The Setting

It’s 7pm, it’s been a long day, you have nothing in the fridge but some carrots you’re still not sure if they went off and you’re starving. This is the perfect setting for a quick browze on the computer to get amazing cheap food as soon as possible.

Luckily, the giant food delivery start-up Deliveroo is offering customers to get £5 off from any delivery with a minimum order of £15 pounds. Yes, you can finally get those delicious starters you always wanted to try out or that inviting dessert that eyed you each time you logged into the website, as you reluctantly skipped through because pay day was still far away.
Well, at least I am most certain that this promotion will be an amazing addition to my student life (and funds).

The method to benefit from this discount is simple, as you log in to the Deliveroo website, just click on the “<3 get free food” and you will be given £5 discount whenever you share your unique web link with a friend and they order; same discount applies to your friend for a total of £10 over two meals.

So be ready to spam all of your Facebook friends, as I’m sure they will do the same afterwards!

Deliveroo’s marketing Strategy

But why is Deliveroo doing this? The first question that popped in my head was: isn’t the company losing out? Surely it would be easy to create a new email and Deliveroo profile in order to gain both discounts for yourself.
Lee’s interesting blog post (2016), among other 2 marketing strategies, explains how enticing customers with generous promo codes makes sense when you consider the lifetime value of a user. Dawson (2016) says how this word of mouth customer acquisition model helped towards the company Deliveroo to a 25% monthly growth over 2015 and 2016.

Villanueva, Yoo, and Hanssens’ study (2008) measures the impact of 1 new person being acquired on the firm’s future performance. Deliveroos expense of the £5 coupon does not largely affect the positive performance and sales of the service in the short-term; however, this form of customer acquisition will affect Word of Mouth (WOM) acquisitions, which will impact the business on an exponential scale in the long-term.

WOM is one of the most effective communications a company encourages for business results. Kimberly Whitler (2014) explains in her blog how consumers are more prone to friend’s suggestions when deciding to purchase a product or service. On top of this, research showed that marketers also believe in the power of WOM marketing but marketers are not focused on it. Companies like Nike, who are connected with their really passionate fans on social media are exponentially more successful than other companies who “buy fans” which signed up just to win a free iPad.

Deliveroo is indeed succeeding in getting their customers passionate about the brand which has increasingly brought high customer acquisition and customer retention rates. Tang, Q., Zhao, X. and Liu, S. (2016) findings show that the sense of self-worth, socializing, economic reward and reciprocity have positive effects on coupon sharing. Furthermore, coupon proneness positively moderates the relationship of socializing and reciprocity with coupon sharing, which means that a satisfied custmer will gain further satisfaction by telling a friend about the deal.

So we get it: Deliveroo is gaining success, offering us big deals and slowly conquering a small place into our hearts. We can therefore only learn from their strategies, appreciate their service for those empty fridges nights and wonder if soon every company will lure us into their products ad services through the same marketing idea.

References

Dawson, F. (2016) Delivering 25% month-on-month growth: The Deliveroo story. Available at: http://www.forbes.com/sites/freddiedawson/2016/02/26/delivering-25-month-on-month-growth-the-deliveroo-success-story/#3c96f1bd4590 (Accessed: 5 February 2017).

Lee, S. (2016) What Deliveroo did to get Traction and become a Billion-Dollar company – word-of-mouth and referral marketing Blog. Available at: http://www.referralcandy.com/blog/deliveroo-marketing-strategy/ (Accessed: 28 February 2017).

Tang, Q., Zhao, X. and Liu, S. (2016) ‘The effect of intrinsic and extrinsic motivations on mobile coupon sharing in social network sites’, Internet Research, 26(1), pp. 101–119. doi: 10.1108/intr-05-2014-0136.