Halcyon Bank: Paid Growth Is Getting Expensive
Product Management
medium45 min0 submissionsMorgan Stanley
Scenario
Halcyon Bank's retail banking product has grown almost entirely through paid acquisition. That is becoming unsustainable.
Unit economics (monthly):
- Blended CAC: $1,538
- ARPU: $1,025
- Gross margin: 73%
- Monthly churn: 7.7%
Existing referral behaviour:
- 18% of active users invite at least one other person
- 14% of those invitations convert to a signup
CAC has risen 63% over 18 months as auction competition increased. The CEO wants a growth model that does not depend on buying every user.
Supporting data
trend
- cac increase 18m pct
- 63
referral
- implied k factor
- 0.025
- users inviting pct
- 18
- invite conversion pct
- 14
unit economics
- blended cac
- 1538
- arpu monthly
- 1025
- estimated ltv
- 9718
- ltv cac ratio
- 6.32
- gross margin pct
- 73
- monthly churn pct
- 7.7
Your task
Design the growth strategy. Provide:
- Analysis — current unit economics, payback period, and the strength of the existing loop.
- Risks — of the loop you propose and of continuing as-is.
- Recommendation — the specific loop to build and how you would prove it works.
Ready to move forward? Up next: Market Sizing Sprint: India ConsumerNext question
How you'll be graded
100 points, 60% to pass.
- loop design25
- growth model25
- recommendation25
- quantitative reasoning25
Hint
Reveal suggested structure
- LTV = ARPU × gross margin ÷ churn.
- LTV:CAC and payback period = CAC ÷ (ARPU × margin).
- K-factor = invite rate × conversion rate. K ≥ 1 is self-sustaining; below that the loop amplifies but does not replace paid.
- Identify the loop type — viral, content, or paid-recycled.
- Find the weakest step and fix that, rather than adding a new channel.