 

[1] Totango, Guide to Successful Customer Growth https://www.totango.com/whitepapers/guide-to-successful-customer-growth qtd. in Alayna Moxness,How to Reduce Churn and Unlock New Company Growth”, (August, 2019)  https://medium.com/@amoxness/how-to-reduce-churn-and-unlock-new-company-growth-ccdc41acef82

[2] https://startupsmagazine.co.uk/article-pandemic-online-delivery-apps-demand-and-golden-opportunities

[3] Hardik Shah, App Usage Statistics 2021 that’ll Surprise You (October 2021)

https://www.simform.com/blog/the-state-of-mobile-app-usage/#:~:text=In%20the%20huge%20app%20market,of%20those%20apps%20remain%20unused.

 [4] Alayna Moxness,How to Reduce Churn and Unlock New Company Growth”, (August, 2019)

https://medium.com/@amoxness/how-to-reduce-churn-and-unlock-new-company-growth-ccdc41acef82

 [5] Vendasta, Why Your Clients Churn (2019) qtd. in Moxness “How to Reduce Churn and Unlock New Company Growth”

https://www.vendasta.com/content-library/guides/client-churn-study/

 [6] https://consent.yahoo.com/v2/collectConsent?sessionId=3_cc-session_cbcf25a0-e33b-497c-adcb-17b827a9e062

 [7] European Union Science Hub

[8] https://buildfire.com/app-statistics/

[9] Based on the average number of transit operators in large cities.

[10] Drivers are paid for each delivery they make rather than the total time spent delivering, as Deliveroo states here.

[11] https://www.theverge.com/22667600/delivery-workers-seamless-uber-relay-new-york-electric-bikes-apps

[12] https://www.restaurantbusinessonline.com/technology/tech-roundup-not-enough-delivery-drivers

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