Is it better for Pluang to focus on acquiring new users or increasing engagement of existing users?

Introduction

The trade-off between focusing on acquiring new users or increasing engagement of existing users is a critical decision for Pluang's growth strategy. This scenario involves balancing short-term user acquisition with long-term user retention and value creation. I'll analyze this trade-off by examining Pluang's current situation, potential impacts, and key metrics, then design an experiment to inform our decision.

Step 1

Clarifying Questions (3 minutes)

• Based on Pluang's current growth stage, I'm thinking we might be facing challenges with user retention. Could you share our current user churn rate and how it compares to industry benchmarks?

Why it matters: Helps determine if we need to prioritize retention over acquisition Expected answer: Churn rate is higher than industry average Impact on approach: Would lean towards focusing on engagement if churn is high

• Considering our revenue model, I assume we generate income through transaction fees or premium features. Can you confirm our primary revenue streams and their contribution to overall revenue?

Why it matters: Aligns our strategy with the most impactful revenue sources Expected answer: Transaction fees are the primary revenue source Impact on approach: Would focus on increasing engagement that leads to more transactions

• Looking at our user segments, I'm curious about the lifetime value (LTV) difference between new and existing users. Do we have data on how LTV changes as users become more engaged?

Why it matters: Helps quantify the potential value of focusing on existing user engagement Expected answer: Engaged users have significantly higher LTV Impact on approach: Would strengthen the case for prioritizing engagement if the difference is substantial

• Regarding our technical infrastructure, I'm wondering about our current capacity to handle user growth. Are there any scalability concerns that might impact our ability to acquire new users rapidly?

Why it matters: Identifies potential technical limitations to our growth strategy Expected answer: No immediate scalability issues Impact on approach: Would allow for more aggressive user acquisition if confirmed

• Considering our current team structure, I'm curious about our capacity for developing new engagement features versus scaling our acquisition channels. How are our product and marketing resources currently allocated?

Why it matters: Determines our ability to execute on either strategy effectively Expected answer: Resources are evenly split between acquisition and engagement Impact on approach: Would influence which strategy we can implement more quickly and effectively