Engagement & Retention project | Zomato

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WHAT IS ZOMATO?

Zomato is a food delivery service that started in 2008, by Deepinder Goyal and Pankaj Chaddah. The company provides information, menus, reviews, ratings and delivery options for restaurants and cafes. Currently, it provides food delivery from over 3,00,000 restaurants and is known to provide a hassle-free dining experience.

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CORE VALUE PROPOSITION

Restaurant Discovery: At its core Zomato is a restaurant discover app. On downloading the app, the user gets access to a reservoir of information based on various criteria, such as location, cuisine, budget, etc. Moreover, one can also review user generated reviews and ratings for the given restaurants.

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Detailed Restaurant Listings and Menu Exploration: This includes the restaurant’s menu, photos of the establishment and its dishes, operating hours, and price range. Zomato's Digital menu is one of its key features that allows the users to explore the entire restaurant menu, right on their app. Users can even filter dishes based on dietary preferences, like vegetarian or vegan.

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Digital Payment at Restaurant: According to a survey 60% people prefer seamless wallet/ card payments post dining, and Zomato solves this through its inbuilt app payments of restaurant bills. The additional deals that Zomato offers on paying through these apps serve as a perk for its users as well.

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Food Delivery: Zomato Users can order food from a vast selection of restaurants and cafes over the app, and Zomato aims to get the food at your doorstep within the time window of 30-60 minutes. Users can also track their order progress right from Placing the Order on the app to Order Delivery at their Doorstep including live tracking of the Delivery Executive.

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ICP RESEARCH

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ICP PRIORITISATION​

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Based on the ICP prioritization framework, we’ll be prioritizing ICP 1 and ICP 2, considering their usage frequency and average order value. Although, the average spend of a college student would not be as high, but if we are able to distribute the product and its features well amongst them, it would essentially create a trickle effect. Students would typically brag about the apps that they are using to their friends and also make their parent and in a lot of cases even their grandparents aware as to what's new in terms of technology,

Although ICP 3 has the highest willingness to spend but since there is a certain resistance to adoption in that area, distribution will be made extremely difficult.

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ENGAGEMENT FRAMEWORK

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ACTIVE USER FOR ZOMATO​

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An active user of Zomato is someone who has placed at least three orders within a 10–14-day period. Initial orders (1-2) might be for redeeming a coupon code or testing the service, but after the second order, it is evident that the user is genuinely interested in the product and is likely to place more orders in the future.

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NATURAL FREQUENCY OF ZOMATO'S CORE VALUE PROPOSITION

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Casual User - Once in ten days - These are users who order once in a while, for either comfort or due to an event

Core Users - One to Two times a week - These are the users who order on the weekends or while hanging out with their friends during the week. Getting food from Zomato is already a habit for them

Power Users - Greater than three times a week - These are the users who typically don't cook or have someone to cook for them. They already have their regular places that they love ordering from and are excited to try new places as well

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Natural Frequency Based Segmentation for the Major ICPs

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ZOMATO'S USER RETENTION:

Zomato has shown robust growth in its financial metrics, which often correlates with good user retention. For example:

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- Zomato's revenue from operations grew by 15.4% in Q3 FY24 compared to the previous quarter【Entrackr】.

- The platform saw a 10.2% increase in the food ordering and delivery business within the same period【Entrackr】.

- Zomato's average order value increased significantly from ₹395.4 in Q4 2021 to ₹568 in Q1 2023【Zomato Statistics: Usage, Revenue, & Key Facts [2024 ] (feedough.com)】.

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These indicators suggest that Zomato has a strong and engaged user base, which typically implies good retention rates. Therefore, a reasonable estimate for Zomato's user retention rate would likely be in the range of 30% to 40% monthly. This estimate aligns with industry standards for well-performing food delivery platforms.

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The following graph is a representation of Zomato's user retention over 9 months:

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RFM MATRIX for Zomato Users will look something like this:

ICPs THAT DRIVE THE BEST RETENTION​

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ICP 1 & 2 drive the best retention as they are core and power users respectively. They prefer the product to keep ordering from the app. They are always on the lookout for good deals and offers. At the same time, since they can order from their favorite restaurants, it is pretty convenient for them. Overall, the focus should always be on retaining them, providing them with good customer support, timely deliveries and offers which keep them hooked to Zomato and not looking for other alternative competitors.

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Strategies for Retaining Core and Power Users​

1. Personalized Deals and Offers:

• ICP 1 (Core Users): Regularly offer personalized deals on their most frequently ordered items or favorite restaurants to keep them engaged and satisfied.
• ICP 2 (Power Users): Provide exclusive discounts or early access to new restaurant partners or special promotions to make them feel valued.

