You need an Ideal Customer Profile, Part 1

This week’s main topic is *Ideal Customer Profiles.

It's part 1 of 2 in the series. Read part two, how to make an Ideal Custoemr Profile here.

What you’ll read this week:

What an Ideal Customer Profile is
How you’ll benefit from having an Ideal Customer Profile
Weekly Interweave Bootstrapping Update

Enjoy!

You need an Ideal Customer Profile

Like many people, I used to start off by deciding what I wanted to build and gave a fleeting thought to who I wanted to sell to.

At most, I'd identify them as gamers, SaaS founders, and enterprises with risk management programs.

Have you ever considered what happens if you don't get specific with who you sell to?

Have you ever considered how much variation there is in a "niche"?
What if that variation makes your product suitable for some people but not for others? Is that a bad thing? Could that be incredibly good?
What if you address too broad a niche and create something for everyone that doesn't please anyone?
How do you efficiently market to someone you can't identify quickly on LinkedIn?
How do you make your marketing copy so compelling someone has to click when you can't narrow down what's unique about who you're marketing to?
How do you help limit the size of your MVP or tell if a feature matters to your business?

I have good news if you've asked questions like these (or now you are).

To address these exact questions and problems, product managers, sales, and marketers have a concept called Ideal Customer Profile (ICP) that every SaaS startup and company should adopt on day one (or now if you're well past day one).

Introducing Ideal Customer Profiles

An Ideal Customer Profile (ICP) is a set of attributes that make your target customer easily identifiable and very specific. It refines the WHO you're selling to.

Your ICP identifies the key attributes in your potential customer base that will make them the best fit for your SaaS.

You're not selling to all social media agencies; you're selling to those who work with big brands, have consumer products, and are focused on short video platforms.
You're not selling to software engineers; you're selling to software engineering teams who work remotely, are on Macs, and love paired programming.
You're not selling to finance teams; you're selling to SaaS finance teams with less than $10M in ARR and are in the US.

You get the idea; it's specific. And by adding specificity, you make your startup life a hell of a lot easier.

Attributes of an Ideal Customer Profile

There are many different attributes you can address; here are a few examples (I'm focusing on B2B, but will give a B2C example below):

Company Size - Are you building a solution for a solo founder or a company with thousands of employees?
Company Stage - Are they a company that's just starting out? Are they bootstrapped or VC-funded? Are they a publicly traded company?
The region they're in - Are you selling to Europe, Asia, North America?
Revenue - Do they have $10k MRR, $1M ARR, $100M in sales, or a trillion?
Job Title / Function - What function are you targeting within this company? Software engineers? Sales? Finance? HR? Within that function, who is the buyer? An individual contributor, manager, department head, VP?
The price point they sell - Do they sell something that's $19/mo or $100k a year?
Something unique to them - Are they regulated in a certain way? Do they sell something to a tangent audience you're involved with? Do they have remote employees?
Their pain - Is there a critical inflection point where they become problem-aware of what you sell? For example, do they have many off-shore employees and they want to go near shore?
Technologies they use - Do they use a specific programming language? Is there a technology you're targeting that's unique to their industry?
Industry - Often, a specific industry will cause a few things to come together. For example, Finance has specific cybersecurity problems caused by regulation. Or early-stage SaaS companies suddenly need their SOC 2 Type II.

Your goal is to use these attributes to get as specific as possible about who you're making for. I have a few examples below to help you out.

So what happens when you get nit-picky with who your ideal customer is?

Benefits of having an ICP

No matter your size, by identifying your Ideal Customer Profile, you will help focus on who you are selling to and what you're building.

By driving focus, you make your marketing copy, sales positioning, and product more approachable to the customer you value most.

Improve your Marketing

If I asked you to talk to someone about your favorite hobby and you need to hold their attention, could you do it?

What if I told you the person knows nothing about your hobby?
What if I told you they were already an expert in your hobby?
What if I told you they didn't even know the sport existed?

Could you use the same content that engages and holds the attention?

Not likely.

That's the beauty of getting super specific with your ideal customer profile.

You know where they're at, their problem awareness, the language they're likely to use, and so much more.

Make Feedback Easier

Let's say you validate an idea before you make it (or at least when you start building it). How do you differentiate what features and problems you should address with your solution?

Do you go by your gut?

What about when you already have a solution and have feedback from 500 customers?

A key benefit of knowing your ICP is it's a handy tool to help guide what you build.

It also helps keep you focused on features that matter to the customers who will most likely pay you.

Let's say your SaaS targets FinOps. Features that a SaaS startup may need vs a Fortune 500 are vastly different.

Many startups have done just fine on Quickbooks for years. While a Fortune 500 would laugh at using Quickbooks. They use costly solutions like SAP.

Why the difference? Because the complexity and focus of those FinOps teams are vastly different.

But if you're trying to sell a FinOps solution to both audiences, you will likely make something neither one wants.

Improved Sales

And finally, sales. Do you want a product that practically sells itself?

Or one that takes you a long time to explain and demonstrate?

When you've tuned in to who you're attracting and built a solution for them, it makes sales far more accessible.

Do you want to make a connection to your prospects? Make them wonder if you're reading their minds?

Then, you want to define your ICP for your sales team.

Doing so, you help them prospect for the correct set of customers (which will reduce churn!). Your sales team will speak their language because they spend 99% of their time talking to your targeted audience.

Your demos will be more efficient.

In short, your entire sales process will be more efficient. Because it's built from the ground up for a specific customer. It's not generalized.

Focus Innovation

When you have a narrow ICP, you become customer problem-aware in a far more specific way.

Because you're not focused on everyone and everything but a narrower target, you start seeing what you can do differently.

You free up time to get specific.

Which leads to more time.

Which leads to more innovation.

Think about it. You're building a broad-fitting MVP. Because of that, you will have to implement feature sets that meet a large audience.

But no matter the team size, you'll always have resource limitations.

When you get specific on your ICP, you suddenly don't have to do everything.

You get to do a solution for a very specific problem set driven by a very specific problem.

That's where incredible innovation and 10x solutions come into play.

In a market where it's increasingly hard to get 10x solutions, this can help you stand out.

Read Part 2

Read part two, how to make an Ideal Customer Profile here.

You'll learn:

How to implement your own ICP
3 real life examples of ICPs
ICP tips