How would you increase DAU ( Daily Active Users ) for a Food Delivery App?
Case in Point: Complete Case Interview Preparation - Growth Strategy Interview Question
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| Growth Strategy for Food Delivery App |
Interviewer: Our client is a food delivery app. They are looking at ways to increase their daily active users (DAUs). Please design a strategy for them.
Priyanka: To get a better understanding of the problem, I would like to understand the business context and the underlying metrics better.
Interviewer: Yes, please go ahead.
Priyanka: Is our client only into food delivery space or does it also provide other services like grocery delivery, restaurant booking & table reservations, etc.
Interviewer: As of now our client is only into food delivery.
Priyanka: As I understand, Daily active users mean the unique users who open/interact with the app daily.
Interviewer: Yes, that’s correct.
Priyanka: I am thinking of why it should be important to our client. If our application or platform has more DAUs, it means that users are engaging with our app. An increase in engagement would help us get more conversions on the platform.
Interviewer: Yes, that’s what our client desires.
Priyanka: I would like to understand in which geography our client is operating?
Interviewer: Our client serves across the Top-tier cities in India.
Priyanka: Is this the only metric that our client is focused on? Interviewer: For your analysis, you can consider this to be the primary metric on which our client is focused.
Priyanka: Quickly summarising, our client is a food delivery app serving across Top-tier cities in India and is focused on improving the DAUs.
Interviewer: How would you go about it now?
Priyanka: I would start by looking at the end-to-end journey of a user right from signing up on the platform to making a successful food order.
- Install the application from the app store.
- Sign up by creating an account on the app.
- Explore restaurants & different options available on the platform
- Add desired food to the cart
- In between the user can also move to comparing the prices on competitive platforms
- Confirm and place the order on the checkout page
- Add different payment options & check for available coupons or promotions
- Confirm delivery address and place the order
- Track the order
- Engage with the delivery person
- Engage with Support & Help, if the order is delayed.
- Collect the parcel from the delivery person
- Provide ratings & reviews based on their experience.
Interviewer: This looks quite comprehensive.
Priyanka: Now I will analyze how we can influence the users to engage with our platform more often.
- Organic: Here I would like to explore ways in which we can attract users to engage more with our application.
- Inorganic: Here I would discuss ways in which we can nudge our existing users and reach out to them to increase their engagement.
Interviewer: Please start with inorganic ways followed by organic.
Priyanka:
Inorganic ways to increase user engagement:
- Reminders: There are several phases of the user journey where we can nudge the users. For example – If the user added something to the cart and left it unordered, we can send them reminders to complete their order. If there is a special deal going on for some items that are left in the cart, we can also remind them and create an urgency here.
- Push notifications: We can nudge our users by sending enticing notifications on limited-time deals, festive discounts, new restaurants, etc. We can also strategize our push notifications during the time of the day when the user usually interacts with our app. For example, there are people who tend to order late at night. So, we can send them notifications during that time of the day.
- Personalisation: Everyone loves getting personalized messages or special treatment on their special days. We can send special discounts/offers on occasions like birthdays, anniversaries etc. We can also nudge users about their favorite restaurants basis their order history.
- Influencer marketing: We can collaborate with influencers, food bloggers, and connoisseurs to review and promote our app. We can leverage paid partnerships with them to increase our visibility and their followers can get exclusive deals to sign up on our app and make their first order.
Organic ways to increase user engagement:
- Engagement through social feed: We can create a social feed where users can post their experience, review restaurants, add pictures, and engage with other people who have already visited restaurants they are looking forward to visiting. Users can like, comment, and share the content. The platform can also build a follower-following culture which allows people to engage with people who have similar tastes and preferences. Creating a social feed would help users in seeking social validation and encourage them to open the app more frequently to see what their friends and community are doing.
- Gamification: Gamification lets food delivery applications integrate features like loyalty points. We can implement ideas like Spin the wheel and get x% off. We can have a simple quiz that will ask users a set of questions to help them decide on their next order. We can engage users through a weekly leaderboard where people get some points for answering some questions. The winners get certain points which can be redeemed on the app.
- Exclusive access: We can create an exclusive experience by introducing a subscription-based service. Through the subscription, the users will get access to special deals, free delivery, customized menus, better packaging, invitations to special events like restaurant openings, food tasting etc. We can also offer them priority support to improve their experience. An exclusive access or subscription program will also prevent our users from switching to another platform and will help us engage and retain them better.
All the above pointers that we discussed focus on the food delivery segment. I would also like to discuss different segments through which our client can grow their DAUs.
Interviewer: Sure, let us discuss that and do a quick feasibility analysis here.
Priyanka:
The different segments that are client can explore:
- Home-Cooked Food Delivery: There is a segment of users who live in Tier-I cities and crave home-cooked food. They usually don’t know how to cook and mostly eat outside. Due to increasing health awareness, a lot of these users are looking for home-cooked food. Our client can explore this segment and onboard sellers who are ready to provide home food. Users can sign up for a weekly/monthly subscription, they can choose from a range of menus, and get limited customizations. Our client can facilitate the delivery and tracking of the same. Since this is a daily requirement, it is most likely to increase the DAUs.
Impact vs. Feasibility Analysis
Home-cooked meals are appealing and resonate with users. There is a segment of users who crave this, but the market size might not be too large. Also, maintaining a good quality supply of those willing to provide home-cooked food on the platform can be tough. There can challenges in terms of ensuring quality checks.
- Restaurant booking & experience: There are individuals who prefer to go to restaurants by booking a table beforehand. Our client can integrate this service into their application. This would let users pre-book tables, and read reviews about restaurants. Our app can also facilitate payment through their platform and provide certain discounts to the users. To facilitate this smoothly, our client can charge a small commission from the restaurant.
Impact vs. Feasibility Analysis
Adding the restaurant reservation options makes both the ordering experience plus the dining out experience available on the platform. This will lead to higher engagement from the users and make them open the app more frequently. The feasibility will depend on the willingness of the restaurants to participate and smooth technology integration. For example – If a restaurant confirms the table on the application, the user should be able to get the table upon visiting the restaurant.
- Grocery delivery: Our client can explore additional value-added services like grocery delivery. Firstly, grocery delivery is a daily requirement. Secondly, our client can explore the synergies like cross utilization of delivery fleet, knowledge of maps & route optimization, etc.
Impact vs. Feasibility Analysis
Grocery delivery service can increase the user’s stickiness on the platform. This will also increase the app opening frequency. Our client can extend subscription benefits to grocery users as well. However, grocery delivery requires a separate infrastructure like dark stores with better storage, demand analytics, robust delivery network.
The options that we discussed above have their own pros and cons. Before launching or delving into any of the segments, our client should gauge the external scenario, perform extensive market research, and define a clear strategy.
Interview: Thanks, we can close the discussion now.
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