Problem Framing

The business aims to improve revenue performance by understanding customer behavior and evaluating the effectiveness of its current discount strategy.

The key challenge is determining whether growth should be driven by increasing customer engagement (purchase frequency) or by optimizing pricing and promotions.

Key issues:

• Revenue is concentrated in a few categories
• Customer base is heavily skewed toward repeat users
• Discount impact on performance is unclear

Hypotheses

• Discounts do not significantly increase purchase frequency or long-term customer engagement
• Loyal customers drive revenue primarily through higher purchase frequency rather than higher AOV
• Investing in high-performing categories yields higher ROI than broad discount campaigns

Key Decisions

• Reduce reliance on broad discount campaigns, as they do not improve AOV or customer behavior
• Focus on increasing purchase frequency, since revenue growth is driven more by transaction volume than pricing
• Invest more in high-performing product categories to maximize return on investment

Trade-offs

• Reducing discounts may improve margins but could negatively impact short-term sales volume
• Focusing on loyal customers may limit acquisition of new customer segments
• Dataset limitations and skew may reduce the reliability of strategic conclusions