How can Sunbit balance offering longer repayment terms to increase customer adoption while maintaining healthy cash flow and profitability?

Introduction

Balancing longer repayment terms to increase customer adoption while maintaining healthy cash flow and profitability is a critical challenge for Sunbit. This trade-off involves weighing the benefits of increased customer acquisition against potential financial risks. I'll analyze this problem by examining key metrics, designing experiments, and proposing a decision framework to guide our strategy.

Step 1

Clarifying Questions (3 minutes)

• Business Context: I'm thinking Sunbit's revenue model is based on interest and fees from repayments. Could you confirm if this is correct and if there are any other significant revenue streams?

Why it matters: Helps understand the financial implications of longer repayment terms Expected answer: Primarily interest and fees, with possible partnerships or referral fees Impact on approach: Would influence the balance between term length and profitability

• User Impact: Based on current user behavior, I'm assuming longer terms are more attractive to a specific segment. Can you share any data on how different user segments respond to various repayment term lengths?

Why it matters: Identifies which users we might be targeting with this change Expected answer: Younger users or those with lower income prefer longer terms Impact on approach: Would help tailor the experiment design and targeting

• Technical Feasibility: I'm thinking our current system can handle variable repayment terms. Is there any technical limitation to offering a wider range of term lengths?

Why it matters: Ensures we can implement the proposed changes without significant development work Expected answer: System is flexible, but may require some updates Impact on approach: Could affect timeline and resource allocation for implementation

• Resource Constraints: Considering this could impact our financial structure, I'm assuming this initiative has high-level support. What resources (team, budget) are available for this project?

Why it matters: Determines the scope and scale of potential solutions Expected answer: Dedicated cross-functional team with executive sponsorship Impact on approach: Would influence the ambition and complexity of the proposed strategy

• Timeline Pressure: Given the potential impact on cash flow, I'm guessing there's some urgency to address this. What's our timeline for implementing changes?

Why it matters: Helps prioritize short-term vs. long-term solutions Expected answer: Aim for initial changes within next quarter, with ongoing optimization Impact on approach: Would affect the phasing of experiments and rollout strategy