From my experience with both Userflow and Cobalt, I have seen the power of knowing your ideal customer profile (ICP). I have also seen the frustration it can bring if you or your organization don’t know it.
In this blog post I will explain why an ICP is important and how you can identify and define it.
Why every SaaS business needs to define an ideal customer profile
A non-ideal customer profile will ask for new features and add friction to a sales process. If your sales team pushes for these, it might close a single customer, but this customer will continue to pull in the wrong direction for other teams like customer success or product.
With a clearly defined ICP that fits your product and positioning, you can build a powerful GTM engine, where marketing, sales, customer success, and product teams are fully aligned. But it requires that you sometimes have to say “No” to non-ICPs. These conversations can be difficult, as most of us love solving problems. But, to build a successful SaaS business, you cannot solve everybody’s problems.
Use Userflow as an example, one could technically use our product to onboard employees on 3rd party enterprise tools. But our current ICP is instead businesses looking to onboard customers to their own SaaS software. Our product, messaging, and value fit this profile. This makes our GTM engine and organization more focused, and thereby stronger.
How to identify and define an ideal customer profile
You would typically look in your existing customer base to identify the ideal customer profile.
Your ideal customers are the customers who consistently buy your product, and they are able to grow with your product (= buy more). The purchase process with an ideal customer almost seems frictionless. They understand your messaging, product, and the problem you solve and they are willing to pay the expected pricing. That last part is crucial, as the biggest fans of your product might not be the ideal customer profile if they cannot pay the money it costs.
When you have identified them, you can describe them. At the most basic level, an ideal customer profile can be described using the following five things:
- Company Size, e.g. # of employees, revenue, or fundraising
- Company Geography
- The key problem they have = why they need your solution
For example, it could be:
- VP/Director of Customer Success
- 51-200 employees with $10M in ARR
- North America
- Have a lot of customers and want to manage renewals at scale better
While this is the ideal customer profile, then to detail it out further, you can dive deeper into these profiles and look into the different Personas and Problems you solve for them. E.g., the ideal profile for sales and marketing might be the Director of Customer success, whereas the customer success operations manager might be the user of the product. Each of these has different problems you solve.
How to communicate an ideal customer profile
Communicating your ICP is almost as essential as defining it. If your ICP is in a hidden document somewhere and your organization doesn’t know about it or fully understand it, it is pretty much useless. Here are four ways I have used in the past to communicate it:
- Make an ideal customer information space
- Share actual customer interviews with the company
- Make it part of all the playbooks (Sales, Marketing, Product, etc.)
- Make sure it is widely communicated on all hands and at onboarding
A customer information space serves as a great on-demand resource for finding customer info. For example, one can build it in Google Drive or Confluence. Such a space can contain the ICP, personas, and real-life interviews to ensure that your employees can see that the definitions fit.
On top of having a customer space to get it fully integrated into the company, you should ensure that it is part of all the team’s playbooks, and is regularly communicated.
With a well-defined and communicated ICP, your entire organization builds towards the same goal and profile, and this becomes extremely powerful for product management, GTM, and much more.