This content originally appeared on HackerNoon and was authored by Lade Falobi
What To Expect:
- How HeyFood got to its first users within the student community
- Expanding outside UI’s borders
- Conquering the more remote areas in Ibadan
- How HeyFood approaches expansion
- HeyFood’s strategy now that there’s more competition
- Strategies & tactics that HeyFood gets right
- Mistakes made by the HeyFood team
From University of Ibadan To 5 Cities
When HeyFood was founded in 2021, Jumia Food was the only food delivery app in Ibadan and they were doing a woeful job. Jumia Food only had Chicken Republic & KFC and only delivered within a narrow radius. If people wanted to order from local favourites like Amala Sky, they had to use unreliable errand services that weren’t worth the cost.
\ A group of friends at the University of Ibadan came together and built a solution – HeyFood. HeyFood rapidly penetrated Ibadan and has now expanded to 5 cities.
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\ So, I spoke with the man who has been with HeyFood since its inception. Courage Afemije is the Head of Growth at HeyFood and he’s managed the product’s growth from its early stage within the UI community to the YC-backed company battling competitors today.
\ Let’s get into it, starting with how HeyFood reached its first big milestone.
First 1k Users, The UI Story
HeyFood was started by UI students, so it’s only natural that the student community first drove its growth. Since Courage was friends with HeyFood’s founder, he had a decisive role from the start.
\ A large reason for HeyFood’s success was that they were solving a real problem for people. Just like Facebook—another product with early roots in the student community—they were solving problems that they themselves had faced. In fact, Courage became more involved after using the product himself and feeling a burning urge for more people to know about it.
\ In those first days, they did things that don’t scale—a principle that likely got reinforced after they got into Y Combinator. HeyFood’s initial “riders” were students who’d help pick and deliver orders for customers. The team used these riders to collect feedback about people’s experiences with the product.
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\ Their first vendors were hall cafeterias and student vendors. Those vendors became a marketing channel for them. The team put stickers promoting HeyFood at each store, promising perks like free delivery on the first order. That’s a practice that HeyFood still swears by today.
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“A lot of students got to know about HeyFood through that approach. We helped them [vendors] create designs, which they sent to their customers on WhatsApp, telling them they could get free delivery if they ordered through HeyFood next time.”
\ HeyFood also did some community marketing, getting student influencers and WhatsApp TVs to share posts about HeyFood on their WhatsApp status. They did that consistently and got the UI community to adopt HeyFood widely.
\ Student communities often have great influence over the city they’re centred in; UI was no different. Before long, word about HeyFood began spreading outside UI.
\
“One thing I’ve noticed is that the student community in Ibadan shapes the culture in major areas like Bodija and Akobo. That’s because there are people living in those areas that probably graduated from UI, are still students of UI, or know someone in UI. So, if you’re leveraging a student community, it’s easy to reach people like fresh graduates who are entering the working class. We were able to tap into that market early.”
\ By the time HeyFood reached its first 1k users, they’d gotten enough traction to get into YCombinator, which meant they now had more money to invest in expansion and marketing.
Expansion Outside UI
There was a short period when Courage left HeyFood, but he stayed connected with the team and was in the loop on their activities; so he is able to fill me in. After HeyFood received YC money, they began leveraging paid ads and referrals.
\ Working-class people didn’t care as much about the N200-N500 referral reward. However, the referral campaign was more effective within the student community because the rewards mattered more to them. So much so that they began gaming the referrals.
\ The team had made some mistakes with the program, allowing people to claim referral bonuses without the referred user taking an activation action. This means students were creating duplicate accounts or referring people outside Ibadan just so they could claim the reward.
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“You look at referrals from the angle of acquisition cost and lifetime value. You expect to recover the rewards cost and break even when the user comes back to make more orders. But these users would order once and probably go look for another number to register with to get another bonus.”
\ HeyFood had to pause referrals for a month and go back to the drawing board. Courage sees a positive consequence of the failed referral though. Because so many people were ordering, HeyFood gained more virality and you could see a HeyFood bike in every corner of the UI-Bodija axis. This led to more organic sign-ups from people who’d seen a bike on the road.
Courage believes this is when HeyFood started achieving product-market fit, with people installing the app organically.
Conquering Ibadan
At this point, HeyFood had gotten traction outside UI, but only in the areas surrounding the university—Agbowo, Bodija, Akobo, Samonda, etc. The question then became how they could fully penetrate Ibadan and reach the less popular areas.
