For Credible's student loan refinancing service, should we emphasize lower interest rates or more flexible repayment terms in our marketing to attract borrowers?

Introduction

For Credible's student loan refinancing service, we're facing a critical trade-off between emphasizing lower interest rates or more flexible repayment terms in our marketing to attract borrowers. This decision will significantly impact our user acquisition strategy and overall business performance. I'll analyze this trade-off by examining our product, target audience, and key metrics, then design an experiment to inform our decision.

Step 1

Clarifying Questions (3 minutes)

• Based on our current market position, I'm thinking we might be facing increased competition. Could you share how our market share has trended over the past year?

Why it matters: Helps understand if we need to focus on aggressive growth or user retention. Expected answer: Slight decline in market share due to new entrants. Impact on approach: Would lean towards a more aggressive strategy to regain market share.

• Considering our user demographics, I'm assuming most of our borrowers are recent graduates or young professionals. Can you confirm our primary user segments and their key pain points?

Why it matters: Ensures we're targeting the right audience with the most relevant offering. Expected answer: Primarily millennials and Gen Z, concerned about monthly payments and long-term debt. Impact on approach: Would tailor messaging and product features to address specific generational concerns.

• Looking at our tech stack, I'm curious about our ability to personalize offerings. How sophisticated is our current system for tailoring rates and terms to individual borrowers?

Why it matters: Determines if we can offer truly personalized solutions or need to focus on broader appeal. Expected answer: Basic personalization capabilities, room for improvement. Impact on approach: Might influence whether we can effectively market both rates and terms simultaneously.

• Regarding our revenue model, I'm assuming we primarily earn through interest rate spreads. Is this correct, and are there any other significant revenue streams we should consider?

Why it matters: Helps prioritize between attracting more borrowers vs. maximizing revenue per borrower. Expected answer: Primarily interest rate spreads, with some additional fee-based services. Impact on approach: Would balance user acquisition with profitability in our marketing strategy.