In a recent webinar, Lokesh Mahajan, Group Product Manager at Glovo, shared valuable insights on tackling complex business problems using data and user research. He emphasized the importance of understanding user behavior and leveraging insights to create impactful products.
Key Takeaways
- Understand the business model and revenue streams.
- Analyze user behavior to identify areas for improvement.
- Use data to inform product decisions and strategies.
- Explore innovative solutions to enhance user engagement.
Introduction to Jimmy
Let’s dive into a fictional company called Jimmy. Jimmy is a monthly subscription service that allows users to access various gyms for a fee of 79 Euros. Operating in a fictional country called Jimmy Land, it has no competition and boasts a solid user base of 50,000 monthly active users, with around 600,000 check-ins each month. This means that, on average, each user checks in about 12 times a month. With over 7,500 gyms and fitness brands available, Jimmy seems to be doing well.
The CEO’s Dilemma
However, things take a turn when the CEO of Jimmy sends a letter to the senior management team. The letter outlines a pressing issue: the company wants to expand into new countries and enter the B2B market, but they lack the funds for user acquisition. This is a common challenge for early-stage startups that are profitable but need more cash to grow.
Breaking Down the Problem
To tackle this, we need to understand Jimmy’s revenue and costs. The revenue comes from subscriptions, calculated as:
- Monthly Active Users (50,000)
- Subscription Cost (79 Euros)
- Annual Revenue = 50,000 * 79 * 12 = 50 million Euros
On the cost side, every check-in incurs a fee paid to the gyms. The cost can be calculated as:
- Monthly Active Users (50,000)
- Average Check-ins per User (12)
- Average Check-in Fee (5.25 Euros)
This results in a total cost of around 40 million Euros, leaving Jimmy with a profit of 10 million Euros.
Strategies for Increasing Revenue
To increase revenue, Jimmy has two main options:
- Acquire New Users: This involves marketing efforts to attract new subscribers, but the CEO’s letter indicates a lack of funds for this.
- Retain Existing Users: Reducing churn is crucial. Strategies could include gamification and loyalty programs to keep users engaged.
Another way to boost revenue is to increase the subscription price or create tiered plans. However, raising prices could lead to user churn, which is not ideal.
Reducing Costs
On the cost side, reducing the average check-in fee is essential. While it might seem logical to decrease the number of check-ins to lower costs, this would hurt user retention. Instead, Jimmy should focus on negotiating lower fees with gyms.
Analyzing User Behavior
To understand user behavior, we can segment users based on their check-in patterns. For instance, new users tend to check in at big brands, while repeat users explore more options. This insight can help Jimmy tailor its marketing strategies.
Discovery Avenues
Jimmy has three main avenues for users to discover gyms:
- Gym Listing: 55% of discovery happens here, with 74% of reservations coming from top brands.
- Activity Discovery Page: About 25% of discovery occurs here, with a better mix of brands.
- Search: 30% of discovery happens through search, with a significant portion of reservations from top brands.
User Research Insights
Qualitative research reveals that users often prefer well-known brands due to trust issues with lesser-known gyms. Familiarity and routine also play a role in their choices.
Defining Metrics for Success
A good metric to optimize for is the average number of gyms tried by a user per n check-ins. This encourages users to explore beyond their usual choices.
Hypotheses for Improvement
To increase this metric, we can:
- Boost Awareness: Make users aware of various activities across different gyms.
- Build Trust: Increase trust in lesser-known brands through marketing and user testimonials.
- Optimize Discovery: Improve the gym listing page to highlight smaller brands.
Potential Solutions
Some potential solutions include:
- Enhancing the gym listing page to showcase activities and trainers.
- Implementing trust markers for smaller brands to build credibility.
- Using machine learning to optimize gym discovery based on user behavior.
Conclusion
In summary, Lokesh Mahajan’s insights on Jimmy illustrate how to break down complex business problems into manageable parts. By focusing on user behavior and leveraging data, companies can create effective strategies to enhance product discovery and drive growth.
This approach not only helps in understanding the current landscape but also paves the way for innovative solutions that can lead to sustainable success.