DashCash: building a new loyalty program for Doordash vendors to retain customers and incentivize on-platform relationships.
For the Kleiner Perkins Fellowship Design Challenge, I decided to build a new feature for Doordash. As a current DashPash subscriber and someone who is always looking for ways to supplement an embarrassingly lack of cooking abilities, I went searching for opportunities to improve DoorDash’s customer retention and user engagement. “Dash Cash” is a loyalty program by DoorDash that rewards customers for ordering food through their platform. It allows customers to earn cash back on their orders, which can be used towards future orders. This aims to increase order frequency and customer retention by incentivizing customers to continue using DoorDash.
The food delivery industry is a fierce battleground, with companies like DoorDash, Uber Eats, GrubHub, and others all vying for a slice of the pie. These companies have revolutionized the way we order and receive food, making it easy and convenient to have our favorite meals delivered right to our doorstep. But with so many players in the game, it can be tough for any one company to stand out and become profitable. Each of the major players in the space has continuously failed to find profitability given a need to keep costs low to remain competitive.
While DoorDash is one of the major players in the food delivery industry, the company is facing a number of challenges as it looks to maintain its market share and stay ahead of the competition. One of these key problems that DoorDash is facing is retaining and acquiring new customers amidst a busy competitive landscape. With so many similar services available, it can be difficult for any one company to differentiate itself and capture a significant share of the market.
To overcome this, DoorDash must focus on innovating and coming up with new ways to retain and acquire users. DoorDash must stay nimble and constantly innovate with new features that wow and retain customers in order to stay ahead in the highly competitive food delivery industry. It’s a challenging task, but with the right strategies in place, DoorDash can continue to grow and thrive in the years to come.
How Might We increase customer retention and create a unique value proposition to set Doordash apart from its competitors?
I conducted 3 interviews with different consumer groups to better understand their food delivery preferences and explore how Doordash could build a platform that better supports the needs of various stakeholders in the system.
1. The Convenience King– a 45 year old DashPass subscriber who has used the platform for over a year
2. The Savvy Searcher – a 20 year old who has multiple platforms downloaded and toggles between them
3. The Loyal Foodie – a 26 year old who uses Uber Eats exclusively but mostly out of convenience and the brand association, generally doesn’t use online ordering very much
The Convenience King
“I’ve been using Doordash for a year or so. It’s the simplest platform and always has had what I need. I compared all of my options and wouldn’t leave Doordash for a competitor unless I have a serious reason to do so. I pay for DashPass, they have all my favorites saved, and I’ve never had any real problems with them.”
- To have easy, convenient, and affordable food whenever and wherever
- Wants to process to be streamlined, simple, and accessible to support a busy lifestyle
- To have a personalized platform that knows his favorites and makes the path to checkout as short as possible
- Convenient means of getting food delivery
- Pre-saved preferences and personalization for fastest checkout time
- Strong customer support and mitigation for any reasons to leave the platform
- Worried about missing out on deals or discounts through other platforms
- Concerned about waiting times and getting food when needed
The Savvy Searcher
“I have all the big platforms downloaded. They all offer different promotions and deals, oftentimes for your first order at a certain place. If I want a meal delivered, I’ll toggle between each of them and find the best deal or shortest wait time.”
- To find the best deals and promotions on food delivery platforms
- To have the shortest wait time for food delivery
- Access to multiple food delivery platforms
- To have up-to-date information on promotions and deals offered by each platform
- To be able to toggle between different food delivery platforms to compare deals and wait times
- To be able to easily access and compare deals and wait times on different food delivery platforms
- To be able to find the best deal for their first order at a certain place.
The Loyal Foodie
“I prefer dining at local restaurants directly to support the community and the personal touch it brings. Although, I also occasionally use delivery platforms like UberEats for convenience, but nothing beats the direct support of local businesses. I use UberEats because it was the first I downloaded – they are all pretty interchangeable for me.”
- To support local businesses and the community
- To have a personal touch and experience when dining out
- To build relationships with local restaurants
- A way to find and access local restaurants
- The ability to dine out and enjoy a meal in a physical location
- Convenience of using delivery platforms like UberEats
- A sense of satisfaction knowing they are directly supporting local businesses with their purchases
- To feel good about their choices of where they are spending their money
- To have easy access to information about the local businesses they are supporting
1. Creating a “Moat” is a Necessity
In the food delivery market, consumers are price elastic, and have little loyalty to one platform over another if another platform has more desirable dining options, lower fees, or faster delivery times, even having multiple downloaded on their phone at once. Building a moat, or creating a unique feature set that makes it prohibitively difficult or unappealing to leave the platform is crucial for customer retention.
2. Increasing Order Frequency is Key
Margins are very low in food delivery businesses. Increasing margins is difficult due to a competitive landscape that necessitates competitive fees, on both the consumer and vendor sides of the marketplace. Because of this, the best path to profitability for Doordash is through increasing GMV, or gross merchandise value, by increasing order frequency. With higher order frequency, users are more likely to pay for premium features such as DashPass (which in turn also increase order frequency) and extend their customer lifetime value.
3. Build In-Platform Vendor Relationships
Interviews have shown that consumers oftentimes order from the same vendor just as they would in in-person dining scenarios. They also are far more likely to use a platform if they have ordered from their favorite restaurant there previously. Loyalty programs are a huge part of this. A loyalty program can also help increase upselling and cross-selling opportunities by providing customers with rewards and perks that they value, and also by providing platforms and vendors with valuable customer data that can be used to target and personalize marketing campaigns.
Building The Flywheel
With the ultimate goal of increasing user acquisition and building feature sets that lead to higher order frequency, I mapped the consumer growth flywheel to show how a loyalty program helps to create a flywheel of growth. As users are brought onto the platform, more merchants join as well, in turn leading to higher post-purchase, better consumer relationships, and higher retention. This in turn leads to a greater number and more loyal consumers, fulfilling this flywheel.
Introducing “Dash Cash”, a loyalty feature that rewards customers with discounts and free items at participating merchants, would be a total game-changer for DoorDash. It would create a virtuous circle of customer loyalty, where customers are incentivized to order more frequently through the DoorDash platform, and in turn, DoorDash would see an increase in revenue and customer retention.
Not only this would be beneficial for DoorDash’s growth and consumer retention, as it would increase revenue streams and customer lifetime value, but also it would increase customer retention rates, as customers would be more likely to stay with DoorDash if they are earning rewards through their purchases.
Furthermore, Dash Cash would also be beneficial for the merchants, as it would encourage customers to try new menu items and increase their frequency of orders. This in turn would increase sales and profit margins for merchants.
Key Design Goals
1. Measures of Success
To see if this solution actually drove orders and was utilized by consumers, the following measures would demonstrate success:
- Increased order volume
- Customer retention periods
- Feature utilization
- Engagement rate
- Referral rate
2. Future Iterations
Of course, future iterations would be highly dependent on feedback from initial users. However, some things to work on following this project would include:
- The vendor experience and customization
- Letting consumers build their own reward system and interface
- Integrating with out-of-platform systems
- Maintaining relevancy for non-delivery orders
This was an extremely valuable experience researching, ideating, and prototyping a new feature set for a company. Although there is a lot of room for this project to grow and different ways to tackle a lack of platform loyalty, I think this serves as a solid starting point and a great demonstration of my working process condensed in a short time frame. Thanks to KP for such a fun design challenge!