Food Delivery Business: Choosing Performance Metrics and Reducing Churn

You work as a product manager at a food delivery company. First, lay out the key metrics you would use to judge how well the company is performing. Then narrow in on the metrics tied to churn and explain how you would improve them. ### Clarifying Questions - Whose churn should the second half focus on: customers who place orders, couriers who deliver them, restaurants that sell through the platform, or all three? - Does the company deliver only restaurant meals, or groceries and convenience items too? - Is the company the leader in its markets or a challenger still competing for share? - How is churn defined: no order within a set window, a cancelled subscription, or a closed account? ### Part 1 — Key performance metrics Propose the metrics you would use to assess how the business is performing, and show how they relate to one another. ```hint Follow one order Trace everything that has to go right for a single order to arrive, and what the company earns or spends along the way; each participant and each money flow suggests a metric. ``` #### What This Part Should Cover - Metrics for each side of the business and for its economics, not for demand alone - A top-level metric and how the other metrics feed into it - Quality-of-experience measures that act as guardrails ### Part 2 — Improving churn Take the churn-related metrics from Part 1 and explain how you would bring churn down. ```hint Ask when people leave Look at the moment people stop using the service, such as after a first try, after a bad experience or after an incentive ends, and ask what each timing pattern says about the cause. ``` #### What This Part Should Cover - A precise churn definition and a breakdown of churn into its main causes - Interventions tied to those causes, in priority order - How you would show that an intervention reduced churn rather than merely delaying it ### What a Strong Answer Covers - Recognition that customers, couriers and restaurants depend on each other, so churn on one side shows up on the others - A metric hierarchy with a north star, input metrics and guardrails rather than a flat list - Churn interventions ranked on impact, cost and their side effects on the other participants - A measurement plan that separates lasting retention gains from short-lived ones bought with incentives ### Follow-up Questions - A discount campaign cuts churn this quarter but lowers contribution margin per order. How do you decide whether to keep it? - How would you identify customers likely to churn before they leave, and what would you do differently for them? - If courier churn rises in one city while customer churn holds steady, which metric would warn you first that customers are about to be affected?