\ The team decided to try the same tactic they’d used in conquering UI—leveraging vendors as an acquisition channel.
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“People in Bodija, UI, Akobo already knew HeyFood. But those in Challenge and Apete didn’t. We tried to recreate what we did in the first areas we dominated. We went to most of the stores in the area, onboarded them, and got them to agree to put some branding in their store.”
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\ Whenever HeyFood onboarded vendors, they put branding at the store – stickers, tabletop signs, and roll-up banners. The more popular a store was, the more branding they put in it. That way, when people walked in, they got to know about HeyFood. Courage believes that this was HeyFood’s highest-converting channel.
\ The restaurants were happy because HeyFood was solving a distribution and delivery problem for them, and because the only alternative (Jumia Food) had prioritised large chains over local favourites. Customers were happy because they didn’t have to go to stores in person or source delivery riders themselves. It was a win-win-win.
\ HeyFood’s hunch was right and before long, they’d conquered all of Ibadan. It was time to think about what city they could conquer next.
Expansion To New Cities
The first thing that Courage tells me about expansion is that marketing is the least of your worries. Operations is the most important factor in expansion success, he says.
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“If you’re thinking of expansion in terms of marketing campaigns or growth experiments, you’re wasting your time. The first thing to think about is how to get riders that would deliver the orders. Once customers cannot get their orders, you’re done. That experience has the most influence on whether a user comes back to use the product again or not. And it’s mostly influenced by operational factors than by any other thing.”
\ In marketplaces, there is often the question of which side comes first – the vendor or the buyers. In HeyFood’s case, it’s neither. The riders are the most important marketplace players.
\ When HeyFood wants to expand into a new city, the Operations team first has to onboard riders and train them to use the app. While this happens, the Sales team identifies popular restaurants in the city and tries to onboard them. That way, the Operations team can prioritise riders close to those restaurants or mobilise riders towards those areas.
\
\ The first city on HeyFood’s radar was Abuja. This was in November 2022, months before Chowdeck stepped into the city. A year later, HeyFood expanded into Abeokuta.
\ Abeokuta bore a lot of similarities to Ibadan. Both typically overlooked by startups in favour of more urban cities like Abuja and Lagos. Both with no major competition for HeyFood. Both with a fairly large student community.
\ However, unlike in Ibadan, HeyFood did not choose Abeokuta’s student community as its starting point. In Ibadan, the university is close to the city’s major commercial and residential district (Bodija), so many of the popular restaurants are within the area. But in Abeokuta, the university is more isolated from major areas, like Oke Ilewo.
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“We try to approach growth like this – if we did this in this city, is it possible for us to replicate that in this new city? Abeokuta had a student community, but it was not one we could leverage in the same way. FUNAAB is far from the places where the most popular restaurants are.”
\ So instead, HeyFood relied on their trusty vendor-as-acquisition-channel strategy. They identified hot spots in the city, onboarded them, and then leveraged them.
\
“If a store does a lot of numbers on-site, they are most likely going to do a lot of orders in the app. That’s our theory and that has been proven. For example, when Item7Go first came to Ibadan, a lot of people were talking about them and they did a lot of orders on-site. So we knew we needed to get them on the platform. That’s the same thing we do in other cities. We focus on bringing the top stores in the city onto the platform. In Abeokuta, that was Halaga and that was the first vendor we chased to get onboard.”
\ HeyFood used this playbook to penetrate Abeokuta & Abuja, and it is the same strategy they used to expand into 2 more cities — Benin & Port Harcourt.
\ While HeyFood was expanding to other cities, competitors were eyeing their home city, Ibadan.
Facing Competition
When HeyFood first launched, they had no real competition to contend with. They were the only option and they’d captured a substantial market share in cities like Ibadan and Abeokuta. By 2022, Glovo had come into Ibadan as a competitor but made little impact against HeyFood. The competitive landscape really changed when Chowdeck announced its entry into Ibadan in 2023.
\
\ But, as Courage tells me, the competition has little to do with marketing and everything to do with operations. Like Courage said earlier in our conversation, riders are the bedrock of the food delivery business. So, riders were the first thing that competitors went after.
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“Riders are very important in the growth process. When they leave, you feel it, because users get bad experiences and that leads to them churning. So, the game is crazier now because riders, just like customers, now have options. When a competitor comes in and tells riders they can earn up to 600k per month, there’s a problem. Users start getting their orders late because riders have been taken by competition.”
