Strategy question

Define a strategy of loyalty program for Google Pay.

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What this question tests

Loyalty program strategy for a payments product where the core action, paying, is already frequent but low margin.

Clarify the goal: increase Google Pay usage frequency and default payment method status among users who have multiple payment options.
Identify what would move behavior: cashback or rewards funded by increased transaction volume and merchant partnership fees.
Prioritize a tiered rewards structure, with higher rewards for higher usage frequency, encouraging habitual default use rather than occasional use.
Propose partnering with merchants to fund targeted, location based offers, sharing cost while giving merchants a customer acquisition channel.
Address the low margin constraint: keep reward costs funded primarily by merchant partnerships rather than Google's own margin.
Define success as default payment method share among enrolled users and merchant partnership revenue offsetting reward costs.

Names the actual margin constraint explicitly, low payments margin, and proposes merchant funded rewards as the solution, not vague 'give cashback'.
Proposes tiering rewards by usage frequency, directly targeting the goal of habitual, default usage rather than occasional use.
Gives an illustrative number, e.g. assumes a 1 percent merchant funded cashback on top 20 percent frequent users could shift default status by 15 percent.
Ties merchant partnerships to a clear mutual incentive, customer acquisition for merchants, funding for Google, rather than one sided cost.

Proposing generic cashback funded entirely by Google's own margin without addressing the low margin constraint of payments.
Not tiering rewards by usage, missing the chance to specifically target and reward habitual default use.
No mention of how merchant partnerships could offset program costs.

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