Is it better for Lulalend to focus on acquiring new customers or increasing loan amounts for existing clients?

Introduction

The trade-off between focusing on acquiring new customers or increasing loan amounts for existing clients is a critical decision for Lulalend. This scenario involves balancing growth strategies in the fintech lending space. I'll analyze this trade-off by examining the business context, user impact, technical feasibility, and resource allocation.

Step 1

Clarifying Questions (3 minutes)

• Based on Lulalend's current market position, I'm thinking customer acquisition might be a priority. Could you share our current market share and growth rate compared to competitors?

Why it matters: Helps determine if we need to focus on market expansion or customer retention Expected answer: Moderate market share with room for growth Impact on approach: Higher market share would shift focus towards increasing loan amounts

• Considering our revenue model, I assume we earn through interest and fees. What's the current split between revenue from new vs. existing customers?

Why it matters: Indicates which customer segment is currently more profitable Expected answer: Higher revenue from existing customers Impact on approach: If new customers are more profitable, it could justify focusing on acquisition

• Looking at user behavior, I'm curious about our customer retention rates. What percentage of customers take out additional loans, and how does their loan amount typically change over time?

Why it matters: Indicates potential for increasing loan amounts with existing customers Expected answer: Moderate retention rate with gradual increase in loan amounts Impact on approach: High retention and loan amount growth would favor focusing on existing customers

• Regarding our technical capabilities, how easily can we implement personalized loan offers for existing customers versus scaling our onboarding process for new customers?

Why it matters: Assesses feasibility and resource requirements for each option Expected answer: Both are feasible but require different resource allocations Impact on approach: Easier implementation for one option could influence the decision

• Considering our current team structure, do we have dedicated teams for customer acquisition and retention, or would this decision require significant resource reallocation?

Why it matters: Determines organizational impact and potential implementation challenges Expected answer: Some specialization exists, but reallocation would be needed Impact on approach: Significant reallocation needs could influence timeline and strategy