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\ When competitors start to take away the bedrock of your product, there will naturally be some temptation to compete on price by increasing the amount you pay riders. Courage agrees that this has been a tempting strategy, but it is not without its cons. He takes the time to explain why.
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“Most of the payment that customers make on the platform is subsidized. Riders actually get paid more than what customers pay. As competition increases, you could try to match the price you pay riders, but you’d end up spending more than you’re supposed to. And then your burn rate becomes way higher.”
\ Courage is a little wistful as he says this, and I understand why. When HeyFood started, restaurants (and many riders) had little experience with food delivery platforms and the team had to do a lot of training to get the market to where it is now. HeyFood developed the market themselves, only for competitors to swoop in and have it easier than they did.
\ But Courage is not discouraged. In fact, I get the sense that the team has a few things in the works to protect and expand their market share. Courage says it has been a challenge to have to deal with strong competitors, but it’s a challenge HeyFood needed to face.
\ I ask Courage if he thinks that HeyFood’s growth has been limited by its initial focus on Ibadan. Most of Nigeria’s most successful startups had origins in Lagos or moved to Lagos to gain more success. It’s the commercial capital of the country and has undeniable influence. And Courage agrees with me. In fact, he believes it has been a factor in the success of some of HeyFood’s competitors. When you consider that HeyFood entered Ibadan, Abuja, and Abeokuta months before competitors like Chowdeck did, you’d see his point.
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“If you own the largest market share in Lagos, you most likely own 50-60% of the Nigerian market. Every other city shares the other 50%. And that’s an advantage for any business coming from Lagos. You’ll see businesses that are only in Lagos doing way more numbers than businesses that are in 5 cities exempting Lagos.
\ Besides the number of orders you do, PR also comes from Lagos. The influencers that could sell your brand are in Lagos. You get exposed to a larger audience. So, it makes it easy to enter other cities. When we [HeyFood] wanted to expand to PortHarcourt, we had to work our ass off to get awareness there. But if it’s a brand coming from Lagos [e.g. Chowdeck], there’s a high chance that people in PortHarcourt already know you. All you’ll need to tell them is ‘oh we’re now in your city.’ So that’s the disadvantage we’re at.”
\ Of course, I ask Courage if HeyFood has plans to expand to Lagos any time soon. While he doesn’t give a direct answer, it is clear that it is a question of when it would happen rather than if it would happen.
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What HeyFood Gets Right
Courage is right that startups in Lagos are likely to gain more brand equity, but brand awareness is one of the many things that HeyFood knows how to do well.
How HeyFood Engineers Virality
HeyFood creates viral content fairly often, from their social content to their push notifications.
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\ When I ask how HeyFood manages to do this, Courage’s response shows that it’s an intentional effort. For starters, he doesn’t believe in 1-month or 2-month content calendars because they limit you to generic content for content’s sake. He prefers to create content that’s relevant to current situations and trends.
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“There are trends we can leverage. There’s a lot of creativity that will come. There will be things that we draw inspiration from along the line. We might see something and want to replicate it fast. And creating a 2-month calendar will not be effective for that. Because in a week, the content might be outdated or no longer align with what we want to achieve.”
\ Courage truly believes that content should always be extraordinary, and he has pushed this philosophy to his team. Whenever the team creates content, he pushes for an interesting factor to make it extraordinary.
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To help, he asks them to share with 5 people and get their feedback. This also helps test if certain creative content is too obscure or controversial.
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“I am always very particular about content. I tell my team to show the content to 5 people and get their feedback before they decide if it’s good enough. For all our content that did really well, we showed it to people before it went out. I want to know people’s genuine reactions when they read the content. And the content has to be simple. It doesn’t make sense when you have to explain content for people to get its meaning. If out of 5 people, 3 people don’t get the meaning, then that is a problem and the content doesn’t work.”
\ With so much viral content, you’d think social media would be a great conversion channel for HeyFood. But that isn’t the case. I ask Courage what role he thinks virality plays for growth.
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“Virality basically helps you build that top-of-mind awareness for your brand. People who might not have known you before could get to know you through your content. But the fact that they know you doesn’t mean they’d automatically go and download your product. It's just one of those touchpoints that you reach users at.”
\
How HeyFood Manages Rewards & Discounts
I’ve used HeyFood myself since 2021, and my usage increased after they launched their rewards program in 2023. When I first spoke with Courage last year, I asked about the rewards program. I ask Courage about it again, but this time I want to know more about its inspiration.
