How would you increase customer lifetime value for Swiggy?

Customer lifetime value - is the total revenue that Swiggy will get from the customer till he is active on the platform.

Swiggy is a platform that has ventured in multiple businesses - like Food order, Instamart, Genie,

Customer lifetime value is spanned over a long duration. Which essentially means staying relevant for longer duration along with optimizing for current needs.

Hence we will look at it in 2 ways -

How can we maximize the value today

How can we make sure that Swiggy stays relevant for changing needs.

Every time customer orders from platform, Swiggy and all other players in ecosystem earn revenue.

So CLV = Average order value * Number of orders per day * Number of days customer has been active on platform

So in order to increase revenue, we will have to do following -

1. increase average order value - meaning bigger orders
   1. Give personalized addons on check outs keeping in mind their image, placement, copy and trigger. Make images very colorful using Gen AI, place at most visible position and use impulsive buy as trigger to increase the AOV.
   2. Allow users to order from multiple restaurants in one order by optimizing for delivery and other operations. This will definitely increase AOV and will be like carrying multiple orders for DPs that DPs are already doing.
   3. Take advantage of synergies between Swiggy and Instamart (club orders of these 2) - Like someone ordering for food may also want to have dry snacks which can be a part of Instamart. Again it will be like DPs carrying multiple orders for same destination.
2. increase frequency of ordering from platform - means more orders in a day.
   1. Right nudges at right time - Like notification related to weather, cricket match, during user’s return from office, late night. Decrease steps required to order when ordering from notification (Like quick order) will help in increasing number of orders
   2. In case user leaves Swiggy without ordering, give him option to buy ingredients from Instamart - Just like - I was looking to buy burgers, and Instamart bundles the ingredients and nudges me to buy that bundle for healthy burger.
   3. Take users towards ordering daily perishables from Instamart more frequently - like biweekly and eventually daily. For this, we can create packages for daily shopping and allow users to subscribe for the perishables.
3. Increasing the lifetime of customer on platform - means more days for active customers

   1. Innovate on recipes and accordingly make ingredients available

      Suggest recipes to customers based on minimal things available in kitchens and little addons which can be fulfilled from Instamart.

   2. Diversify - like add more categories on Instamart, or Allow users to share recipes and others to follow to create a community.

Now these can be prioritized on the basis of current company goals, impact vs effort. These are basically long term and ever evolving features based on user preferences. 

Let me try to understand the business and product before I begin to answer this problem solving interview question.

Swiggy as I understand is an online food delivering app. Customers can browse the menu of a restaurant of their favourite choice and order food through the app. Swiggy will deliver the food to the customer on a promised time.

Restaurants can enroll themselves to Swiggy and list their menu. When a customer orders a food, the restaurants will get notification and prepare the food for the delivery executive to pick up and deliver to the customer.

Swiggy also has Instamart - similar to amazon fresh - order groceries and get it at your doorstep in a short duration 30 mins to 1 hr.

So, I am assuming customer here is the person who orders food through the Swiggy app ? Yes, go ahead.

Customer lifetime value (CLV) is a factor of: average number of years a customer stays with the company or the product * average number of purchases a customer makes in a year * average purchase value of every transaction.

Now in order to increase the CLV, we have the below levers:

• Increase the average duration a typical customer stays with the company
• Increase the number of transactions a year 
• Increase the purchase value of every transaction

Increase customer lifetime with the company :

Provide consistently good service and resolve all problems a customer face with satisfaction - this can be done through with continuous long investments on the User experience as the company goes through different phases,  Invest in good customer service to resolve issues etc.,

This might appear trivial, but many companies miss the mark. Customer focus should be made part of the culture in everything the company does. regardless of whether the focus is to improve CLTV or not, I would expect any company to invest continously on this front.

Increase the number of transactions:

1. Introduce loyalty program - similar to amazon prime and give free delivery to customers for a duration of either 6 months or 1 year. To restrict misuse of this program, allow this to be applicable only for minimum $ transactions and also only for deliveries within a certain mile radius e.g., 10 miles

2. Introduce new categories based on the companies strength: Swiggy has a strong logistics network within a city and is good at door to door deliveries of items in real time. They also have a good network of grocery stores and restaurants as partners.From customers perspective swiggy is a one stop destination for all food / hunger related problems

   • Introduce daily deliveries of essential items like milk, bread etc., on subscription basis

   • Introduce door to door courier service of small items within city limits

   • Introduce fresh vegetables and fruits delivery

   • Introduce reservations for selected restaurants.

