Is it better for Yoco to focus on acquiring new merchants or deepening engagement with current users?

Introduction

The trade-off between acquiring new merchants and deepening engagement with current users is a critical decision for Yoco's growth strategy. This scenario involves balancing short-term expansion with long-term user value. 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 Yoco's 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 main competitors?

Why it matters: Helps determine if aggressive acquisition or retention is more critical Expected answer: Moderate market share with room for growth Impact on approach: Would influence balance between acquisition and retention strategies

• Considering our revenue model, I assume we have a mix of transaction fees and subscription revenue. What's the current split between these revenue streams?

Why it matters: Informs which user behaviors drive most value Expected answer: 70% transaction fees, 30% subscription revenue Impact on approach: Would prioritize strategies that increase transaction volume or subscription upgrades

• Looking at user segments, I'm curious about the value distribution among our merchants. What percentage of our revenue comes from the top 20% of users?

Why it matters: Helps identify if we have a "power user" segment to focus on Expected answer: 60-80% of revenue from top 20% of users Impact on approach: Might suggest focusing on high-value user retention and upselling

• Regarding our technical capabilities, how scalable is our current infrastructure for onboarding new merchants? Are there any bottlenecks in the process?

Why it matters: Determines if rapid acquisition is feasible Expected answer: Moderately scalable with some manual processes Impact on approach: Might need to factor in technical improvements for acquisition strategy

• Considering our current team structure, how are our resources allocated between acquisition and retention efforts?

Why it matters: Identifies any existing biases or constraints in our approach Expected answer: 60% acquisition, 40% retention Impact on approach: Might suggest rebalancing team focus based on strategy