Your Most Efficient Audience Might Be Too Small

Founders are constantly told to narrow their audience. Find your ideal customer. Get specific. Figure out exactly who has the problem, speak directly to them, and don't try to be everything to everyone. It's good advice.

But recently, I was talking with our CMO about performance marketing, and he made a point I haven't stopped thinking about.

The first efficient audience you find might not be the audience that scales your company.

You can find a small group of people who desperately want your product. Your advertising performs. Your acquisition costs look great. Your conversion rate is strong. Everything is telling you that you've found your customer. And you may have.

You just don't know yet whether you've found your market.

Imagine you launch a product and discover an audience you can acquire for $50 per customer. Your competitors are paying $100. Naturally, you start putting more money behind it. Then more. Then more. Eventually, performance starts deteriorating.

It isn't necessarily because the advertising stopped working. You may have simply reached most of the people who fit that particular profile. The pool was efficient. It just wasn't very deep.

Now imagine another audience costs $70 to acquire. On the surface, it's worse. But instead of 100,000 potential customers, there are 10 million. And perhaps those customers spend more, stay longer, or purchase more products. Suddenly the $70 customer might be far more valuable than the $50 one.

This is why I think founders need to separate two questions that often get treated as one:

Can I acquire this customer efficiently?

And:

How many of these customers can I acquire efficiently?

They sound similar. They are completely different questions.

A great example came up in that same conversation: Vuori. The company had an unusually clear early customer in men interested in yoga and activewear. That was a useful place to start. There were men who wanted comfortable, performance-oriented clothing but didn't necessarily identify with the traditional athletic brands built around running, basketball, or hardcore training. That's an efficient audience.

But imagine if the company had concluded from that early success:

We make clothes for men who do yoga.

The positioning that helped establish the brand could have eventually constrained it. Because the underlying appeal of the product extended far beyond yoga. The same guy could wear it to work out. He could wear it traveling. He could wear it playing golf. He could wear it around the house. He could wear it to grab dinner with his wife.

The product hadn't changed. The use case had expanded. And with every new use case came another potential audience pool.

That's the distinction I find interesting. Sometimes your earliest customer doesn't reveal the boundaries of your market. They reveal the first reason your product matters. Your job is to figure out how many other people want the same underlying value for a different reason.

This changed the way I've started thinking about creative. Most people think advertising exists to sell something. Of course it does. But especially early in a company's life, advertising can do something else:

It can teach you who your market is.

Imagine creating twenty ads for the exact same product. One speaks to saving time. Another speaks to saving money. Another speaks to status. Another speaks to convenience. Another speaks to a specific frustration. Another speaks to a particular age group. Another speaks to a moment in someone's life. Same product. Different hypotheses about why someone might care.

You put those hypotheses into the market and watch what happens. Some disappear. Some get clicks but don't convert. Some produce customers but terrible economics. And occasionally one starts behaving differently. People stop scrolling. They click. They buy. They stay. The market has given you a signal.

That's why cheap creative testing can be so powerful. A simple static ad doesn't need to become your best-performing ad forever. It might simply tell you:

There is something here.

Then you invest. Build the video. Hire the creator. Make the landing page. Produce the testimonials. Develop the campaign.

You're not just testing advertisements. You're testing different explanations for why your company should exist.

There's another trap here. Marketers love metrics that are easy to compare. Cost per click. Cost per lead. Customer acquisition cost. They're important. But a cheap customer isn't necessarily a valuable customer.

Suppose one audience produces $30 leads and another produces $45 leads. It would be easy to declare the first campaign the winner. But what happens after the lead? Maybe the $30 lead spends $500. Maybe the $45 lead spends $3,000. Maybe one converts at 10% and the other at 30%. Maybe one buys once and the other stays for three years. Maybe one requires enormous support while the other doesn't.

Acquisition efficiency has to be followed through the business.

Lead → Customer → Revenue → Margin → Retention

The cheapest entry into the funnel doesn't necessarily create the best economics at the bottom of it.

The real question isn't:

Where can I buy the cheapest customer?

It's:

Where can I find the largest pool of customers with economics that work?

What's especially interesting is that finding another audience doesn't always require building another product. Sometimes it requires describing the existing product differently.

Healthcare makes this obvious. Take something like longevity. "Live longer." "Optimize your health." "Anti-aging." Those ideas describe an enormous category, but they're abstract.

Now make the problem specific.

Maintain muscle after 50.

Suddenly someone recognizes themselves. Or:

Stay sharp after menopause.

Different person. Different concern. Different entry point. You haven't necessarily changed the underlying capabilities of the business. You've changed the reason someone realizes those capabilities might matter to them.

That's important because founders often respond to slowing growth by expanding the product catalog. New product. New category. New feature. New market. But there may still be enormous undiscovered TAM sitting around the product you already built.

The whitespace isn't always in the product. Sometimes it's in the positioning. Sometimes it's in the use case. Sometimes it's in the distribution. And sometimes it's simply in a group of people who would love what you've built but haven't yet been given a reason to believe it's for them.

Our CMO, Austin Sutor, gave me an exercise I really like. Imagine your product launched on Amazon today. Now jump forward six months.

What do you want someone to write in a review that they couldn't just as easily write about your competitor?

Not your tagline. Not your mission statement. Not the language on your homepage. What does the customer actually say?

If you sell a wearable, maybe the generic review is: "It helped me sleep better." That's fine. But dozens of products can own that sentence.

A much more interesting review might be:

"I avoided ten arguments with my husband this month because this catches when I'm getting stressed before I react."

Now you have something. There's a customer. There's a problem. There's an outcome. And potentially, there's an audience hiding inside it.

I like the exercise because it forces you to stop thinking about what your company sells and start thinking about why a particular person would care that it exists. Do that across different problems and different customers, and you begin creating hypotheses about audience pools you can actually test.

This is ultimately why I think founders should be careful about becoming too attached to their ideal customer profile. An ICP is useful. But early on, it's still a hypothesis. The market gets a vote.

Your first customers will teach you things. Your advertising will teach you things. Your failed campaigns will teach you things. Your reviews will teach you things. And sometimes the people who ultimately build your company into something enormous won't look exactly like the people you originally built it for.

The answer isn't to go broad from day one. That's the other extreme. If you try to speak to everyone, you usually speak to no one. Start narrow. Find the person with the problem. Speak directly to them. Get efficient. Learn why they care.

But once you've found them, don't stop asking questions. What exactly are they buying from us? Who else wants that outcome? What other problem does our product solve? What other moment creates the same need? What happens to the economics when we move one circle outward?

Then test it.

Your first efficient audience is incredibly valuable. They give you traction. They give you feedback. They give you revenue. Most importantly, they give you information.

But don't confuse your first strong signal with the boundaries of the opportunity. The customer who gets you from zero to one might not be the customer who gets you from one to one hundred.

Find the people who desperately want what you've built. Understand exactly why they want it. Then start looking for everyone else who wants the same underlying thing for a reason you haven't discovered yet.

Your first efficient audience tells you where to start.

It doesn't tell you where to stop.

The goal isn't simply to find an audience you can acquire efficiently.

It's to find the largest audience you can acquire efficiently.

Subscribe to keep up.

See you Mondays, Maximilian