Retention Lessons from Foodpanda’s Head of Growth Innovation

Welcome to the latest edition of Maven Club, where we dive deep into go-to-market strategies with industry leaders. Today, we have the pleasure of speaking with ZeMing, Head of Growth Innovation at foodpanda. In this edition, we explore his expertise in user retention, loyalty programs, and referral strategies, along with actionable insights that can help businesses drive growth and customer engagement.

Who is ZeMing? 

ZeMing leads the Growth Innovation team at foodpanda, focusing on product strategies to enhance customer engagement and improve retention. With a background in growth and strategy, he has been instrumental in developing foodpanda's subscription programs and loyalty initiatives across APAC. His experience spans over three years with the company, where he has spearheaded various programs that have significantly boosted user retention and customer satisfaction.

Retention Strategies: A Long-Term Game

“Even though we think about retention and acquisition, sometimes that gets very focused on marketing teams, growth teams. It's really about the entire suite of products, services you offer in the company.”

According to ZeMing, retention is often more challenging than acquisition. While acquisition focuses on attracting new users, retention revolves around consistency and customer satisfaction across all touchpoints—whether it’s customer service, product quality, or communication.

Key Retention Principles:

• Consistency in Experience

  • Retention is driven by delivering a consistent and positive experience across all aspects of the business. From customer service to product quality, every touchpoint matters.

• Cross-Team Ownership

  • Retention isn't just the responsibility of the marketing or growth teams; it requires alignment across multiple departments.

• Loyalty and Subscription Programs

  • Programs like PandaPro, foodpanda's subscription service, add value by incentivizing users to return. These programs are particularly effective in competitive markets, helping to drive consistent usage.

Case Study: PandaPro Subscription Program

“No customer is going to sign up for a benefits program when they know that the amount of benefits they're getting is less than what they pay for it.”

One of the biggest initiatives at foodpanda is the PandaPro subscription program, which offers users benefits in exchange for an upfront payment. The challenge is to design a program that is valuable for both the customer and the business.

Designing PandaPro:

• Value for Customers

  • Customers must feel they are getting more than they pay for. ZeMing highlights a 3x to 5x minimum ROI as the sweet spot for customer satisfaction. This means the benefits received should be at least three to five times the cost of the subscription.

• Business Considerations

  • While providing value to customers, the business must balance cost-effectiveness. Offering too many benefits could distort the market, while too few could make the program unattractive.

• Adapting Over Time

  • Early adopters of subscription programs are usually more engaged, but the broader user base may require adjustments. For instance, over time, foodpanda has had to adjust pricing or partner with other benefit platforms to ensure the program remains competitive and attractive.

Leveraging Loyalty for Growth: Referral Programs

“What we have found is that it's actually the instances where you have had a great experience. That's when you want to refer. And that's when referrals are more powerful.”

Loyalty programs don’t just retain customers—they can also drive new customer acquisition through referral strategies.

Why Referrals Matter:

• Loyal Customers Refer More

  • Loyal customers are 2 to 2.5 times more likely to refer friends to the platform. This makes the referral program a critical acquisition tool, as referred customers tend to have higher lifetime value.

• Context Matters

  • Referrals are most effective when they happen in the right context. For example, order completion pages or group sharing situations (like a meal with friends) are ideal moments to prompt users to refer others. This increases the likelihood of referral success.

Making Referral Programs Work:

“A lot of companies tend to hide their referral program somewhere in the menu page, very often in the accounts page... What we have found is that the instances where you have had a great experience are more effective.”

• Competitive Rewards

  • Offering compelling rewards is essential for motivating users to refer friends. These rewards should be easy to use and valuable to the referrer.

• Timing and Placement

  • Referral programs should be visible in moments of high satisfaction. For example, after a successful order or delivery, users are more likely to share their positive experience with friends.

• Targeting Quality Users

  • foodpanda focuses on reaching out to high-quality users for referrals. These users tend to bring in higher-value customers. Sometimes, enhanced rewards are offered to these top referrers, recognizing their ability to bring in equally valuable customers.

Measuring Success: Key Metrics for Retention and Referrals

“When it comes to loyalty programs, what you're looking for is an increase in retention or an increase in the wallet spend that users bring in when they're on the loyalty program versus when they're not.”

Measuring the success of retention and referral programs requires careful attention to several key metrics:

• Scale

  • For any program to be successful, it must scale effectively. A small-scale program may not justify the investment, no matter how well it performs.

• Productivity

  • For loyalty programs, increased retention and higher wallet share from loyal users are key indicators of success. For referral programs, conversion rates from referrals and the lifetime value of referred customers are essential.

• Cost Efficiency

  • Both loyalty and referral programs come with costs—whether it’s providing benefits in loyalty programs or offering rewards for referrals. The cost of sustaining these programs must be balanced against the value they bring in terms of retention and new customer acquisition.

Overcoming Challenges in Retention and Referral Programs

“When it comes to price-sensitive, value-sensitive users, the loyalty program becomes a huge element that they would measure as well.”

Designing effective loyalty and referral programs is not without challenges. Some of the common hurdles include:

• Program Design

  • Crafting a program that appeals to customers while being cost-effective for the business is always a balancing act. Missteps in program design can lead to poor adoption or high churn rates.

• Competitive Markets

  • In highly competitive markets like food delivery, users often switch between multiple platforms. Changes in subscription pricing or loyalty benefits can lead to customers jumping ship if they find a better deal elsewhere.

• Engagement Over Time

  • Early-stage enthusiasm for programs can wane over time. It’s important to consistently evaluate whether these programs are growing the engaged customer base or merely attracting short-term interest.

We hope ZeMing’s insights on retention, loyalty, and referral strategies at foodpanda have provided valuable takeaways for driving customer engagement and growth. His focus on delivering consistent value, optimizing referrals, and refining subscription models offers practical lessons for growth leaders. 

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