Product design question
How would you design a loyalty program for DoorDash to increase customer retention?
- DoorDash
- Product design
- Medium
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What this question tests
Retention-focused product design: can you design a loyalty program tailored to a delivery marketplace's actual economics (order frequency, multi-sided restaurant network).
How to approach it
- Define the goal: increase order frequency and reduce churn among existing customers, not just attract new ones.
- Identify the target segment: mid-frequency customers who could become habitual, since infrequent one-off users are harder to convert with loyalty alone.
- Propose the mechanism: a tiered points/cashback system, combined with perks like reduced delivery fees at higher tiers.
- Consider the two-sided angle: partner with restaurants for exclusive loyalty perks, which also benefits DoorDash's restaurant relationships.
- Address cost: model the program's cost against expected retention lift, since discounts erode margin if not targeted well.
- Define success: order frequency lift and churn reduction for enrolled versus non-enrolled comparable users.
What a strong answer includes
- Targets mid-frequency users specifically, since that's where a loyalty program has the most leverage to build habit.
- Proposes tiered rewards (points plus reduced fees) rather than a flat discount, which drives ongoing engagement, not one-time redemption.
- Brings in the restaurant side of the marketplace, showing understanding that DoorDash isn't a single-sided business.
- Flags margin risk from discounting and insists on comparing enrolled vs non-enrolled cohorts to prove incrementality.
Common mistakes
- Proposing a simple points program with no view on cost or margin impact.
- Ignoring the two-sided marketplace dynamic (restaurants) and designing only for consumers.
Likely follow-up questions
- How would you prevent existing loyal customers from just getting a program that costs you margin with no behavior change?
- How would you measure whether the program is truly incremental?
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Learn the skill behind it
Chapters of the AI PM course that teach what this question tests.
- Chapter 4: Discovery and strategy for AI products
- Chapter 7: AI UX and human oversight: design for a system that is wrong sometimes
- Chapter 14: Get the job: the AI PM interview loop