Strategy question
As a PM at Turbo tax, what would you do about Credit Karma's free tax filing feature?
- Strategy
- Hard
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What this question tests
Competitive response strategy when a rival introduces a disruptive free offering against a paid core product.
How to approach it
- Assess the real threat, Credit Karma's free filing mainly targets simple tax situations, while TurboTax's paying base often has more complex returns.
- Segment TurboTax's customer base, simple filers who might be price sensitive and at risk versus complex filers, e.g. self-employed or itemized deductions, who need more support.
- Decide where to compete, likely defend against a full price war and instead reinforce the value gap for complex filers, since matching free is not sustainable for a paid product.
- Consider a defensive free tier, offering a genuinely free simple filing option to prevent losing that segment entirely to Credit Karma.
- Invest in differentiation for paying customers, better audit support, live expert help, and accuracy guarantees.
- Define success metrics, retention rate of simple filers on a free tier and revenue per complex filer over time.
What a strong answer includes
- Segments the customer base by filing complexity rather than treating all TurboTax users as equally at risk from a free competitor.
- Recognizes that racing to zero price is not sustainable and instead proposes reinforcing value for complex filers who need real support.
- Proposes a defensive free tier specifically for simple filers, addressing the actual competitive threat without cannibalizing the whole paid base.
- Sets metrics distinguishing the two segments, since success looks different for defending simple filers versus growing complex filer revenue.
Common mistakes
- Proposing to match Credit Karma on price across the board, threatening the core paid business.
- Treating all TurboTax customers as equally at risk from the free offering.
- Not proposing any concrete differentiation for the paying customer base.
Likely follow-up questions
- How would you prevent a free tier from cannibalizing paid customers.
- What would you invest in to retain complex filers.
- How would you measure whether the response worked.
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Learn the skill behind it
Chapters of the AI PM course that teach what this question tests.
- Chapter 4: Discovery and strategy for AI products
- Chapter 9: Prove it paid off: outcomes, economics, and pricing
- Chapter 14: Get the job: the AI PM interview loop