- 1.Know Your Margins
- 2.Set the Minimum Order Amount Intelligently
- 3.Offer Free Delivery as Part of Your Loyalty Program
- 4.Use Free Delivery on Select Items
- 5.Offer Free Delivery for a Minimum Order Amount
- 6.Offer Free Delivery as a Promotion
- 7.Use Free Delivery as a Bonus
- 8.Offer Free Delivery to First-Time Customers Only
- 9.Include Delivery Costs in Menu Item Prices
According to statistics, the online food delivery sector is expected to have an annual growth rate of 6.36%. Thus, the industry is projected to reach annual revenue of $182 million by 2024.
We can also assume that the COVID-19 pandemic has caused many restaurants to pivot. After all, not everyone will feel safe to go out and dine in their favorite restaurant nowadays. It is also undeniable that ordering online with contactless delivery provides convenience.
Not listening to consumer demand will render keeping a restaurant business afloat tricky.
The good news is, to make your off-premise strategies more appealing, you don’t need to have a huge marketing budget. In this post, we will share the nine handy ways in which you can offer free delivery to boost your sales.
1. Know Your Margins
Your ability to offer free delivery depends on two things:
- Cost of delivering the order
- Profits that you can still make on that order
While it’s pretty challenging to predict this, you can review your average order value (AOV), as well as the costs of delivering your orders.
Having an estimate allows you to know whether you can comfortably offer a free delivery option to customers. The impact of free delivery on sales can be negative if you don’t know how to approach this strategy.
2. Set the Minimum Order Amount Intelligently
Only offer the free delivery option if it reaches the minimum purchase value.
You need to know your threshold first. You can do this by calculating your current average order and setting the free delivery minimum just slightly above it.
Doing so will encourage your customers to add at least another menu item to their cart to qualify for this option.
Do not set the threshold too high, though. Let’s say that your average order value is only $20, and you’ve selected the free delivery minimum at $200. That won’t work.
Ensure that you don’t set the limit too far away from the average order value. Ideally, it should be just enough for your customers to order a couple of items more.
3. Offer Free Delivery as Part of Your Loyalty Program
Loyalty programs can be valuable if you want to strengthen your relationship with your customers. You can also use this tactic to boost your average order value.
Offer free delivery as part of your restaurant’s loyalty program. The value of this lies in the data that’s gathered.
When you offer free shipping to customers in exchange for their loyalty to your brand, it allows you to get valuable information about them. This includes common customer demographics, best-selling products, and more.
Mind you, these insights could come in handy in your next promotional campaign.
For example, you can offer an exclusive loyalty membership to people who’ll register for your loyalty program.
Then, members who purchase from your restaurant are offered free delivery, along with other perks of being a member.
4. Use Free Delivery on Select Items
If you want to minimize the negative impacts of the free shipping strategy on your overall profits, consider offering it on select items only.
Does free delivery increase sales? Yes, if you know how to do it right.
Choose carefully which particular orders you want to deliver with free delivery. It’s usually the items in your menu with relatively low margins that suffer losses from shipping costs.
The key here is how you can communicate this effectively to your customers. Being transparent and upfront with them about certain restrictions lets them navigate your page quickly and with trust.
5. Offer Free Delivery for a Minimum Order Amount
You can also have free delivery only when an order reaches a certain amount or for a purchase of more than $X.
Doing so allows you to boost your average order value and your profits within specific order categories. You can have this running throughout the end of the month.
You can also leverage the free shipping strategy on all your orders during a particular day. It’s just a matter of working with reliable service providers in your area.
So, if your business is based in California, that could mean working with a California fulfillment services provider.
6. Offer Free Delivery as a Promotion
The thing with free delivery is that you don’t need to offer it all year long or for all of the items on your menu.
You can also use it as a welcome boost to your sales. Whether it’s during the holidays or a business anniversary, offering it for a limited amount of time gives your customers the incentive to buy now.
7. Use Free Delivery as a Bonus
You can also use free delivery as a bonus or incentive when a customer does something for you.
Let’s say you’re offering free delivery to customers who have signed up to your email list.
But to execute this perfectly, you need to charge the delivery rate per order. Imagine what would happen if every single one of your customers signed up to your email list.
You’d lose money on delivery costs, especially if it’s not based on the total retail price. So, technically, this only works once. The next time, your customers will no longer have this option.
8. Offer Free Delivery to First-Time Customers Only
The free shipping strategy works well with first-time customers too.
What you can do is send a code via email. For that, you’ll need an auto-responder tool that will allow you to auto-send emails to new customers with the free delivery code.
However, don’t run this promotion while offering unconditional free delivery at the same time. That’s because it’s unlikely that customers will sign up to your email list.
More so if they already saw a massive banner on your website that all orders are delivered for free. It just doesn’t make sense.
9. Include Delivery Costs in Menu Item Prices
Think of the time you got irritated because your hotel room got charged with hidden fees during check-out. Or those additional fees that you didn’t know about when you wanted to buy a pair of jeans in an online store.
The last thing you want to do with your customers is surprising them with hidden fees. Hence, you should include delivery and other taxes from the get-go.
Basically, you should not hide any fees. Otherwise, it can lead to cart abandonment.
To prevent that, you can include the delivery costs along with the menu prices. That way, customers don’t have to worry about a surprise waiting for them as soon as they hit the check-out button.
The rate of cart abandonment can decrease since there’s a lot of transparency from search to check-out.
Wrapping it Up
While the free delivery strategy might appear like a marketing tactic reserved only for known restaurants, it is not. It can still work, even if you are a mom-and-pop diner.
It is just a matter of finding the balance between customer satisfaction and protecting your bottom line.
Here’s the thing: it’s only a matter of time before online food delivery becomes the norm. Soon, more and more people will expect food businesses, big or small, to offer delivery.
As a result, businesses have to pull in all the stops to offer these services to their customers. And that includes learning how to offer free delivery.
Every business is different, though. You have to think of ways to bring invaluable service to customers, and there isn’t a one-size-fits-all approach here.
There are millions of ways to incorporate a free delivery marketing strategy into your online food delivery business. Just ensure that it will encourage customers to buy more from you and make them loyal to your brand.