2. Timely Deliveries:

• Ensure that delivery times are consistently accurate and prompt. Implement a system to prioritize orders from these high-value users to maintain their satisfaction.

3. Exceptional Customer Support:

• Offer dedicated customer support channels for ICP 1 and ICP 2 users to address their concerns quickly and effectively. Consider implementing a loyalty program that includes priority support.

4. User Experience Enhancements:

• Continuously improve the app's user interface and experience based on feedback from these segments. Make the ordering process seamless and intuitive.

5. Engagement Campaigns:

• Run engagement campaigns that highlight new restaurants, seasonal offers, and other exciting updates. Use push notifications and email marketing tailored to their preferences.

6. Feedback and Reviews:

• Actively seek feedback from these users and implement changes based on their suggestions. Encourage them to leave reviews and ratings, which can help attract more users.

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By focusing on these strategies, Zomato can effectively retain its core and power users, ensuring they remain loyal and satisfied customers.

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REASONS FOR ZOMATO'S CHURN ARE

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Voluntary Reasons for Churn

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1. Poor Delivery Experience:

• Late Deliveries: Delays in delivery times frustrate customers who expect timely service.
• Order Accuracy: Frequent issues with incorrect or missing items lead to dissatisfaction and loss of trust.

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2. High Prices and Delivery Charges:

• Increased Costs: Rising prices for menu items and high delivery fees make customers feel they are not getting value for their money.
• Lack of Value Offers: The absence of compelling deals or discounts can drive users to seek more affordable options.

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3. Inconsistent Food Quality:

• Restaurant Quality Variability: Inconsistent food quality from different restaurant partners can result in negative experiences.
• Packaging Issues: Poor packaging leading to spilled or damaged food can deter customers from reordering.

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4. Better Offers from Competitors:

• Competitive Promotions: Competitors offering better discounts, loyalty rewards, or exclusive deals can attract Zomato users.
• New Market Entrants: New food delivery services with aggressive marketing strategies can lure away users.

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5. App Performance Issues:

• Technical Glitches: Frequent app crashes, slow load times, or bugs create a frustrating user experience.

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6. Customer Service Problems:

• Poor Support Response: Slow or unhelpful responses from customer service can erode trust and lead to churn.
• Resolution Time: Lengthy resolution times for issues exacerbate customer frustration.

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7. Loyalty Program Challenges:

• Perceived Value: If users feel that loyalty programs like Zomato Gold does not offer sufficient value, they may not renew their subscriptions.
• Program Changes: Frequent changes in the terms and benefits of loyalty programs can confuse and alienate users.

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8. Personal Preferences:

• Dietary Changes: Changes in dietary preferences or health consciousness can affect ordering habits.
• Lifestyle Changes: Changes in personal circumstances, such as moving to a new location where Zomato is not available, can lead to churn.

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Involuntary Reasons for Churn

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1. Payment Issues:

• Failed Transactions: Technical problems with payment processing or billing errors can prevent users from completing orders.

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2. Technical Issues:

• System Outages or App Problems: Unplanned outages or maintenance can prevent users from accessing the app. Changes that make the app incompatible with certain devices can also cause users to stop using the service

3. Delivery Area Limitations:

• Service Unavailability in Certain Areas: Users moving to areas not covered by Zomato’s delivery network may churn due to lack of service.

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4. Account Issues:

• Account Lockouts or Suspensions: Issues such as account lockouts or suspensions can prevent users from accessing their accounts.
• Forgotten Passwords: Difficulty in resetting passwords or accessing accounts can lead to churn.

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5. Natural Disasters or Unexpected Events:

• Severe Weather Conditions: Adverse weather can disrupt delivery services, leading to involuntary churn.
• Pandemics Affecting Operations: Situations like pandemics can impact delivery operations, causing users to churn if services are unreliable.

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By understanding these reasons, Zomato can develop targeted strategies to mitigate both voluntary and involuntary churn, improving overall user retention and satisfaction.

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CHANNELS DRIVING THE BEST RETENTION FOR ZOMATO​

1. Push Notifications:

Zomato excels in using push notifications by creating curiosity through engaging content, which encourages users to check out deals and offers, leading to more orders. The personalized nature of these notifications keeps users engaged and returning to the app.

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2. WhatsApp:

Zomato sends notifications directly via WhatsApp with user-targeted content that nudges users to take action or open the app. Since WhatsApp is widely used, it's an effective channel for reaching users quickly. The immediacy and high engagement rates of WhatsApp messages make it a powerful tool for retention.

3. App Pop-ups:

App pop-ups effectively increase order value and prompt users to explore different dishes. They inform users about various offers at different stages of placing an order, thereby enhancing the overall user experience and increasing retention.

