For Wheels Up's membership tiers, should we emphasize exclusive benefits for top-tier members or create more accessible entry-level options to attract new customers?

Introduction

The trade-off we're examining today is whether Wheels Up should focus on exclusive benefits for top-tier members or create more accessible entry-level options to attract new customers. This decision is crucial for Wheels Up's membership strategy and will significantly impact customer acquisition, retention, and overall business growth. I'll analyze this trade-off by considering various factors, including customer segmentation, revenue implications, and long-term business strategy.

Step 1

Clarifying Questions (3 minutes)

• Based on the current market conditions, I'm thinking our customer acquisition costs might be increasing. Could you share how our CAC has trended over the past year for different membership tiers?

Why it matters: Helps determine if we need to focus on retention or acquisition Expected answer: CAC has increased significantly for top-tier members Impact on approach: Would lean towards improving exclusive benefits for retention

• Considering our revenue model, I assume top-tier members contribute disproportionately to our bottom line. What percentage of our revenue comes from the top 20% of our members?

Why it matters: Informs the potential risk of focusing on entry-level options Expected answer: 70-80% of revenue from top 20% of members Impact on approach: Would prioritize exclusive benefits unless entry-level growth potential is substantial

• Looking at user behavior, I'm curious about the upgrade path from entry-level to higher tiers. What's our current upgrade rate, and how long does it typically take?

Why it matters: Helps assess the value of entry-level options as a funnel Expected answer: 10-15% upgrade rate within 18 months Impact on approach: Strong upgrade rates would support expanding entry-level options

• Regarding our technical capabilities, can our current platform easily support more granular membership tiers or benefits? Or would this require significant development work?

Why it matters: Influences the feasibility and timeline of implementing changes Expected answer: Moderate development work required for new tiers Impact on approach: Would factor in development costs and time to market

• Considering our current team capacity, do we have the customer support infrastructure to handle an influx of new, potentially less experienced members?

Why it matters: Ensures we can maintain service quality with membership changes Expected answer: Current team at 80% capacity, would need to expand Impact on approach: Would include customer support scaling in the implementation plan