\ Like with many growth discussions at HeyFood, the rewards system was the outcome of a casual chat between Courage and his close friend and roommate from 100level. Only, this friend happens to be HeyFood’s founder, Taiwo Akinropo.
\ At the time, HeyFood ran promo campaigns almost daily. HeyFood’s discount strategy was built to increase user stickiness (i.e. keep users coming back to order). But it was becoming too costly to retain users and they needed to be more strategic. So, Courage was thinking of alternative retention strategies that would cost less.
\ The inspiration came from Starbucks’ infamous loyalty program. Courage believes in stealing like an artist. He and Taiwo reverse-engineered Starbuck’s loyalty program to figure out what parts they could replicate and what parts couldn’t apply to their use case. He says it’s important to know your capacity as a brand so you don’t set yourself up for failure.
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“If Coca Cola implements something and you say you want to steal it, you need to remember that they have the budget to push it. If you’re working with a lean budget and trying to implement the exact same strategy, you’re probably setting yourself up for failure. A lot of times, you have to study how exactly they implemented it and then adapt it to your own circumstance.”
\ Once they’d studied Starbucks’ reward program, they could create theirs.
\
“A lot of this initial calculations were between me and Taiwo [HeyFood’s founder]. We sat down and did the maths of how much we were spending before, how much we’re looking to spend now, and the impact that would have on retention. We needed to decide how much we were willing to spend on retention, so we set a cap for how much we could spend per user. We knew we didn’t want to spend above N20 for every N1000 spent so we started from there to figure out a number that made sense. ”
\ Courage wasn’t joking about the calculations. He spends about 5 minutes explaining the numbers they considered, the worth of a HeyFood star, the dynamism of the rewards, and the different iterations they made before settling on the version they launched. It was enough maths to give me a headache. But Courage says it was worth it. The rewards program significantly reduced the cost they spent on retention and increased the number of orders they got.
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\ To further optimise the program and reduce costs, Courage added an expiry caveat to the rewards, so that users would order more often to accumulate rewards.
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“We made claiming the reward a deliberate action. You don’t get your reward automatically; you have to come back into the app to claim it. We also have an expiry feature so you’d use your stars as fast as possible and keep coming back.”
\ Interestingly, HeyFood’s rewards program doesn’t do much for their power users. Often power users even forget to use promo codes when ordering, Courage says. But other user types value the rewards, so the feature is most impactful for them.
\ Courage also wanted to encourage people to take other activities within the app, like rating a vendor and sharing a review. So he tied those actions to rewards as well. He says these actions are useful, not just for virality, but for operational success.
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“We wanted to increase the number of ratings that users made. Ratings lets us know which riders are performing well or how users perceive specific vendors in the app. Vendors can check their dashboard, see the ratings, and improve their service. We also share these reviews with our success teams so they can help vendors work to improve their service based on user feedback.”
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2023 Recap Campaign
Since Spotify launched their first end-of-the-year Wrapped campaign in 2016, many startups have begun creating personalised annual data summaries for users. Apple Music has Replay, Cowrywise has Roundups, Piggyvest has Report Cards, and HeyFood has Recaps.
\ 2023 wasn’t the first year HeyFood would publish a recap feature to mark the year ending, but it was the first year I took notice of it – largely because the team had made some improvements in presentation and visuals.
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“The most notable thing was probably the presentation and visuals. We tried to create a deeper emotional connection, and music was a good way to do that. So we took the top Nigerian songs of 2023 and allowed users select their favourites to play in the background while they go through the recap. We also improved the design and added more personalisation and relatable slangs.”
\ One of the goals of the campaign was to improve brand awareness. So, Courage engineered virality into it by promising rewards to lucky users who shared their recap on social media.
\
When I ask Courage about the impact of the feature on orders, he explains to me that it’s difficult to give an accurate number because its release coincides with HeyFood’s top revenue month – December. In other words, there was a spike of growth when the recap was released, but some of it could be attributed to the typical seasonal spike.
Courage’s Biggest Mistake
With so many successful experiments, I am curious to know about the ones that didn’t do so well. I ask Courage about his most regrettable mistake, and he tells me about a failed attempt to leverage low-cost out-of-home advertising. When Courage tells me the story, his regret is palpable. I empathise with him; it was a brilliant idea ruined in execution.
