How to launch a food delivery product in the market

For better understanding, I have segmented this blog into the following parts

1. Product Analytics

2. Growth Strategies

3. Product Roadmap

4. Product Backlog and Sprint

5. Product Requirements Documents (PRD)

6. GTM Strategy

Product Analytics

Acquisition Metrics

Acquisition stage deals with acquiring new users. At this stage, we are trying to answer questions such as how many new users are onboarding, which channels give the newest users, what is the cost of acquiring a new user etc.

1. Install to Registration Rate- What percentage of users installing the app create an account? Closely monitoring the install to registration rate can optimize the user onboarding process.

2. Average Time to Register- Average time it takes new users to register after the first app launch. Time to register is a good indicator of the value a new user sees in your app.

3. New Users per Channel- By analysing the new users per channel, you can understand which acquisition channels are performing better.

4. Bounce rate- The success of the product depends on users viewing more than one page of the website, hence, a high bounce rate would mean that either the landing page of the website is not relevant to visitors or the users are not finding your product useful.

5. Customer Acquisition Cost (CAC)- The average cost you incur in getting a user to install and register on your app. Monitoring CAC is vital to analyse the return on investments made in the marketing of a product. It also helps to understand which acquisition channels convert better.

Industry Standard:

• Install to Registration Rate: 25% of users register after the first app launch

• Average Time to Register- 22 min

Activation Metrics

Activation is the stage of the user journey when a user has had the Aha moment, that is they do a core action or actions which demonstrate they have achieved success or get value from the product.

1. Core Action- Order a meal at least once within the first month of installing the app. This shows the percentage of users who see value in the product after they have been onboarded.

2. Average Transition Time- Average time for users to order for the first time on the app. The first 3 days after a user registers are critical, and apps that fail to recognize this run the risk of losing out on a potential loyalist. This might have further ramifications on engagement and long-term user retention.

3. Average Order Value- It shows how new customers are perceiving the product in terms of Value. Whether they are finding value in the product.

Industry Standard:

• Core Action- 35% of users perform core action within a month

• Average Transition Time - 3 days

Engagement Metrics

Retention answers the key question of how many of your users are continuing to use the product i.e. being retained over time. Retention and engagement go hand in hand in determining the health of the business. If you are acquiring new users but not retaining them or your users are not engaged, you are doomed to fail

1. Average app launches per user in a month- Tracking the average number of monthly app launches for your app helps provide you with an idea regarding how often users come back to your app.

2. Average CTR for push notifications- Click-through rates (CTRs) help measure the effectiveness of marketing campaigns. Are your messages generating the response you intended? Are they prompting users to open your app? Tracking click-through rates helps to optimize message content, delivery times, user segments, and campaign strategies.

3. Average Session Length- Average session duration is a metric that reports the average amount of time users to spend on your website. This gives the likeliness and engagement for your product.

Industry Standard:

• CTR- 1% Average CTR for push notifications

• Average app launches per user in a month- 10

Retention Metrics

1. Number of active users- Active users means the number of people that are actively using your product, This metric will not only provide an estimate for the usage of the product by the users but will also help track the growth of the company.

1. MAU- No.of users ordering once a Month

2. WAU- No.of users ordering once a Week

3. DAU- No.of users ordering once a Day

2. Churn rate- Proportion of customers uninstalling the app/ not visiting the website for a month. Greater the churn, the more capital is required for the business just to maintain its revenue, hence it is important to monitor and keep it at a minimum.

3. Transaction Abandonment Rates- The number of users who dropped off after showing a high intent to transact.

Industry Standard:

• Retention rate- 22% week 1 retention rate for New users, 65% week 1 retention rate for existing users

• Churn rate- 86 % of new users Churn within 2 weeks of launching the app

• App Stickiness- 8% average stickiness (DAU/MAU)

Revenue Metrics

In the revenue stage, we look at the key monetisation metrics for the users. This is the stage where you should figure out how can you convert your potential customers into paying customers which contributes to your revenue.

1. Daily Average order volume- It shows whether users are forming a habit and are ordering more frequently

2. Average order Value- It shows whether the service is gaining a significant share of business in the market.

3. Average delivery cost per order- As delivery cost is a major revenue channel for Food Tech, it will be necessary to track delivery costs separately.

