How Zomato used pro accounts to boost sales
To understand why Zomato Pro accounts worked, we first need to learn about a cognitive bias called the Entourage effect. I have already talked about this effect in my newsletter, which in case you haven't subscribed to, you can still do.
What is the entourage effect?
The entourage effect is a phenomenon where people feel more valued and important when they are allowed to share their VIP privileges or perks with their friends or family. This effect is often seen in events or places where VIP or elite memberships are given.
An example from a study when this was first noticed
A study conducted by researchers at the University of California, San Diego, found that people who were given access to a VIP lounge at a sports event were more likely to feel important and valued when they were allowed to bring their friends along with them. In the study, participants who were given access to the VIP lounge were split into two groups. One group was allowed to bring their friends along with them, while the other group was not. The participants who were allowed to bring their friends reported feeling significantly more important and valued than the participants who were not allowed to bring their friends.
Why it works
The entourage effect works because of the psychological concept of social comparison. People tend to compare themselves to others, and when they are allowed to share their privileges or perks with their friends, they feel more important and valued because they are being compared to others who do not have the same privileges.
Now coming back to Zomato, they let you share your pro membership with 3 of your friends right? Their plan was to get users to experience the benefits of Zomato Pro hoping they would see the value during the trial period, eventually becoming customers. And while they had it, it worked like a charm. They did get a lot of Zomato Pro users from that single strategy.
In 2018, the company claimed to have 1,50,000 users of Zomato Gold in India, and that 40 percent of its total sales were referral driven. (source)
How to implement this
VIP Memberships: Offer VIP memberships that allow members to bring along a certain number of guests with them. This will make your customers feel more valued and important, and it can also encourage them to bring more people to your business or event. You can select these VIP members based on the number of orders/month, revenue, or others.
Referral Programs: Offer referral programs that reward customers for bringing in new customers. This will encourage your customers to share their VIP privileges with their friends and family, and it can also help to attract new customers to your business.