Introduction
The key trade-off for SweepSouth is whether to focus on acquiring new customers or increasing retention and frequency of existing users. This decision is critical for the company's growth strategy and resource allocation. I'll analyze this trade-off by examining the current business context, user behavior, and potential impacts on key metrics. My approach will involve clarifying the situation, identifying relevant metrics, designing experiments, and providing a data-driven recommendation.
Analysis Approach
I'd like to start by asking a few clarifying questions to ensure we're aligned on the context and objectives before diving into the analysis.
Step 1
Clarifying Questions (3 minutes)
Why it matters: Helps determine if new customer acquisition is more urgent due to market dynamics. Expected answer: Moderate competition, but SweepSouth has a strong market share. Impact on approach: If competition is intensifying, it might lean towards new customer acquisition.
Why it matters: Indicates the relative value of new vs. existing customers. Expected answer: 60% from returning customers, 40% from new customers. Impact on approach: A higher percentage from returning customers might favor retention strategies.
Why it matters: Helps identify if there are immediate retention issues to address. Expected answer: Slight decrease in booking frequency over the past quarter. Impact on approach: A declining trend would emphasize the need for retention efforts.
Why it matters: Assesses our ability to execute sophisticated retention strategies. Expected answer: Basic personalization capabilities, but room for improvement. Impact on approach: Limited capabilities might favor simpler acquisition strategies in the short term.
Why it matters: Determines our readiness to execute on either strategy. Expected answer: Slightly more resources allocated to acquisition currently. Impact on approach: Would influence the feasibility and timeline of implementing either strategy.
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