Is it better for Just Eat Takeaway to focus on customer retention or new user acquisition?

Introduction

The trade-off between customer retention and new user acquisition is a critical decision for Just Eat Takeaway. This scenario involves balancing resources and strategies to either keep existing customers engaged or expand the user base. I'll analyze this trade-off by examining the current business context, user impact, technical considerations, and resource allocation.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking about the competitive landscape in the food delivery market. Could you share insights on our current market share and how it compares to our main competitors?

Why it matters: Helps determine if growth or consolidation should be the priority Expected answer: Moderate market share with room for growth Impact on approach: Would influence the balance between retention and acquisition strategies

• Business Context: Based on our revenue model, I assume we earn from both restaurant commissions and delivery fees. Is there a significant difference in profitability between new and returning customers?

Why it matters: Affects the financial impact of focusing on retention vs. acquisition Expected answer: Returning customers are more profitable due to lower acquisition costs Impact on approach: Would lean towards retention if the profitability gap is substantial

• User Impact: Considering user behavior, I'm curious about our current customer churn rate. Can you provide insights on our retention metrics over the past year?

Why it matters: Helps identify the urgency of addressing retention issues Expected answer: Moderate churn rate with room for improvement Impact on approach: High churn would prioritize retention efforts

• Technical: I'm thinking about our current tech stack. Do we have the necessary infrastructure to support personalized retention campaigns, or would this require significant development?

Why it matters: Influences the feasibility and timeline of implementing retention strategies Expected answer: Basic personalization capabilities with room for improvement Impact on approach: Limited capabilities might favor acquisition in the short term

• Resources: Considering our team structure, how are our marketing and product teams currently allocated between retention and acquisition efforts?

Why it matters: Helps understand the current resource balance and potential for reallocation Expected answer: More resources currently dedicated to acquisition Impact on approach: Would inform the feasibility of shifting focus to retention