For Postmates's subscription service, should we focus on increasing the number of subscribers or maximizing revenue per subscriber?

Introduction

For Postmates's subscription service, we're facing a critical trade-off between increasing the number of subscribers and maximizing revenue per subscriber. This decision will significantly impact our growth strategy, user acquisition costs, and long-term profitability. I'll analyze this trade-off by examining our product ecosystem, key metrics, and potential experiments to inform our decision.

Step 1

Clarifying Questions (3 minutes)

• Context: Based on the current market dynamics, I'm thinking we might be facing increased competition. Could you share how our market share has trended over the last 6-12 months?

Why it matters: Helps determine if we need a defensive or offensive strategy. Expected answer: Slight decline in market share. Impact on approach: Would prioritize subscriber growth to maintain market position.

• Business Context: I'm assuming our subscription service is a key revenue driver. What percentage of our overall revenue does it currently represent?

Why it matters: Informs the urgency and potential impact of our decision. Expected answer: 30-40% of revenue. Impact on approach: Higher percentage would lean towards maximizing revenue per subscriber.

• User Impact: Considering user behavior, I'm curious about our current churn rate for subscribers. Can you provide insight into this metric?

Why it matters: Helps determine if we should focus on retention or acquisition. Expected answer: Monthly churn rate of 5-7%. Impact on approach: High churn would suggest focusing on value per subscriber to improve retention.

• Technical: Thinking about our platform's scalability, do we have any technical limitations that might impact rapid subscriber growth?

Why it matters: Ensures our strategy aligns with our technical capabilities. Expected answer: No major limitations, but some backend optimizations needed. Impact on approach: Would influence the pace at which we could pursue subscriber growth.

• Resource: I'm considering the implications on our team structure. How is our current team distributed between acquisition and retention efforts?

Why it matters: Helps understand if we have the right resources to execute either strategy. Expected answer: 60% acquisition, 40% retention. Impact on approach: Might need to reallocate resources based on chosen strategy.