4. The average revenue per user (ARPU)- ARPU gives an estimate of the revenue that each user is generating. Hence, it can be a useful metric for building financial models to forecast the revenue of a company and segment users to different segments.

5. Monthly Recurring Revenue (MRR)- MRR is the total number of paying customers multiplied by the average revenue per user (ARPU). this will give the revenue firm expects to earn every month via their paid customers

6. Customer Lifetime Value (LTV)- LTV is an estimation of the total value an average customer brings over their entire time as a customer. LTV of different customer groups tells where to focus to grow the business. We can segment customers based on their LTV & then allocate more resources to the customers who have a higher LTV

Referral Metrics

The referral is the stage where you are asking how can you turn your current users into promoters such that they help in getting new users. One of the best ways to drive growth is through referrals.

1. Viral Coefficient- Viral Coefficient is the number of new users an existing user generates. Hence, a high viral coefficient is a clear indicator that there is a good market for your product and that users are finding it useful enough to share it with their friends.

2. Customer experience – Tracking customer ratings of the number of likes and dislikes after every food delivery will give the satisfaction rate of participants with respect to the product experience.

3. App store ratings and reviews- Tracking the positive and negative reviews as well as ratings will give the overall satisfaction of customers and also tell us about the issues and feedback of the product.

4. Revenue from Referral Signups- Revenue from referral signups gives a sense of the effectiveness of the channel and the impact of the same on the revenue for the company

5. Total Referral by Channel- Referral by Channels gives a sense of the effectiveness of the channel and decides which channels to focus on.

Growth Strategies

Acquisition Strategy

Acquisition channels: There are many acquisition channels for FoodTech to gain new users online and offline. As a Food Tech startup, we can go for-

• Paid advertising​: Using paid ads on popular social media channels and offline advertising would be a good idea. These could be channels such as LinkedIn, Facebook, Twitter, Newspapers and billboards.

• Email marketing​: This requires that we build a database of email addresses over time that can be targeted through nurture campaigns.

• Social media​: A company’s social media channels (including LinkedIn, Facebook, Twitter and Instagram) are great marketing channels to tell a product’s story, offer engaging content (in the form of blogs and videos), explain the product, its use-cases, and customer testimonials.

Acquisition strategies :

1. In-app Notifications: Display an exit pop-up or in-app notification encouraging users who have completed an in-app search 5 times to register and/or create a profile on the app

2. Social media​ Marketing: Marketing through various Social channels like Facebook, and Instagram via blogs, and videos having viral content to increase Brand awareness and generate leads. This will also allow us to occasionally engage users through games/quizzes and other means of social engagement.

Activation Strategy

Activation event: Users ordering Food delivery for the first time on the App

Activation strategies: For Registered but not Activated Users

1. Nudge users to check out offers at restaurants in their area.

2. Recommend popular eateries and offer specials to encourage users to order their first meal

3. Send personalized push notifications, emails, or text messages encouraging users to make their first in-app purchase on days 1, 3, 5, 10, and 15 after registration

4. Send personalized push notifications reminding users who abandoned their carts to complete their first transaction within minutes 5, 30, and 45 of recorded activity

5. Send in-app notifications urging users who are browsing to make their first purchase

6. Understand users’ preferences so that they can be shown the most relevant options and restaurant recommendations in their area.

Retention Strategy

Personalized user engagement campaigns nurture your brand’s relationship with customers and drive repeat orders. These campaigns form the foundation for long-term user retention.

1. Run personalized push notification, email or SMS engagement campaigns on days 1, 3, 5, 7, and 10 after the last conversion – promoting discounts, providing updates on new eateries, menu changes, etc.

2. Special offers on the users’ preferred restaurants via in-app notifications along with delivery status updates on external channels like push notifications and email messages.

