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Objective of CRM Strategies
Customer Relationship Management (CRM) strategies encompass a myriad of objectives – understanding consumer behaviour, maximising Customer Lifetime Value (CLTV), enhancing brand loyalty, maintaining a healthy user base and driving revenue growth, among others. Of these CRM objectives, customer retention stands out in the realm of delivery business and online ordering.
Amidst fierce competition and ever-rising consumer expectations, companies like Delivery Hero, one of the world’s leading local delivery platforms, recognise the importance of fostering enduring relationships with their customers. With a large and diverse customer base, how does Delivery Hero keep them loyal and satisfied?
We spoke to Tobias Lüder, Head of CRM, Delivery Hero, Europe, who talked about Delivery Hero’s approach to customer retention and highlighted the importance of timing of CRM campaigns in achieving true personalisation.
Delivery Hero’s Approach to Customer Retention
In a highly competitive food delivery industry, companies like Delivery Hero are leading the way in transforming the food delivery and online ordering experience. However, what truly distinguishes a company goes beyond acquiring new customers; it hinges on its capacity to retain them. This is where customer retention and lifecycle marketing strategies play a pivotal role.
Tobias, discussing Delivery Hero’s perspective on customer retention, highlighted its significance within their current marketing strategy. He pointed out that while every business aims for immediate profitability, the primary revenue source often lies in existing customers. It is crucial to enhance the CLTV and capitalise on the investment made in acquiring each customer.
Delivery Hero’s approach to customer retention revolves around nurturing organic customer returns and cultivating a robust user base. Their focus remains on staying consistently relevant to consumers. Here are the key methods they employ to maximise CLTV and optimise customer retention:
1. Enhancing CLTV through Personalisation
Differentiating between new and existing customers is essential. At Delivery Hero, they focus on building and managing such customer cohorts in shaping their customer retention strategy. Here are some effective ways to enhance CLTV through personalisation:
- Personalised Product Recommendations: Implement a recommendation engine that analyses a customer’s browsing and purchase history to suggest products or services tailored to their interests and preferences.
- Segmentation and Targeted Marketing: Divide your customer base into segments based on characteristics such as demographics, purchase history, and behaviour. Craft personalised marketing messages and offers for each segment to address their unique needs and preferences.
2. Targeting Occasions for Customer Engagement
Tobias emphasised on the importance of providing customers with occasions and reaching them at specific moments. For instance, customers order on various occasions, like Fridays, lunchtime, or vacations. It is important to engage with the existing customers on these occasions. A diverse range of occasions presents multiple opportunities for Delivery Hero to engage with customers effectively. So, understanding the best timing is key to driving app orders. Marketers can effectively target occasions for customer engagement by considering the following two strategies:
- Seasonal and Holiday Campaigns: Align marketing efforts with specific seasons, holidays, and events relevant to your target audience. Create campaigns that resonate with the sentiments and interests of your customers during these occasions.
- Life Events and Milestones: Pay attention to significant life events and milestones in your customers’ lives, such as birthdays, anniversaries, graduations, or the birth of a child. Send personalised messages, offers, or gifts to celebrate these occasions and make customers feel valued.
3. Optimising the Channel Mix
Tobias discussed their diverse customer engagement channels, including SMS, email, push notifications, WhatsApp, and web push, with different channels catering to distinct target audiences. For customer retention, instead of determining the best performing channel, the focus has to be on pinpointing the most effective one for specific customer cohorts. The strategy revolves around engaging each cohort on their preferred channel at the right time.
Marketers can optimise the channel mix to enhance customer retention through the following strategies:
- Multi-Channel Personalisation: Develop a cohesive multi-channel marketing strategy that leverages various communication channels, such as email, social media, SMS, and in-app notifications. Use customer data and behavioural insights to personalise content and messages for each channel.
- Channel Attribution and Analysis: Implement robust analytics to track the performance of different channels in terms of customer retention. Identify which channels are most effective at retaining a given cohort of customers and driving repeat business. Allocate resources and marketing budget accordingly to prioritise the most successful channels for a given cohort.
4. Enhancing Marketing Consent Amid GDPR Challenges
GDPR poses significant hurdles to customer retention and loyalty. Obtaining opt-ins for push notifications and channel subscriptions, as well as app retention, is crucial. GDPR necessitates marketing consent, leading to a drop in opt-in rates. To address this, Delivery Hero takes proactive marketing efforts such as building features like in-app messages, and encouraging unsubscribed users to resubscribe. An effective strategy includes setting up a marketing framework that communicates the benefits of opting in, such as access to deals and promotions.
