Evaluating a Year-Over-Year Decline in Performance Metrics: A Guide for FAANG Product Manager Interviews
Introduction
Landing a product manager role at a FAANG company is no easy feat. Interviewers often throw complex scenarios your way to assess your problem-solving and strategic thinking skills. One such question you might encounter is about evaluating a company’s year-over-year decline in performance metrics. Let’s take Nike’s sitewide conversion as an example: “Nike’s sitewide conversion has declined year over year. How would you evaluate this?” By applying structured frameworks, you can not only structure your response but also showcase your analytical approach and business acumen.
Detailed Guide on Framework Application
Selected Framework: AARRR (Acquisition, Activation, Retention, Revenue, Referral)
Step-by-step Guide:
- Acquisition: Analyze the channels through which Nike acquires visitors to understand if there’s been a change in the quantity or quality of traffic. For instance, a decrease in marketing spend or effectiveness could lead to less traffic or lower quality leads that are less likely to convert.
- Activation: Examine if new users are engaging with the site as intended. For instance, if recent UI changes have made it difficult for users to find products they are looking for, this could contribute to the decline in conversions.
- Retention: Assess whether Nike is retaining customers and if they are making repeat purchases. If there is a decrease in retention rates, it could impact the overall conversion rate negatively.
- Revenue: Consider factors that may have led to a drop in revenue per user, such as increased competition or decreased consumer spending in the athletic apparel category. This could result in lower conversions if customers are buying less or not at all.
- Referral: Investigate if there’s been a drop in word-of-mouth or referral traffic. A decrease in customer satisfaction or the effectiveness of referral programs could lead to fewer conversions.
A hypothetical example to illustrate the application of the AARRR framework might be: Nike’s marketing campaigns from the previous year were highly successful on social media, leading to high-quality traffic. However, this year, there’s been a strategic shift towards more influencer partnerships that have not yielded the same quality of visitor, impacting acquisitions and thus conversions. On the activation end, a new checkout process implemented to streamline purchases could be more complex than anticipated, creating friction for customers and leading to carts being abandoned.
Facts Checks:
While exact numbers might not be available during the interview, it is essential to demonstrate an understanding of industry benchmarks and logical estimations. For instance, a PM candidate might note that the average e-commerce conversion rate is typically around 1-2%, and a significant deviation from this range will require investigation.
Communication Tips:
When answering the question, be concise and structured in your response. Present your findings coherently, and when making assumptions, state them clearly and justify why they are reasonable. It’s also crucial to show how you would verify your hypotheses through data analysis or user research.
Conclusion
To effectively address a concern like Nike’s sitewide conversion decline, it’s imperative to apply a structured framework that encompasses all aspects of the user funnel. The AARRR framework is particularly valuable in dissecting such issues. Remember to substantiate your hypotheses with data pointers, even if they are indicative, to convey a solid understanding of the potential problem areas. Finally, practice applying these frameworks to various scenarios to enhance your product thinking and to prepare for challenging FAANG interviews.
“`