For Just Eat's loyalty program, should we focus on increasing user engagement through more frequent rewards or maximizing long-term customer value with higher-value, less frequent incentives?

Introduction

For Just Eat's loyalty program, we're facing a critical trade-off between increasing user engagement through more frequent rewards and maximizing long-term customer value with higher-value, less frequent incentives. This decision will significantly impact our customer retention strategy and overall business performance. I'll analyze this trade-off by examining the product context, identifying key metrics, designing experiments, and providing a data-driven recommendation.

Step 1

Clarifying Questions (3 minutes)

• Based on the current market dynamics, I'm thinking this loyalty program might be a response to increased competition. Could you provide some context on the competitive landscape and how this program fits into our overall strategy?

Why it matters: Helps understand the urgency and strategic importance of the program Expected answer: Increased competition from new entrants, need to differentiate Impact on approach: Would influence the aggressiveness of the rewards strategy

• Considering our business model, I assume we're looking at this from a unit economics perspective. Can you share how our current customer lifetime value (CLV) and customer acquisition cost (CAC) are trending?

Why it matters: Informs the balance between short-term costs and long-term value Expected answer: CLV is stable but CAC is increasing Impact on approach: Would lean towards maximizing long-term value if CAC is high

• Looking at user behavior, I'm curious about our current order frequency and retention rates. Do we have data on how these metrics vary across different user segments?

Why it matters: Helps identify which user groups to target and potential impact areas Expected answer: Varied frequency and retention across casual, regular, and power users Impact on approach: Would tailor reward strategies to different user segments

• From a technical standpoint, I'm wondering about our current capabilities for personalization. How granular can we get with targeting rewards to specific user behaviors or preferences?

Why it matters: Determines the feasibility of sophisticated reward strategies Expected answer: Basic segmentation possible, working on more advanced capabilities Impact on approach: Would influence the complexity of the proposed reward system

• Regarding resources, what's our current capacity for managing and iterating on the loyalty program? Are we looking at a dedicated team or shared resources?

Why it matters: Affects the scope and timeline of program implementation Expected answer: Small dedicated team with support from shared resources Impact on approach: Would impact the rollout strategy and iteration speed