For Grubhub's subscription service, Grubhub+, should we focus on increasing member benefits or expanding the subscriber base to improve overall profitability?

Introduction

For Grubhub+, we're facing a critical trade-off between increasing member benefits and expanding the subscriber base to improve overall profitability. This decision will significantly impact our subscription service's growth trajectory and long-term sustainability. I'll analyze this trade-off by examining key metrics, designing experiments, and providing a data-driven recommendation.

Step 1

Clarifying Questions (3 minutes)

• Business Context: I'm thinking our current revenue model might influence this decision. Could you share how Grubhub+ contributes to our overall revenue mix?

Why it matters: Helps understand the financial impact of focusing on either option. Expected answer: Grubhub+ contributes 15-20% of overall revenue. Impact on approach: Higher contribution would lean towards expanding benefits, lower towards growing subscribers.

• User Impact: Based on user behavior, I'm assuming we have different tiers of Grubhub+ users. Can you confirm if we segment our subscribers based on usage frequency or order value?

Why it matters: Informs whether benefit increases should be targeted or broad. Expected answer: Yes, we have three tiers based on monthly order frequency. Impact on approach: Would suggest a tiered approach to increasing benefits.

• Technical Feasibility: Considering our current tech stack, I'm curious about our ability to personalize benefits. How flexible is our platform in terms of offering customized perks to different user segments?

Why it matters: Determines the feasibility of a sophisticated benefit increase strategy. Expected answer: Moderate flexibility, with some limitations on real-time personalization. Impact on approach: Would influence the complexity of benefit increase strategies we could implement.

• Resource Allocation: Given the potential scale of this initiative, I'm wondering about our current team capacity. Do we have dedicated resources for Grubhub+ or would this require reallocation from other projects?

Why it matters: Affects the speed and scope of implementation for either option. Expected answer: Limited dedicated resources, would require some reallocation. Impact on approach: Might lean towards a phased approach for whichever option we choose.

• Timeline Pressure: Considering market dynamics, I'm thinking about the urgency of this decision. Are we facing any immediate competitive pressures that might influence our timeline?

Why it matters: Helps prioritize short-term gains vs. long-term strategy. Expected answer: Increasing pressure from competitors' subscription services. Impact on approach: Might favor quicker wins in subscriber growth over long-term benefit enhancements.