Is it better for Xendit to focus on acquiring new merchants or increasing transaction volume from existing ones?

Introduction

The trade-off between focusing on acquiring new merchants or increasing transaction volume from existing ones is a critical decision for Xendit's growth strategy. This scenario involves balancing short-term gains with long-term sustainability, considering the impact on various stakeholders, and aligning with our overall business objectives. I'll analyze this trade-off by examining key metrics, designing experiments, and providing a data-driven recommendation.

Step 1

Clarifying Questions (3 minutes)

• Based on our current market position, I'm thinking we might be in a growth phase. Could you share our current market share and how it compares to our competitors?

Why it matters: Helps determine if we need to focus more on acquisition or retention Expected answer: We're a growing player with significant room for expansion Impact on approach: Would lean towards new merchant acquisition if market share is low

• Considering our revenue model, I assume we charge a percentage fee per transaction. Is this correct, and are there any other significant revenue streams?

Why it matters: Influences whether we should prioritize volume or merchant count Expected answer: Primarily transaction-based fees with some additional services Impact on approach: Would focus on increasing transaction volume if fees are the main revenue source

• Looking at user behavior, I'm curious about our merchant retention rates. What percentage of merchants are still active after 6 months?

Why it matters: Indicates whether we need to focus on retention before acquisition Expected answer: Moderate retention rate with room for improvement Impact on approach: Would suggest balancing acquisition with retention efforts

• Regarding technical capabilities, do we have the infrastructure to support a significant increase in transaction volume from existing merchants?

Why it matters: Determines if we can handle increased volume without major upgrades Expected answer: Current infrastructure can support moderate growth Impact on approach: Would influence the pace of volume increase initiatives

• Considering resource allocation, what's the current split between our acquisition and retention teams in terms of budget and headcount?

Why it matters: Helps understand our current focus and potential for reallocation Expected answer: Slightly more resources allocated to acquisition Impact on approach: Would inform how much we can shift focus without major restructuring