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4. In-app Banners:

In-app banners are useful for showcasing various restaurants and offers, helping users discover new or current campaigns. They increased awareness of features and promotions available on the app, making users more likely to explore and engage with the app regularly.

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5. Emails:

Zomato has recently been very active with email marketing, using compelling subject lines to encourage users to open emails and engage with the content. These emails often highlight personalized offers and updates, keeping users informed and interested in the app's offerings.

6. Social Media Engagement:

Zomato uses social media platforms effectively to engage with users, post updates about new features and offers, and respond to user queries and feedback. This continuous interaction keeps the brand top-of-mind and fosters a loyal user community.

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7. Loyalty Programs:

Zomato Gold provides users with perks like savings, free delivery, and exclusive offers/access, which increases loyalty and frequent usage of the app. The added benefits make it more attractive for users to subscribe and remain active.

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Sub-features or Sub-products Driving the Best Retention​

1. Personalized Discounting and Offers:

Personalized discounts and offers drive users to place more orders by making them feel valued and incentivized to continue using the app. This tailored approach ensures that users receive relevant deals, enhancing their loyalty.

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2. Special Features:

Introducing new features like ZPL during IPL and Zomato Legends enhances user engagement by offering unique experiences, such as ordering popular dishes from different cities, which keeps users excited and engaged with the app. These innovative features cater to user interests and trends, driving higher retention.

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3. Zomaland:

Zomaland is Zomato's food and entertainment carnival, featuring a variety of food stalls, music performances, and interactive activities. This event provides a unique offline experience, fostering a deeper connection with the brand and encouraging continued app engagement.

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4. Integration with Payment Platforms:

Zomato’s integration with various payment platforms, including UPI, wallets, and credit/debit cards, provides users with a convenient and seamless payment experience. This ease of transaction encourages users to order more frequently.

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5. Customer Feedback Mechanism:

Zomato actively seeks customer feedback and implements changes based on user suggestions. This responsiveness builds trust and shows that Zomato values its users, leading to higher satisfaction and retention.

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By leveraging these additional channels and sub-features, Zomato can further enhance user retention and loyalty, ensuring a robust and engaged customer base.

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ZOMATO ENGAGEMENT & RETENTION CAMPAIGNS: REVAMPED AND EXPANDED

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Additional Solutions:

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1. Gamification Campaigns:

• Who: Occasional Users
• Type: At Risk
• Goal: Increase engagement and order frequency
• Pitch/Content: "Play & Win! Collect points with every order and unlock exclusive rewards."
• Offer: Points system with tiers of rewards (e.g., discounts, free delivery, exclusive access)
• Channel: In-app gamification, Push notifications
• Frequency: Ongoing
• Success Metrics: Engagement Rate, Frequency of Orders
• Why this campaign will work: Gamification adds a fun element to ordering, encouraging users to engage more frequently to unlock rewards.

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2. Personalized Meal Plans:

• Who: Health-conscious Users
• Type: Churned
• Goal: Reactivate and retain users
• Pitch/Content: "Stay healthy with personalized meal plans delivered to your door."
• Offer: Subscription to personalized meal plans based on dietary preferences
• Channel: Email, In-app banners
• Frequency: Monthly subscription
• Success Metrics: Subscription Rate, Retention Rate
• Why this campaign will work: Catering to specific dietary needs can attract health-conscious users and ensure consistent engagement through subscriptions.

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3. Collaborative Offers with Influencers:

• Who: Social Media Active Users
• Type: At Risk
• Goal: Increase engagement and new user acquisition
• Pitch/Content: "Order what your favorite influencer is eating and get 20% off!"
• Offer: Special discounts on orders recommended by popular influencers
• Channel: Social media, In-app banners
• Frequency: Weekly collaborations
• Success Metrics: Engagement Rate, New User Acquisition, Order Volume
• Why this campaign will work: Leveraging influencer marketing can attract their followers to Zomato, increasing engagement and bringing in new users.

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4. Limited-time Themed Menus:

• Who: Food Enthusiasts
• Type: Active/High-Value Users
• Goal: Maintain excitement and order frequency
• Pitch/Content: "Enjoy our exclusive themed menu this week! Limited time only."
• Offer: Curated themed menus (e.g., regional cuisines, festive specials)
• Channel: Email, Push notifications
• Frequency: Monthly
• Success Metrics: Order Volume, Engagement Rate
• Why this campaign will work: Themed menus create a sense of novelty and exclusivity, encouraging frequent and repeat orders from food enthusiasts.

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By implementing these revamped and creative engagement and retention strategies, Zomato can effectively address various churn reasons and enhance user loyalty, ensuring a robust and engaged customer base.

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