Financial Modelling: Unlocking Growth Potential through Challenges 🚀

The Challenges tool at Deliveroo serves as a strategic mechanism to ignite customer engagement and stimulate sustainable growth.

1. Understanding the Challenges Tool: A Driver for Behavioral Change 🌱

The Challenges tool is fundamentally designed to influence customer behavior in a way that translates into mutual benefits for both the company and the consumer. It aims to promote specific behaviors that can enhance customer lifetime value (CLV). These target behaviors include:

• Increasing ordering frequency: Encouraging regular orders to foster habitual engagement.
• Exploring new use cases: Introducing customers to various options beyond their usual orders, such as grocery deliveries or lunch options.
• Enhancing order profitability: Nudging customers toward higher average order values (AOV) and more profitable restaurant choices.

The underlying philosophy of the Challenges tool is to create a seamless user experience where customers are gently guided through their journey, gradually moving from occasional users to habitual patrons. This is achieved through thoughtfully structured challenges that reward them for engaging in target behaviors.

2. Empirical Validation: Evidence Supporting Growth within Profitability Frameworks 📈

To substantiate the feasibility of the Challenges tool as a growth driver, several experiments were conducted over the past quarters. One significant outcome was observed during the Weekday V1 Challenge, which encouraged customers not accustomed to ordering on weekdays to engage in more frequent transactions.

Key insights derived from the Weekday V1 Challenge include:

• A measurable change in user behavior during the incentivized period, which resulted in an increase of approximately x% in orders.
• The behavioral shift persisted for x months post-challenge, with sustained increases observed during the non-incentivized period.
• Financial models indicated that the initial customer incentive could be recuperated within x months, underscoring the program's viability.

Investors and stakeholders can take solace in findings indicating that the Weekday Challenge yields a x-x% internal rate of return (IRR) and a favorable cost per incremental order (CPIO) compared to average operational profit per order (OPPO). Such data illustrate the program’s effective alignment with profitability objectives.

3. Scaling Challenges: The Pathway to an Always-On Growth Lever 🌟

The potential of the Challenges tool extends beyond individual experiments. By conceptualizing it as an "always-on" growth lever, Deliveroo can continually appeal to new customer cohorts and simultaneously drive incremental order volume.

When strategizing for the sustained implementation of the Challenges tool, the following prospects emerge:

• Projected Scaling: By refining the existing Weekday Challenge and potentially combining it with other initiatives, such as a Large Order, Lunch, and ODC Challenges, we foresee an approximate total impact of ~x% in incremental order volume within x months.
• Sustainability and Steady-State: After x-x months of continuous cohort launches, the growth impact is expected to stabilize, achieving a "steady-state" where sustained engagement and profitability coexist harmoniously.

Conclusion: The Future of Challenges as a Growth Strategy 💡

The Challenges tool exemplifies a forward-thinking approach to customer engagement, intertwining behavioral economics with innovative marketing strategies. By nurturing a cycle of behavior change, Deliveroo not only reinforces its market position but also cultivates a pathway toward sustainable profitability.

The strategic insights extracted from the Challenges program demonstrate its capacity to adapt and thrive within varying market dynamics, ensuring long-term viability. It is this interplay between bold growth initiatives and robust financial modeling that defines a successful future, allowing Deliveroo to maintain its competitive edge while delivering value to customers.