Targeting: the beachhead arithmetic
Rank segments by what a dollar of acquisition returns, not by headline revenue, and name the cost-to-win figure that would flip the choice.
On this page
Targeting picks the one segment to win first, and the first-pass arithmetic fits on a line: segment revenue = accounts × win rate × ARPU. That line ranks segments by size, and size is the wrong ranking for a six-person company with a fixed budget. Once the cost of reaching each account is subtracted, the segment with the smallest headline can be the only one that pays.
The headline formula
The three segments from the segmentation lesson each get a win rate. Here "win rate" means the share of the segment the company expects to win in its first two years, not the demo win rate used in the positioning lessons. All three are assumptions: 1% for solo consultants, where dozens of free calendars compete for the same sign-up, and 2% for clinics and agencies.
segment revenue = accounts × win rate × ARPU (a year)
solo consultants 2,000,000 × 1% × $180 = $3,600,000
small clinics 40,000 × 2% × $1,200 = $960,000
agencies 15,000 × 2% × $3,600 = $1,080,000
ARPU is a year here: $15, $99 and $300 a month, with the clinic figure rounded from $1,188 to $1,200. On this ranking the clinics come last, behind a segment fifty times their size and another that pays three times their price.
The mistake: picking the biggest headline
The founder takes the solo consultants: $3.6M is the biggest number, and the market behind it is 2,000,000 accounts deep. Winning 20,000 of them costs money before it earns any. Assume a won solo account costs $120 through paid search: a $3 click, above the course's $2 because every calendar product bids on these words, and 2.5% of clicks paying, far above the course's trial-led 0.6% (3% sign up × 20% pay) because a $15 card purchase needs no trial. So 20,000 accounts cost $2.4M of acquisition. At the course's own rates a solo account would cost $333 and lose money on every sale. At 6% monthly churn, 0.94¹² ≈ 48% of any month's sign-ups remain a year later. Revenue leaks almost as fast as it is bought.
The headline formula has no cost term, so it cannot see this. Revenue is what a segment pays; what the company keeps is what it pays, for as long as it stays, minus what it cost to win.
Add the cost of reaching an account
Two more numbers per segment. Lifetime margin (LTV) is monthly margin divided by monthly churn, the definition the unit-economics module builds on. Assume 80% gross margin throughout. Cost to win one account (CAC) is built from how each segment is reached:
- Solo consultants, $120: paid search, $3 a click, 2.5% of clicks become paying accounts the same day: $3 ÷ 0.025.
- Small clinics, $800: a booked demo costs about $300 all-in (newsletter placements plus an hour of the founder's time), and roughly 38% of demos close, so $300 ÷ 0.38 ≈ $800. The 38% is the blended rate across the tools prospects use today, worked in Dunford's method; it is well above the course's 20% for demos booked from paid media because these owners arrive from newsletters they already read.
- Agencies, $7,500: a salesperson at the course's $150,000 a year loaded, through a 90-day cycle with three approvers, closes about 20 agencies a year rather than the course's 30: $150,000 ÷ 20.
margin/mo churn LTV CAC LTV − CAC won contribution acquisition cash
solo $12.00 6% $200 $120 $80 20,000 $1,600,000 $2,400,000
small clinics $79.20 2% $3,960 $800 $3,160 800 $2,528,000 $640,000
agencies $240.00 1.5% $16,000 $7,500 $8,500 300 $2,550,000 $2,250,000
Each row is the same three steps. For clinics: $99 × 0.8 = $79.20 a month, ÷ 2% = $3,960 of lifetime margin, − $800 to win = $3,160 per clinic, × 800 clinics = $2,528,000. The solo segment, first on the headline, is now last: $1.6M of lifetime contribution for $2.4M of acquisition spent up front. Clinics and agencies tie at about $2.5M.
