Is it better for SnapScan to focus on increasing daily active users or maximizing revenue per user?

Introduction

The trade-off between increasing daily active users (DAU) and maximizing revenue per user (ARPU) is a critical decision for SnapScan's product strategy. This scenario involves balancing growth and monetization, two fundamental pillars of product success. 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)

• Context: I'm thinking SnapScan might be a mobile payment app in a competitive market. Could you provide more context on SnapScan's current market position and primary use cases?

Why it matters: Helps tailor the strategy to market realities and user needs Expected answer: Mid-sized player, primarily used for peer-to-peer transfers and small business payments Impact: Would focus on either expanding use cases (DAU) or deepening engagement in core areas (ARPU)

• Business Context: Based on the trade-off presented, I'm assuming revenue is a key priority. How does SnapScan currently generate revenue, and what's our current growth rate?

Why it matters: Informs which lever (DAU or ARPU) might have a more immediate impact on business goals Expected answer: Revenue from transaction fees, moderate growth but facing increased competition Impact: High growth might favor DAU focus, while mature market could lean towards ARPU optimization

• User Impact: I'm curious about our user segments. Can you share insights on our most valuable users versus our most numerous user group?

Why it matters: Helps identify where to focus efforts for maximum impact Expected answer: Power users (frequent, high-value transactions) vs. casual users (occasional, lower-value transactions) Impact: Strong power user base might favor ARPU strategy, while large casual user base could benefit from DAU focus

• Technical: Considering potential scalability challenges, what's our current infrastructure capacity for handling increased daily active users?

Why it matters: Ensures technical feasibility of growth strategies Expected answer: Current system can handle 2x current DAU without major upgrades Impact: Limited capacity might favor ARPU focus, while excess capacity could support DAU growth

• Resource: I'm thinking about implementation capacity. What's our current product and engineering team bandwidth for new features or optimizations?

Why it matters: Determines feasibility of different strategies within current resources Expected answer: Teams are at 80% capacity with ongoing projects Impact: Limited bandwidth might favor focused ARPU improvements, while more capacity could support broader DAU initiatives