Here are the methods that marketers can adopt to navigate GDPR challenges while fostering a culture of transparency and trust with their audience.
- Clear and Transparent Opt-In Processes: Ensure that your opt-in processes are clear, transparent, and user-friendly. When collecting consent, provide detailed information about what data you will collect, how you will use it, and who will have access to it.
- Preference Centers and Granular Controls: Implement preference centres that enable users to manage their consent preferences easily. Allow them to update their communication preferences, choose the frequency of emails or messages, and specify their interests.
5. Utilising Control Groups for Testing
Delivery Hero employs control groups to rigorously test their retention strategies. This approach allows them to assess the true impact of their efforts on the company. They maintain a global control group to ensure the effectiveness of their retention initiatives company-wide.
Marketers can utilise control groups for testing in the following two ways:
- A/B Testing Validation: When conducting A/B tests, it’s crucial to include a control group. By comparing the results from the control group with those from the test group, marketers can assess the true impact of the changes.
- Marketing Attribution Analysis: Control groups can be used to evaluate the contribution of specific marketing channels or tactics to overall conversions or sales. By dividing your audience into different segments, you can measure the incremental impact of that channel or tactic.
Why Customer Retention Strategies Matter
Today’s dynamic business environment poses several challenges for businesses. For instance, the once-reliable channels have evolved and thus the ways companies used to reach customers aren’t as effective anymore. Further, privacy regulations have made it challenging to offer personalised experiences.
Amidst these challenges, businesses work hard and spend money to acquire each new customer. Customer retention strategies play an important role in ensuring that your existing customers have a great experience and they can derive value from your products or services. Effective customer retention strategies can significantly enhance CLTV, revenue, brand loyalty, cost-efficiency, and business growth and provide extensive data insights.
As per Spectrm’s State of B2C Customer Retention 2023 Report based on a survey of 300 marketers globally – returning customers are making companies a lot of money. 59% say returning customers constitute a quarter to half of the company’s revenue and 29% say they’re between half and three-quarters of their company’s revenue.*
Here are the reasons why customer retention strategies matter.
- Sustained Revenue: Existing customers tend to spend more over time than new ones. By retaining your current customers, you can count on a steady source of revenue, which is often more cost-effective than acquiring new customers.
- CLTV: The longer a customer remains loyal to your brand, the higher their CLTV becomes. Implementing retention strategies ensures that customers stay with your business for an extended period, maximizing their value to your company.
- Word-of-mouth Marketing: Satisfied, long-term customers are more likely to recommend your products or services to others. This positive word-of-mouth marketing can attract new customers and enhance your brand’s reputation.
About Delivery Hero
Delivery Hero is one of the world’s leading local delivery platforms, driven by the mission of delivering anything, straight to customers’ doors. They operate in over 70 countries worldwide, powered by tech but driven by people. As the world’s leading local delivery platform, they work with a large global ecosystem of riders, restaurants, shops and partners. From prepared meals to groceries, flowers, coffee, and medicine, they deliver whatever customers need to their doors. As one of Europe’s largest tech platforms, headquartered in Berlin, Germany, they have more than 53,000 employees globally.
Tobias’ CRM Marketing Experience
With a background in business administration and a strong passion for marketing, Tobias found his calling in marketing quite naturally. However, while he was initially drawn to SEO, his interest gradually shifted towards CRM while working at Germany’s top real estate brokerage company, McMakler. Thereafter, Tobias started garnering in-depth CRM experience.
Approximately six years ago, Tobias joined Delivery Hero as a CRM specialist. Through dedication and hard work, he progressed to his current leadership role in 2023, overseeing the European markets. He attributes his success to his humble beginnings as a junior team member, as it provided him with firsthand experience executing CRM-related tasks, equipping him with technical know-how in the process.
Tobias and his team now focus on CRM strategy, performance metrics, and the management of customer retention and engagement across various channels. One of his standout achievements at Delivery Hero involves orchestrating user migrations and rebranding efforts for Delivery Hero’s apps, ensuring a seamless transition for both customers and data.
Final Thoughts
Sharing his advice for CRM marketers, Tobias said,
CRM is like the most honest marketing because you are talking to customers – you get to build up this conversation and I think, that is possible only in CRM Marketing. My advice to people starting in CRM is to work with a good CRM tool and test a lot. At the same time, do not overcomplicate things, just keep it simple.
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