The ideal customer is no mythical being. Unlike unicorns and leprechauns, your target customer exists out there in the real world. The trick is to recognize them. You can only identify these ultra-valuable customers once you have crafted your ideal customer profile.
In this SaaStr Build panel, three cloud marketing and business leaders share tips to craft the perfect customer profile for your SaaS business. Read on for advanced learnings from Carilu Dietrich (Board Advisor at 1Password), Katrina Wong (VP of Product Marketing at Segment), and Isabelle Papoulias (CMO at Mediafly).
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What is an Ideal Customer Profile, and Why Should You Care?
The pace of startup life can be hectic, so it’s valuable to go back to basics every once in a while. So, what exactly is an ideal customer profile? “At its essence, the ideal customer profile is trying to articulate as specifically as possible who you are selling to,” Dietrich says.
The reason this is so critical is that your accuracy directly influences your product effectiveness and selling power. The more detailed your understanding of your buyers is, the better you can build your product to service them and speak to that audience.
Wong emphasizes that your ideal customer profile (ICP) goes beyond a marketing strategy –– it’s the basis for your entire company strategy. For every dollar you spend, what would yield the greatest return? Your ICP can help answer that and support your longevity. “When I think about the ICP, it’s who you want to sell to versus who just wants to buy from you. So it’s a strategy in many ways.”
What ICP Looks Like At Different Stages
- Early ($0 – $5 million)
At early company stages, you might not have too many customers yet, or you are collecting observations from your first set of buyers. At this point, when considering ICP, the patterns may not emerge immediately, so you will likely find yourself working from a hypothesis of why you created the product. The first ICP motion is about validating your core set of customers and learning how to iterate along the way.
- Growing ($5 million – $100 million)
As your company grows larger and attracts more customers, you will be armed with a greater set of insights and information. At this stage, examine your top deals and ask yourself these questions:
- How easy is it to close these top deals?
- How simple was it to set your customer up with onboarding and implementation?
- How sticky is your product?
At this stage, it can be tempting to do everything possible to please your enterprise customers, allowing your product growth to be heavily influenced by the whims of large companies. But Wong offers a word of caution: “If you don’t get your ICP right, you kind of become this custom software development shop for your top customers.” You may not achieve your greatest potential when you get caught up in too many specific requests. Keep your eyes on the prize of your ultimate ICP.
Dietrich adds, “You can move slower with a whole bunch of different customers, or you can move faster to dominance with a more focused target.”
- Thriving ($100 million +)
Once you accelerate to significant scale growth, it’s vital to get an outsider’s perspective. Segment, for example, hired a research firm to combine their observations with in-house data for a holistic view of their ideal customer. Their goal was to build their product for growth instead of grappling with a massive product surface area that tries to satisfy every customer.
The lesson here: Revisit your ICP with a data-driven approach. Work smarter, not harder, and you will reach your goals.
- Your ICP strategy is the basis for your entire company’s strategy.
- Don’t get sucked into devoting all your product growth to your enterprise customers’ special requests. Make sure you stay true to your ideal customer to achieve optimal product development and business expansion.
- Continually review and iterate on your ICP, even as you grow.