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Grubhub’s Exclusive Student Offer Fuels Repeat Business

An image of Grubhub's gated student offer giving college students $12 off their first delivery order of $15. Gated offers use initial discounts to drive long-term customer loyalty.

Grubhub’s Exclusive Student Offer Fuels Repeat Business

by Tony Coray
Senior Content Strategist
Posted on Mar 29, 2019 6 min read

When it comes to food delivery services, students are the ideal segment. They’re up late, they don’t cook a lot, and they’re part of a younger generation accustomed to convenience and instant gratification. Discounts are the right way to capture their attention, but brands that want to keep it need a longer-term customer loyalty strategy.

As the Wall Street Journal reports, food delivery companies need repeat customers “driven by force of habit at least as much as by bargains.”

Enter gated offers—exclusive promotions that target consumers based on attributes such as their life stage or affiliation.

Gated Offers Appeal to Students

Grubhub, the leading online and mobile food-ordering company, knew a gated student offer would be an effective strategy to attract and retain young consumers because college students align perfectly with the company’s target demographic.

In 2018, the company acquired Tapingo, a leading platform for campus food ordering that’s used by more than 150 colleges and universities nationwide.

And according to the NPD Group, while only a portion of Gen Z is old enough to order food delivery, they still represent significant opportunity: food delivery orders among Gen Z totaled $552M in 2018, only $1M shy of their older Millennial counterparts.

In 2018, Gen Z food delivery orders totaled $522 million.

So in 2019, Grubhub launched a gated offer giving US college students $12 off their first order of $15 or more.

Securing Gated Offers with Digital Verification

Grubhub implemented their gated student offer with the SheerID Digital Verification Platform, which enables a streamlined process for users:

  1. Student diners enter a few pieces of basic information.
  2. SheerID uses authoritative sources to instantly confirm their eligibility.
  3. Student diners immediately receive their discount.

Digital verification is a quick step in an in-brand, frictionless experience that customers love. It supports Grubhub’s commitment to easily connect diners with the foods they love, and drives long-term engagement by launching a direct relationship with those customers.  

Digital Verification Drives Customer Loyalty  

While some brands use affiliates to reach students, these third parties put themselves first. They want students to become loyal to the affiliate—not the brand. And they promote discounts on behalf of all of their customers, exposing students to a host of competitive offers.

Also, when students use a third-party website to shop for an offer, brands miss out on first-party data. But with digital verification, companies receive and own the data. Grubhub’s gated student offer gives the company the opportunity to use that data to nurture long-term customer loyalty.

Digital Verification Prevents .edu Fraud

Using digital verification instead of affiliate sites also ensures that Grubhub will avoid the common pitfalls of .edu email verification, which can lead to discount abuse as high as 35% for some companies.

SheerID’s Digital Verification Platform uses thousands of authoritative data sources to verify consumers, which ensures fraudsters can’t spoof .edu email addresses.

By not relying on an .edu email loop to verify students, digital verification also minimizes offer abandonment because students don’t need to leave the transaction to confirm their email address. And it retains the integrity of both the offer and the brand. According to our consumer survey, when shoppers know a brand allowed an “exclusive” offer to be wrongfully redeemed, 80% of consumers say they’d lose trust in the brand and half would shop there less often.

43% of college students were never issued an .edu address.

Finally, digital verification also increases reach: our survey found that 43% of college students were never issued an .edu email address. With 180+ million students worldwide, relying on a .edu address could prevent brands from reaching more than 77 million prospective customers. That’s a lot of money to leave on the table given that college students have $574 billion spending power in the US alone.

3 Ways Gated Offers Create Customer Loyalty

There’s a reason gated offers are the strategy of choice for digital marketers looking to acquire and retain long-term customers.

01 Gated Offers Speak Directly to Students

With little disposable income, younger consumers are motivated by discounts: 79% of Millennials say that finding the best deals will impact their purchasing decision when shopping online. Research also shows that 91% of students are more likely to shop with a brand that offers a gated student discount.

02 Gated Offers Deliver Personalization

By collecting a small amount of information during verification, brands can engage students with other offers and experiences that facilitate deep customer loyalty, such as rewarding them with a bonus discount on their birthday or graduation date.

03 Gated Offers Create an Emotional Connection

When provided a gated offer, 54% of consumers report feeling rewarded, 47% feel excited, and 35% feel special. Students, in particular, are also ready to spread their love for the brand: 83% of shoppers 18-34 years old say they would share a gated student discount with eligible friends and family.

Gated Offers Drive Repeat Business

All of these factors dissuade younger consumers to discount hop from one service to the next while searching for the most generous coupon. When given access to a gated offer, nearly 40% of students would purchase more items, and 94% would shop with the brand more often.

Verifying their offer through SheerID gives Grubhub the customer data they need to facilitate long-term customer loyalty by establishing a positive relationship with students when their brand affiliations are still forming. Deloitte found that college students have a 10-year customer lifecycle preference, and 60% of Millennial consumers said they are “often” or “always” loyal to brands that they currently purchase.

College students have a customer life cycle preference of 10 years.

This leads to greater engagement and loyalty. Brands using SheerID to secure their gated offers report 3x conversions and 2x repeat purchases.

A Smart Strategy that Fuels Growth

With 17.7 million active diners in 1,100 cities, Grubhub has doubled its earnings in recent years, and growth remains in the forecast. Grubhub’s chief operating officer, Stan Chia, said in a press release, “The company looks forward to continuing to expand our delivery network nationwide and adding even more cities throughout 2018 and beyond.”

As Grubhub expands to the UK, Canada, and Australia, the SheerID platform will scale with them, providing the ability to verify hundreds of millions of student diners in more than 100 countries who speak up to 26 different languages.  

Beyond student verification, Grubhub is also counting on SheerID to power future gated offers for new target markets like teachers and nurses. In the race to acquire the largest—and most loyal—user base, gated offers are giving Grubhub a competitive edge by turning casual purchasers motivated by a discount into customers the Wall Street Journal says food-delivery company’s need: “repeat users who rely on their services regularly.”

Want to Learn How Gated Offers Can Work for You?

Download our e-book, The Definitive Guide to Gated Offers, or contact us.

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