\ Before Courage came back to HeyFood, there was an old strategy that involved putting up billboard ads around Ibadan. But Courage figured that he could save costs and get the same results by placing stickers on public transportation across the city. A brilliant idea.
\ Courage put in the work and met with the transport chairmans to negotiate. He paid a small sum and they agreed to aid with distribution of the stickers on buses and cabs in their network. Another brilliant idea.
\ So how did it become “an absolute disaster,” as Courage put it? Well, Courage gave the designs to a printer who printed all the stickers in one go. This was the first mistake. This mistake made it hard to rectify the second mistake:
\
\
“By the time the printer brought the work, we realised he printed with a paper sticker. And he’d printed every single thing so we had to work with it that way. We tried to get a refund, but his recuse was that we didn’t specify that he shouldn’t use paper.”
\ The disadvantage of paper stickers is that they slowly dissolve when it rains. And just their luck, rain fell the same day they put up their stickers. The stickers were supposed to last for months and be seen by hundreds of thousands of people. But the entire work washed down the drain only a few hours after they were put up.
\ Like Courage says, it was a great idea with poor execution.
Courage’s Biggest Win
I cannot ask about Courage’s biggest mistake without asking about his biggest personal wins. Courage takes an experiential approach to everything he does, so he says his biggest win is creating an integrated mix where his little experiments add up to the growth he wants.
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“I like to experiment with things that don’t scale. These things don’t scale, but they add to the overall growth we’re trying to achieve. One channel could be contributing 10%; another 5%. And it all comes together beautifully to the number we’re aiming for.”
\ Courage is also proud of all the learning he has done at HeyFood, especially while expanding to new cities. The most challenging expansion was to Abuja, because unlike Ibadan and Abeokuta, the country’s capital was more competitive and running costs were higher. For example, billboards in Abuja cost 3-6 times what they cost in Ibadan. So, Courage had to find low-cost growth opportunities. And he did. HeyFood now boasts 20% week-on-week growth in Abuja because of community marketing tactics that Courage implemented.
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“It’s expensive to operate in Abuja. Billboards are more expensive, transportation is more expensive. So we had to look into non-expensive things to achieve our numbers. We started looking for communities to target. And communities can be anything, like student communities or NYSC members. And now, we’re doing at least 20% weekly growth in Abuja, largely due to communities we leveraged.”
\
Collaboration culture at HeyFood
Because Courage oversees so many growth experiments that require input from multiple teams, I had to ask about how HeyFood encourages collaboration. He reveals that HeyFood’s student origin has had a positive impact on the team culture. Because many members of the founding team (and current team) were friends before working at HeyFood, the team is able to speak and relate freely. Oga-led marketing isn’t a thing at HeyFood.
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“Among friends, you’re free to talk about different things without being scared. In this case, it feels like you’re talking to someone who’s been your friend for years, so there’s freedom to say ‘we’re not doing this right, we should do this.’ Even when it comes to discussing finance and salary, everyone is very open.”
\ Collaboration is extremely important, as Courage tells me. The most important department to collaborate with at HeyFood is the Operations team. As we’ve established, Operations is the bedrock of the food delivery business.
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“Operations has to be in the loop on everything. If you want to run a campaign to increase number of orders, Operations must be aware or you set yourself up for failure. Because Operations needs to create the system that ensures the campaign’s success. For example, if we’re giving discounts at a particular store, they need to direct a lot of riders to that store or recruit more riders to match up with the order volume.”
\ When it comes to collaborating with the tech team, it helps that HeyFood’s founder (and Courage’s close friend) is the head of tech. Since Courage and Taiwo brainstorm together on a lot of experiments, it’s easy to translate rough ideas into technical requirements.
\ The more the interview went along, the more obvious the camaraderie between Courage and Taiwo seems to me. HeyFood’s student origins don’t just make a nice story; it’s the driver behind the open culture that encourages Courage and his team to test growth tactics and move quickly.
\ That’s it! A look into how HeyFood grew from a small campus delivery service to a YC-backed startup with 100k users and 5 cities.
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This content originally appeared on HackerNoon and was authored by Lade Falobi
Lade Falobi | Sciencx (2024-09-11T19:00:24+00:00) How HeyFood Grew From a Small Campus Tool to 100k Users in 5 Cities. Retrieved from https://www.scien.cx/2024/09/11/how-heyfood-grew-from-a-small-campus-tool-to-100k-users-in-5-cities/
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