5 ms·
The marketing spend actually scales faster than linearly. These companies do a lot of direct response advertising where acquiring the marginal customer becomes
by mrosett 7y ago
The marketing spend actually scales faster than linearly. These companies do a lot of direct response advertising where acquiring the marginal customer becomes more expensive as you scale up.
- wrsh07 7y agoThis is often the case for many companies acquiring the marginal customer, because the ones for whom it is a good fit will find it first (very cheap to acquire - they're looking for you). Then there are customers who only need a trial (or a small amount of information "what is it") before they come on board. Finally you get to tough sells: people who already have a good enough alternative - why would they want to pay the same amount as someone who had no systems in place? The marginal benefit to them isn't as high. As you expand out from your original customer base, each new ring of customers is more expensive to acquire. This is the situation Casper, Blue Apron, and many others face. Meanwhile, their competition has also ramped up - providing other alternatives (which might fit niche customers better)