Should PalmPay invest in developing a loyalty program or improving its cross-border transfer capabilities?

Introduction

The trade-off we're examining today is whether PalmPay should invest in developing a loyalty program or improving its cross-border transfer capabilities. This decision is crucial for PalmPay's growth strategy and user retention efforts. I'll analyze both options, considering their potential impacts on user engagement, revenue, and market position. My response will cover clarifying questions, product understanding, hypothesis formation, metrics identification, experiment design, data analysis, and a final recommendation.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking PalmPay is facing increased competition in the fintech space. Could you share more about our current market position and main competitors?

Why it matters: Helps understand the competitive landscape and urgency of the decision. Expected answer: PalmPay is a top-5 player with strong local presence but facing pressure from global entrants. Impact on approach: Would influence whether we prioritize user retention or expansion.

• Business Context: Based on our revenue model, I assume transaction fees are a significant revenue source. How does our current revenue breakdown look between domestic and cross-border transfers?

Why it matters: Helps quantify the potential impact of improving cross-border capabilities. Expected answer: Cross-border transfers account for 30% of revenue but are growing faster. Impact on approach: Higher cross-border revenue would strengthen the case for improving those capabilities.

• User Impact: I'm curious about our user segments. What percentage of our users regularly engage in cross-border transfers versus those who primarily use domestic services?

Why it matters: Helps understand which user segments would be most affected by each option. Expected answer: 20% of users regularly use cross-border transfers, but they're high-value customers. Impact on approach: Would influence whether we focus on expanding services for existing users or attracting new ones.

• Technical: Regarding our current infrastructure, how scalable is our cross-border transfer system? Are there any major technical hurdles to improving it?

Why it matters: Helps assess the feasibility and potential timeline for improving cross-border capabilities. Expected answer: Current system is moderately scalable but would require significant updates for major improvements. Impact on approach: Technical challenges could influence the timeline and resource allocation for the cross-border option.

• Resource: Considering our current team structure, do we have the in-house expertise for both loyalty programs and cross-border payment improvements, or would we need to hire or contract out?

Why it matters: Helps understand resource constraints and potential implementation timelines. Expected answer: Strong in-house payment expertise, but would need to hire for loyalty program development. Impact on approach: Could influence which option is more feasible in the short term.