   • In the food order category - introduce party packs (predetermined selection of cool drinks, foods, snacks etc., through a single order ) for a qualified minimum order. Most of the time when people party, they order a large number of items from Swiggy. Make it easy for them to do so by introducing birthday packs, party packs for watching sports, weekend party packs etc.,

   • Introduce catering service for large gatherings.

• Cross sell more items from the same restaurants through recommendations.E.g., for Pizza , we can recommend garlic breads, fries and cool drinks.
• Introduce progressive discounts, the more you order the more discounts you get.
• Introduce custom / special orders - Customer can choose add more ingredients to a dish at a little higher price. E.g,. more butter, more chicken etc., Similar to what pizza shops offer, but this is for other regular food items which customers order and also easy to implement from the restaurant end. 

Starting point would be why are we even doing this? Is CLTV a problem? is it less than CAC? If yes, then can we decrease CAC? 

Suppose, CAC has to remain constant, and we have to increase CLTV

Let's first define what does customer lifetime value mean for Swiggy.

Usually, it's defined as - Average order value * Average number of orders in the given period * Average periods a customer stays with the platform

Thus, to increase CLTV, one or more of these 3 parameters must be increased. 

Do we have a problem area among the 3 that clearly needs handling? 

Let's assume this is an open question without a trigger from a drop. 

Are there specific user cohorts that we would want to optimize these for. For example - for the sake of this discussion - let's split the cohorts by their usecases for using Swiggy to order - 

1. Office goer who doesn't have cook / carry tiffin, orders lunch

2. Family wants to eat food that's from a restaurant (needs variety)

3. There's a party at home, and want to order food from outside. 

Let's assume it's open ended discussion.

In that case, we will discuss the possible approaches to increase each of the above 3, we will estimate the improvements and effort for doing each of them, impact on the 3 customers (end user, delivery executive and the restaurant), as well as the alignment with the strategy of swiggy. 

Thus, key criteria of evaluation will be - 

1. Aligned with the strategic direction of Swiggy (Could be to become the biggest player, or to become profitable, or to drive the maximum number of customers)

2. Ensure that it fulfills and aligns with the goals of the customers - 

for the end user- Increase choice and restaurant servicability, ensure delivery promises are met and delivery times are lower than 1 hour. 

for the delivery executive - it could be to maximize the income, or maximize trips, reduce wait times (increase utilisation)

for restaurants - it would be to maximize fulfilled orders 

Let's discuss the 3 parameters that form the part of CLTV in these 2 lights first, and then bring in the impact and the effort. 

Average Order Value - 

Assuming the prices of the food items are stable, and the quantity that a person eats is constant, the value can only be increased by getting higher value orders / higher fulfilled users per order

1. Encourage bulk order / order for friends / colleagues

2. Order a higher value item? 

Transactions per customer per month

3. Accompaniments - Post lunch dinner/ snacks 

4. Subscription service for regular meals.

5. Cover more usecases/ reduce the friction in ordering

Retention for a longer period. 

This is largely a function of the value that the user derives out of the platform. 

Personally, I believe out of the three, increasing the repeat transactions is the strongest lever, as that impacts the retention and also the average order value. 

To increase the repeat transactions on the platform, Swiggy can think of covering more usecases for the cohorts that are either highly loyal or have a strong fit with the strategic direction of the company. 

In my view, the largest opportunity is in students, college goers and the recent graduate segments. These users do not have resources to cook meals / or prefer eating out at a higher frequency. 

This is more discussion and high level view. 

We can split each metric as well- 

TPC can be driven by - Number of visitors per month * Number of orders / visitors

One can increase one or both to increase the TPC. 

Number of orders / visitors -> Number of completed checkouts / number of add to carts * number of add to carts / Number of restaurant visitors* Number of restaurant visitors / Number of homepage visitors.

At each stage we can approach the problem based on user cohorts/ time of the day, to increase the CLTV.