Blue Apron, a meal subscription service, just filed for an IPO. While most analysts are interested in Blue Apron’s valuation, I read through the S-1 filing to learn about Blue Apron’s marketing strategy. Below is the Coles Notes’ version for marketers. There are plenty of insights for any marketer to learn from and apply learnings to their work.
- Blue Apron’s positioning is around creating a “cooking experience”
- Technology and data support every part of the business.
- Marketing is focused on building brand awareness, customer engagement, and retention.
- Referral marketing program was very effective as it drove 34% of new customers.
- Since inception, Blue Apron delivered 25 million paid orders
- 4.1 orders per customer in Q1 2017
- Average order value $57.23 in Q1 2017
- They sell a “cooking experience”. “Central to these experiences are the original recipes we design and send along with fresh, seasonal ingredients directly to our customers. We offer our customers two flexible plans—our 2-Person Plan and our Family Plan. Our recipes are accompanied by printed and digital content, including how-to instructions and the stories of our suppliers and specialty ingredients.”
- It costs $94 to acquire a customer, within six months that customer will generate $410 of Cumulative Net Revenue.
- In 2016, 92% of net revenue was generated from Repeat Orders.
- In Q1 2017, 34% of customers were acquired through a referral program.
- They use offline channels to build brand awareness, engagement (not clear how they define customer engagement) and retention. Offline was 45% of marketing spend in 2016. Overall marketing spend is increasing, reached 24.8% of net revenue in Q1 2017. However, Q1 is also their busiest period. For the full year (2016) marketing made up 18.1% of net revenue.
- # of Customers
- Orders Per Customer
- Average Order Value
- Rate of Repeat Orders
- Customer Acquisition Costs
- Net Revenue per Generated Customer
They position themselves as a lifestyle brand, focused on direct-to-consumer relationships, content, and always innovating.
- Increase market penetration with core product.
- Expand core product to fit more lifestyles to increase repeat orders and average order value.
- Broaden product portfolio.
- Develop new brands and new channels.
- International expansion.
“Many of our new customers originate from referrals from existing customers, and therefore we must ensure that our existing customers remain loyal to us in order to continue receiving those referrals.” I must note that these referrals aren’t cheap. Blue Apron ran a variety of introductory and referral programs over the years including heavily discounted first-time orders and free meals for referrals. Those discounts are part of marketing expense, which contributes to the high cost of customer acquisition.
- Online video
- Sponsored Content
- Social Media
- Direct Mail
Blue Apron does note that not all channels are effective and they may not able to recover marketing costs from some channels. For some reason, they miscategorized podcasts by putting them into an offline channel. It should be in digital as all podcasts are hosted, promoted and accessed through digital channels, including a mobile and apps.
New customer acquisition channels/tactics
- New customers get promotional discounts.
- Word of Mouth, including a referral program.
- Marketing drives customer engagements, brand awareness, AND retention.
- They investing in products, brand and customer experience.