Rank by what a dollar of acquisition returns
A tie on total contribution is broken by the cash each segment needs to get there. A company with unlimited cash would rank by total. A six-person company ranks by what each acquisition dollar returns, because the budget runs out before the segment does.
contribution ÷ acquisition cash
solo $1,600,000 ÷ $2,400,000 = $0.67
clinics $2,528,000 ÷ $640,000 = $3.95
agencies $2,550,000 ÷ $2,250,000 = $1.13
Clinics return $3.95 per dollar, agencies $1.13: the same total, for 3.5 times less cash. The agency figure also hides two costs the table does not show. The 90-day cycle means the first agency revenue lands at least three months after the salesperson starts, longer while the pipeline is built, and the salesperson has to be hired first. And the 2% win rate assumes the product already routes meetings round-robin and syncs to the agency's sales records, which it does not.
Payback on expected margin, the number the unit-economics module decides by, picks the same segment. Cumulating each month's margin × the share still paying, a clinic repays its $800 in month 12, a solo consultant its $120 in month 15 and an agency its $7,500 in month 42. Only the clinics meet the course's 12-month target.
Can the company lead it, and where does it go next
The arithmetic says which segment pays; the beachhead also has to be one the company can lead. Geoffrey Moore's Crossing the Chasm borrowed the term from the D-Day landings: a segment small enough to dominate, whose members talk to each other, from which the next segment is reachable. Three checks, applied to the clinics:
- Small enough to lead. 800 clinics is 2% of the national 40,000, which no owner notices. Concentrate the first year on one region of about 4,000 clinics and 400 clinics there is one in ten, the density at which owners hear about the product from each other and word of mouth starts to lower the $800.
- Members refer each other. Clinic owners meet at the same regional association; solo consultants have no such meeting.
- A next segment within reach. Veterinary practices share the no-show problem and buy the same way, after one demo at a similar price, so the product carries over and only the channel changes.
What would change the choice
Name the number that would flip the answer, and how far it has to move. Agencies match the clinics' $3.95 when (16,000 − CAC) ÷ CAC = 3.95, which solves to CAC = 16,000 ÷ 4.95 ≈ $3,230. A partner channel that halved the agency cost to win would come close, and that is worth a test. In the other direction, the clinic choice survives a lot: clinic CAC would have to rise to 3,960 ÷ 2.13 ≈ $1,860, more than double, before clinics fall to the agencies' $1.13. A choice that survives its most uncertain input doubling is a choice to commit to.
The cost-to-win figures are the weakest numbers in the table, so measure them first. Ten demos booked through the clinic newsletters give a real cost per demo and a real close rate within a month. The estimation habit is the same as in a back-of-envelope sizing: find the input the answer is most sensitive to and spend the effort there.
In practice
To a board or an investor, show the three segments with five numbers each (accounts, ARPU, churn, CAC, win rate) and rank them per acquisition dollar, then say what would flip it: "Clinics return $3.95 per dollar against $1.13 for agencies; we would reconsider if agency CAC fell below about $3,230." A board can argue with an input. It cannot argue with "we feel clinics are right".
With the team, the beachhead is a promise to say no for a year. Write down which leads sales rejects (solo consultants, agencies, clinics with more than five practitioners) and what marketing will not write for. A beachhead nobody turns business away from is not a choice.
The mistake that costs money is choosing the segment with the biggest headline and finding the cost to win after spending it. On these numbers the solo plan spends $2.4M to earn $1.6M of lifetime contribution, and the loss shows up only as each monthly cohort churns away.
Check yourself
1. A partner offers agency leads that would bring agency CAC down to $3,000. Do you switch the beachhead?
Not yet. On the arithmetic agencies now return (16,000 − 3,000) ÷ 3,000 ≈ $4.33 per dollar against the clinics' $3.95, but that assumes the 2% win rate, which needs round-robin routing and sales-record sync the product lacks. Run the partner channel for ten agencies on the current product. Switch only if they close and stay at close to the assumed rates.
2. A new clinic channel doubles the cost of a booked demo from $300 to $600, with the same 38% close rate. Do clinics remain the beachhead?
Yes. CAC becomes $600 ÷ 0.38 ≈ $1,580, and the return is (3,960 − 1,580) ÷ 1,580 ≈ $1.51 per dollar, still above agencies' $1.13 and solo consultants' $0.67. The margin over agencies falls from 3.5 times to about 1.3 times, so measure the new channel's real cost per demo before scaling it.