4 Value-Based Marketing Lessons Inspired by a Delivery App

Covid-19 has shifted the ecommerce landscape in ways we couldn’t have imagined. While some marketers are continuing business as usual, others are using this time to find the right customers, nurture relationships and build loyalty. These advertisers are leaning into what we call value-based marketing.

For most businesses, the majority of revenue is driven by their most loyal customers. Value-based marketing focuses on finding and nurturing those relationships to help drive revenue and accelerate profit margins.

My biggest lesson in value-based marketing didn’t take place in my virtual office, but from my favorite food delivery app. Before the pandemic hit, my three kids lived for our Friday night trips for burgers and milkshakes. But when Covid-19 kept us home, I tested different delivery apps to keep up our tradition. Here are four essential lessons in value-based marketing—from the delivery app that earned my loyalty—that businesses can adopt.

1. Know what drives loyalty

Ordering for a family of five is expensive. The delivery app saw how quickly my expenses were accumulating. To keep me happily spending, the app promoted its subscription service, which eliminated delivery fees for just a few dollars a month. And what really sold me was when the app showed me the hundreds of dollars I could’ve been saving.

Acquiring customers is easier than keeping them, and positive customer experiences are essential for earning loyalty. Consider what resonates with your highest-value customers, then put that value proposition front and center.

2. Use KPIs to understand customer value

The food delivery app that captured my loyalty was the only app that continued our relationship post-download. Every Friday, that app prompted me to order burgers and milkshakes. After a few weeks, I started seeing ads for groceries and wine. Being a one-stop shop meant that I went from just ordering on Fridays to several times a week.

So, what does this mean for your business? Not all customers represent equal business value. Many advertisers rely on cost per acquisition (CPA) as their KPI, which treats purchasers equally. The marketing team for this app likely understood my value by using ROAS, which rewards purchase, basket size and frequency. For your strategy, consider the value each customer delivers and whether pivoting from CPA to reengagement ROAS makes sense for your business.

3. Use customer behavior to drive personalization

How did the delivery app know to advertise my kid’s favorite burger restaurant on Fridays and promote its subscription service to me? All it took was recognizing high-value site behaviors. For me, it was placing several weekly orders, like burgers for my kids, sushi for my wife and pizza for me.

When thinking about segmenting customers, consider what behaviors correlate with high lifetime value, such as frequency. From there, you can target the audience that’s expected to provide higher value. Then you can decide how much you want to pay for this type of customer, customize messaging and share special offers to keep them engaged. 

4. Site experiences should bring joy

When opening the delivery app on my phone, I’m greeted with new restaurants to explore, local favorites and exclusive deals, presented on beautiful, mobile-friendly cards. I can place an order in less than five taps, opt for contactless delivery and watch my meal’s progression via map integration.

Leading marketers obsess over creating seamless shopping experiences, because if a customer experiences friction, they aren’t likely to return. One of the best ways to discover what may be impacting your conversion rate is to go through checkout flow as if you were a customer and test the experience on different platforms.

From offering major savings, being a one-stop-shop, showcasing new restaurants and providing frictionless experiences, the delivery app’s marketing team clearly thought about the lifecycle of valuable customers. What started as a way to keep up my family’s burger and milkshake tradition, turned into a lesson in value-based marketing that just so happened to save me $400. I don’t believe this relationship would have been possible without the app’s savvy approach to value-based marketing.

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How are you thinking about value-based marketing? What programs can you build to better identify and prioritize high-value customers? And what tests can you add to your learning agenda to measure the impact of value-based marketing? For more on how you can move toward value-based marketing, check out our episode of the MAU podcast.