3. Run personalized push notification or email engagement campaigns on days 3, 5, 10, 15, and 30 after first-time conversion – pitching new offers, limited-time discounts, and access to exclusive user-generated content

4. Emojis are great, and can drive engagement when relevant to your app and are used in moderation. Sending in-app personalised notification with the first name, at optimized send times can improve open rates and CTRs

To reduce Churn:

1. Re-engage users who've gone inactive by sharing the latest offers on restaurants in their vicinity, new menu options, and restaurants added to the app

Identify and proactively engage with users who are likely to churn using automated segmentation, such as Recency, Frequency and Monetary (RFM) Analysis

Referral Strategy

Referral Discounts​: A referral program that encourages word-of-mouth marketing and incentivises the referrer could be another channel to drive initial adoption. The referral program will help acquire more customers and build brand awareness at lower CAC (customer acquisition costs). One such Referral campaign could be when a user orders first time using a referrer’s coupon, Reward will be given as below-

Referrer Rewards: 10% off their next purchase up to 100 Rs

Referee Rewards: 10% off their first purchase up to 100 Rs

Contests or Giveaways: Contests or giveaways can incentivize customers to refer new leads. For example, on Social channels such as Instagram posts contests can be hosted where customers are only entered if they refer a certain number of leads. This can mean getting signups where the lead will be rewarded on successful conversion such as first order.

Revenue Strategy

• In-app Notifications: Send a push notification to users with reminders 10 minutes and 1 hour after they have abandoned a cart, this will lead to returning of such users which will lead to conversions and an increase in Revenue.

• Personalized & Triggered Messaging- Segmenting users based on dinner and lunch usage, and triggered reminders via emails or In-app can help in booking the meals.

• Discounts on minimum cart value: Provide incentives by offering discounts, and promotions such as a flat percentage discount on minimum cart value which will encourage users to increase their cart value like- Flat Rs 50 off on minimum cart value of Rs 300

Product Roadmap

Product Roadmap Link - https://docs.google.com/spreadsheets/d/15tX7aCefdTiCS_R-o9oaXllcgxNMoRP_9ikqZBVe-pg/edit?usp=sharing

Product Backlog and Sprint

Product Backlog and Sprint Link -https://docs.google.com/spreadsheets/d/15tX7aCefdTiCS_R-o9oaXllcgxNMoRP_9ikqZBVe-pg/edit?usp=sharing

GTM Strategy

Achieving Product-Market Fit

Ideal customers- People in the age group of 25-35 years, who are unmarried and are either a student or working professionals living in a metro/ tier 1 city. This user group tends to order food online more frequently as they could not afford the time to cook food themselves.

Pain points of target customers:

We are making this product to address the below issues from the existing food delivery market that we discovered during our market and user research:-

1. High Commission cuts from the app making the net payable cost of customers higher.

2. To address order cancellation and refund policy issues with the current apps.

3. To address the delivery issues including late deliveries and cancellation.

Product/market fit​- Achieving PMF is a ​constant and iterative process​. Constantly revisiting our understanding of the market, our product offering and its value proposition, and the messaging is critical to ensure constant PMF where the market and customers’ needs are also constantly changing.

Key features that will lead to achieving the Product/market fit​-

1. Smart Recommendation system- Our smart recommendation system will recommend to users their favourite restaurants and cuisine using AI and high-end technologies which will lead to less confusion and deciding time while ordering food through our App.

2. Fast delivery by focusing on Nearby restaurants: We will recommend restaurants which are within 5 km of the user’s location which will lead to a lower delivery time and delivery cost.

3. Low Net payable cost: Food deliveries from nearby restaurants will lead to low delivery cost hence a decrease in Net payable cost.

Key indicators that will help to know if we are achieving the Product/market fit​-

1. Beta launch​: Feedback from early adopters of the product

2. Customer interviews: Product teams directly engage with ideal target customer personas to get feedback

3. Market research: Through independent forms, analysts and industry surveys

4. A/B testing: On the website, to see how different visitors interact with the product/platform

5. Different sales and marketing channels: Feedback from the different marketing and sales channels used to run different experiments
   

Product Positioning

1. Here, we define what the product stands for, in terms of product value, promise and price: EleCart (Our Food delivery App) offers the Fastest ever food delivery service from thinking to eating.

2. USP or Differentiator- USP for our APP will be a Smart food tech app which provides excellent recommendations to users based on their personal choice and hence provides a efficient service for busy professionals who want quick and economical food deliveries.

