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Defining your ICP can help you better identify customer needs, clarify priorities for your team, and pursue opportunities for expansion down the line.
As an early-stage startup, it can be tempting to chase any customer meeting — whether your goal is getting your first design partner or closing deals on your way to $1M ARR.
Companies that don’t take time to define a clear ICP (ideal customer profile) face serious challenges in both the short-term and long-term. In the short term, these companies struggle to hit critical ARR targets, which can jeopardize future fundraising. Others might experience moderate success without clearly defining an ICP early on, but then struggle down the road with customer churn, acquiring new customers, and battling a backlog of requested product features. In a worst-case scenario, startups attempt to build every feature that big, early customers request, while still trying to uncover what value their ideal customers are getting from their product!
The best way to avoid failure early in your journey and set up a repeatable process for earning revenue instead of just one-off deals is defining an ICP and being disciplined about disqualifying those who don’t fit that profile. Strong execution of the customer validation process will allow you to more effectively define your ICP because you'll start to pattern-match the attributes of a potential customer against someone who's unlikely to ever buy your product.
Keeping a laser-focus on your company’s ICP can help you better identify customer needs, clarify priorities for your team, and pursue opportunities for expansion down the line.
In this guide, we’ll discuss how to narrow in on your ICP and USER and BUYER personas, the right questions to ask when you’re qualifying deals against your defined ICP, and how to iterate on this process over time with your team as your company scales.
At Unusual, we sometimes use the term ideal customer profile with ideal company profile interchangeably because we're focused on B2B software. The definition of ideal customer is the company that will get the most value from purchasing your product. Put simply, it’s the answer to these questions:
It’s important to keep in mind that you’re seeking companies that will become advocates, help expand your product in the broader market, and become paying customers now or in the future.
Once you define the specific types of companies that are in an ideal situation to benefit from your product (your ICP), we'll dig a level deeper to determine who exactly at these organizations are relevant to target — your BUYER and USER personas.
Your BUYER persona represents the person with the influence and authority to make a purchasing decision within your ICP company. For instance, it might be a manager or business executive, or even the USER of the product him/herself.
A simple question to ask in order to find out who a BUYER is in a potential deal is: “Who will sign the order form or contract?” This is a good indicator of who has the authority to make a purchase.
Your USER persona represents the direct consumer of your solution. Remember, USER personas want to use your product to make their lives and jobs easier. Having empathy for the USER and building that into your messaging is critical to ensure strong adoption whether you’re selling to teams with developers, product managers, salespeople, or another persona.
For example, a developer typically becomes an advocate for a tool when it improves the quality of their job. It may be that your tool makes their job easier or offers a 10x better experience than alternatives, but they won’t become fans of your tool simply because management is excited about saving 10% a quarter on AWS costs. Put another way, a developer doesn’t use a security product because it saves their organization from data breaches and corporate liability, but because preventing data breaches is part of their job and your product makes that job easier.
Note: In the ideal scenario, your BUYER is the same person as your USER, but that’s not always the case. These can be different individuals (i.e., a manager approving the purchase for an engineer who will ultimately use the software). That means your USER and BUYER may have entirely different motivations and thus, will require different messaging and tactics to see the value of your product.
One common mistake founders make when defining personas is too loosely defining their ICP. A job title (i.e., DevOps Engineer) is a good starting point, but it’s worth digging deeper so that you’re able to answer: What makes a DevOps Engineer at your ideal company a better fit than a DevOps Engineer at any ordinary company? The more specifically you can pinpoint why, the easier it will be to relate to this person through your messaging and outreach. This in turn shortens your sales cycle because you have a crystal-clear understanding of what challenges you can solve for them.
Another mistake founders make is conflating their ICP and personas. They’re separate concepts and should be kept distinct. The easiest way to distinguish between your ICP and personas is by answering two separate questions:
This will allow you to build a scalable and repeatable process around lead generation (marketing), shipping the right updates (product), closing more deals (sales), and improving net retention rates (customer success).
Clearly defining your ICP, BUYER persona, and USER persona gives your whole team a “true north” they can refer back to when making decisions, increasing your likelihood of making it past the Seed Stage. Here are examples of how having clear ICP and personas can benefit your startup:
You can prioritize your product roadmap based on the needs of your ICP, rather than building any requested feature that comes from customers who might not fit the ICP profile as well. Occasional customizations should be an exception, not a distraction from what your target customers need. Engineering will have the bandwidth to ship more by knowing what's expected, why they're building certain aspects of your solution, and for whom. Knowing what not to build, even if one non-ICP customer is asking for it, is just as important.
Instead of spraying and praying on a broad set of profiles, you can better allocate spend to target specific companies and personas based on the data you’ve collected from your ICP/personas. This also helps you better qualify leads and reduces the number of meetings/resources required to close a customer.
You can use a consistent narrative in external marketing to ensure your ICP clearly understands what you do. For example, account executives and marketing should use the same external messaging that targets the same ICP. This is especially important if you’re creating a new category. HubSpot also did this with creating "inbound marketing" as a category and built a ton of content and messaging around the same narrative for their ICP/personas (see here).
Finding the ideal customer early allows you to build operational playbooks around what your customer will need to be to be successful and expand adoption of your product. Doing so prevents the likelihood of churn risk in year two.
Building a focused solution that solves real pain for a specific ICP and persona paves the way for advocacy (enabling BUYERS/USERS to evangelize your solution on your behalf), testimonials (case studies, white papers, webinars, etc.), and referrals that will lead to organic inbound leads.
Although many startups want to jump straight to reaching out to prospective BUYER and USER personas, you have to establish an ICP first. As we covered, your ICP is your company’s “true north.” Its definition should be known and understood by everyone in the company.
To illustrate the importance of having an ICP, consider this scenario: If you use tools to find contact information on BUYER/USER personas and just searched “DevOps Engineer,” you might get more than 1 million results. Now, if you run the same search but narrow down the ICP by the company's geography, industry, revenue, tech stack, etc., it might drop that DevOps search result to 2,000 individuals.
To define your ICP and find your first customers, start by answering a few critical questions. I’ve included an example list of questions you can use to get started:
Once you’ve completed the exercise, your next step is building a company profile around the common answers. Here’s an example of an ICP, BUYER persona, and USER persona you might generate through this exercise:
Defining an ICP and personas is an iterative process. As you learn more about your customers and usage of your product through engagements and customer interviews, continue shaping your ICP and Personas. At a minimum, you should be meeting with your customers once a quarter to gather feedback and further refine your ICP or Personas. The more clearly you can evolve your ICP and BUYER persona over time based on new information, the more effectively you can support your customers and turn them into advocates via referrals, testimonials, etc.
Advocates and testimonials allow your company to reduce the friction in a sales process. Anyone who has sold before has heard, “This is great, but what customers have used your solution and what were their results?” The more advocates you can offer as proof points, the more credibility you’ll have with prospects and the more likely you’ll be to make the sale. Harness (an Unusual Portfolio Company) and Okta ($OKTA) are good examples of companies that highlight strong proof points with their ICP. Referrals typically lead to customers you wouldn’t otherwise discover (or who would be expensive to acquire).
As you scale your startup, it’s worth re-evaluating your ICP and personas semi-annually or annually to see if there are growth opportunities within segments you couldn’t initially address. You might find that you need to adjust your product roadmap or resources (i.e. closing your first seven-figure customer may require a different success and support motion). It’s critical to understand that your ICP will and should change over time.
The table below gives examples of changes you might see over time and how you might use them to refactor your ICP and personas.
