A bigger user base allows effective spreading of fixed cost user acquisition efforts like acquiring a new service, building WeChat mini program, celebrity endorsements and the like.
It also allows new acquisition channels like outdoor advertising, TV ads, ads placement in TV shows etc.
Having scale also allows the company to raise money, which may effectively increase the "acceptable" CAC, if they can last in the long term.
2. On The Individual level
On a individual or variable cost basis, your CAC should generally increase as you crowding out the easy-to-reach audience. In which case, your acceptable CAC has no choice but to increase.
The harder-to-reach audience may be located in, say, lower-tier cities or less surrounded by technology, so they may have more future need of Meituan services, so the LTV may make it worthwhile.
Wang Huiwen didn't explain it explicitly so these are my interpretation.
a wonderful overview. thank you! sharing in yen.fm newsletter.
This is unreal!
If i can as u a question, Why "more users" lead to "Higher acceptable Cac" in the Meituan’s Platform Strategy?
1. On The Aggregate Level
A bigger user base allows effective spreading of fixed cost user acquisition efforts like acquiring a new service, building WeChat mini program, celebrity endorsements and the like.
It also allows new acquisition channels like outdoor advertising, TV ads, ads placement in TV shows etc.
Having scale also allows the company to raise money, which may effectively increase the "acceptable" CAC, if they can last in the long term.
2. On The Individual level
On a individual or variable cost basis, your CAC should generally increase as you crowding out the easy-to-reach audience. In which case, your acceptable CAC has no choice but to increase.
The harder-to-reach audience may be located in, say, lower-tier cities or less surrounded by technology, so they may have more future need of Meituan services, so the LTV may make it worthwhile.
Wang Huiwen didn't explain it explicitly so these are my interpretation.