3. The product positioning, given the current market and competitive landscape, is around adding great value to Customers through a product built exclusively for that market, along with flexible and affordable pricing plans and great customer support.

Hence we are targeting customers who want food delivered within minimum time and at an economical cost. We will fulfil this with a smart recommendation system which will recommend to users their favourite restaurants and cuisine using AI which will lead to less confusion and deciding time while ordering food through our App and focus on nearby restaurants to decrease delivery time and cost.

Pricing Strategy

Choosing the right pricing strategy is extremely crucial to ensure initial adoption and product-market fit. Our Aim for pricing strategy is to set pricing worthy for customers and profitable for the company.

External factors impacting pricing-

• Food tech is into high volume/ low margins pricing quarter

• High competition

• Highly price-sensitive audience

Internal factors impacting pricing-

• Product cost

• Revenue and Targets

• Investment Budget

We will be using a combination of Pricing strategies for our product namely-

1. Cost plus pricing- So that we get a minimum profit over our total spends

2. Value-based pricing- By analysing how much our users are willing to pay based on various demographics

3. Penetration- Offering high discounts on newly launched locations

Pricing Strategy- The pricing Strategy for our product will be to take a fixed commission of around 10-15% from restaurants on all orders. Additionally give a fixed Rs 20-30 to delivery partners on each order, as initially, all orders will be in the distance range of within 5 km. What we take from users will be the food cost + delivery cost. In this way commissions from restaurants will be majorly turned into profits after deducting operational costs. The pricing Strategy can then be tweaked based on user feedback too.

Sales & Marketing Strategy

Marketing Channels:

1. Social Media/Facebook Advertising:- Social Media/Facebook advertising is the most effective and fastest way to reach out to the target audience in today's world when the entire world rotates around it.

2. Search Marketing (Google AdWords):-Google AdWords allows users to focus on a particular target audience by customizing keywords and ads, based on their App ID and other information.

Sales Channels:

1. Direct Selling:- Selling through an app/website. Post Marketing, the number of visits to the app/website will cause direct selling.

2. Affiliate partnership:- Partnership with the restaurants to promote each other on their platforms. Restaurants will provide offers if ordered using our App and we will feature the restaurants.

Product Launch Plan

Key activities-

Pre Launch Plan:

Check that the Development and testing sprints are complete.

1. Support Documentation readiness.

2. Sales and user onboarding plan.

3. Pre-launch market research

4. Soft or Beta Launch for limited customers.

5. Feedback from Beta launch.

6. Define KPIs to be tracked on the launch day. These could be the Number of sign-ups, Unique visitors to the product page, Customer value, Sign-ups for the various tiers, CAC, or APRU.

7. Ready social media channels for the launch with the right messaging and gather initial traction and followers for the channels.

Launch Day:

1. Release Plan- After a successful pre-launch, post the AD and TV commercials with the launch date across all TV/social media and marketing channels.

2. Media event- Organise a press conference on the launch day to announce about the product release.

3. Celebrity endorsement- Based on the budget, choose a brand ambassador to feature in AD and also attend the media event.

4. Run gamified audience engagement through early access, freebies, etc. on launch day.

5. Do live tracking of KPIs.

6. Effectively map out the customer journey and identify areas of friction during usage that cause users to drop off; this could be at the sign-up stage, the email confirmation stage or the payment stage.

Reach out to customers who signed up or who didn’t, to understand their experience and gather feedback on areas of improvement. This will help go back and make adjustments to the sign-up workflow and pricing strategy.

Post Launch Plan:

1. Early user feedback:- Post the launch, constitute a product support team which will track all the feedback across different platforms, work and resolve all the raised tickets.

2. Customer success teams:- Engage account managers/customer success managers to make sure that the customer engagement is optimum, the product support team is working as expected, and also suggest a continuous improvement plan.

3. Create new sales and selling strategies based on product launch learnings.

4. Check all data, including:

• Rates of acquisition, adoption, conversion, and the efficiency of the various sales and marketing channels.

• Run analysis on the users signing up for the product to confirm that it matches the customer segment identified to make any changes if there is a mismatch

• Any areas of customer feedback that need fixing, based on proof such as customer stories and testimonials from the initial adopters on the user experience.