Introduction
The trade-off between offering steep discounts to acquire new users versus focusing on retention strategies for existing customers is a critical decision for Delivery Hero. This scenario touches on the core of growth strategy and customer lifecycle management. I'll analyze this trade-off by examining the business context, potential impacts, and key metrics, then design an experiment to inform our decision-making process.
I'd like to start by asking a few clarifying questions to ensure we're aligned on the context and constraints of this decision. Then, I'll walk you through my analysis framework, including identifying key metrics, designing an experiment, and outlining a decision-making process.
Step 1
Clarifying Questions (3 minutes)
Why it matters: Helps determine if aggressive user acquisition or customer retention is more critical. Expected answer: Increasing competition in key markets. Impact on approach: Would lean towards user acquisition if market share is at risk.
Why it matters: Influences the viability and sustainability of discount strategies. Expected answer: Margins are tight, profitability is a concern. Impact on approach: Would need to carefully balance discount depth with long-term value.
Why it matters: Helps assess the urgency of retention efforts versus new user acquisition. Expected answer: Retention rates are below industry average. Impact on approach: Would prioritize retention strategies if churn is high.
Why it matters: Affects our ability to execute sophisticated retention strategies. Expected answer: Basic personalization in place, room for improvement. Impact on approach: Would influence the complexity of retention strategies we can implement.
Why it matters: Helps understand if we're already heavily invested in one area. Expected answer: 70% acquisition, 30% retention. Impact on approach: Would inform how radical a shift in strategy would be required.
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