Is it better for iZettle to focus on increasing transaction volume or improving profit margins per transaction?

Introduction

The key trade-off for iZettle is whether to focus on increasing transaction volume or improving profit margins per transaction. This decision is critical for the company's growth strategy and financial health. I'll analyze this trade-off by examining the business context, user impact, technical feasibility, and resource implications. My approach will involve clarifying the situation, identifying key metrics, designing experiments, and providing a data-driven recommendation.

Step 1

Clarifying Questions (3 minutes)

• Based on iZettle's business model, I'm thinking transaction volume might be crucial for network effects. Could you share how our current transaction volume compares to our main competitors?

Why it matters: Helps assess market position and growth potential Expected answer: We're in the top 3, but not leading Impact on approach: Would prioritize volume growth if significantly behind

• Considering user segments, I'm assuming we serve both small businesses and larger merchants. What's the current split between these segments in terms of transaction volume and revenue?

Why it matters: Different strategies may be needed for each segment Expected answer: 70% small businesses, 30% larger merchants Impact on approach: Would tailor strategies to prioritize the dominant segment

• From a technical perspective, I'm wondering about our current processing capacity. How close are we to our maximum transaction throughput?

Why it matters: Determines if we can handle increased volume without major infrastructure investments Expected answer: Operating at 60-70% capacity Impact on approach: Would influence the feasibility of a volume-focused strategy

• Regarding resources, I'm curious about our current team structure. Do we have dedicated teams for acquisition (volume) and monetization (margins), or are they combined?

Why it matters: Affects our ability to execute on either strategy effectively Expected answer: Combined teams with some specialization Impact on approach: Might need to consider team restructuring based on chosen strategy