Narrow Your ICP and Transform your Company

Be ruthless in your focus to go faster, and be more efficient

"Segment until it hurts." - Tom Buiocchi, Former CEO of ServiceChannel

One of the biggest mistakes founders make early on is hoping and thinking their product is for everyone. It’s a natural instinct: you’ve built something great, you want as many people as possible to use it, and you want to build the biggest possible business.

But the reality is, if you try to sell to and build for everyone, you’ll end up selling to no one effectively. We often think of the need for a narrowly defined Ideal Customer Profile (ICP) in the early stages. But the reality is that chasing too broad of a market can be an existential problem at every stage of growth.

As a CEO, you want your team to operate with a laser focus on a narrowly defined customer — this will close more deals, improve retention, and increase performance across all key metrics.

A too broadly defined ICP will drain your resources and sap your growth efficiency. It will lead you to create a too-diverse customer base, making it difficult to understand. It will frustrate your sales team, who will waste time chasing the wrong prospects. It will lead to messaging that by definition is too broad, and which does not actually speak to anyone. It will delude you into developing features that solve the wrong problems for the wrong customers. It will be difficult to determine who your ideal partners might be. A broadly — and poorly — defined ICP will negatively impact every part of your business.

Narrow your focus. CEOs must ruthlessly define their Ideal Customer Profile (ICP) and Ideal Buyer Persona (IBP).

Why Defining Your ICP Matters

One of the best investment firms I have worked with is Warburg Pincus. The Operating Partner I collaborated with, Tony Eales, used to be the CEO of a fleet tracking company.

I remember a story he told me about when he took over as CEO and his team bragged about having this massive sales pipeline. But when he dug into it he realized that they had been selling anyone and everyone: from a guy with a single van to a business with hundreds of vans in their fleet. They were selling to all sorts of buyers: from fleet managers to business owners.

After spending time on the road with their top salespeople, and after analyzing their customer base and pipeline, he realized they were only successful with companies with 3-10 vans (I can’t remember the exact number but it was a tight band). These customers were not too small to avoid tracking, and not too big to use an enterprise solution. More importantly, the decision-maker was always the company owner. Once they aligned their sales and marketing efforts to this ICP and IBP, their sales became much more predictable and efficient.

This same principle applies to SaaS startups. You might think your product can serve SMBs and enterprises, but the reality is the product, pricing, sales process, and support needs are vastly different. You might think you want to sell to both IT and security buyers, maybe you have a GTM solution and you think you’ll sell to the CRO and the CMO…but the messaging that resonates with them is different, building a community for one versus the other is different, and the very product they care about is different.

If you’re not clear on who you’re building for, you risk stretching your team thin and failing to serve any market well.

How to Define Your ICP: A Data-Driven Approach

To narrow your focus, you need data—not gut instinct. Here’s a systematic approach to defining your ICP and finding your pockets of gold:

Step 1: Build a Customer Dataset

Start by compiling a spreadsheet (or database) of all your current and churned customers. Include in the list the sales opportunities you never won in the first place. Then, enrich the list with as much firmographic and sales data as possible:

• Firmographics (Public Data): Location, employee count, revenue, industry, growth rate, money raised and public/private status.

• Business-Specific Data (Proprietary Info): This will be company and product-specific, but could include what related technologies do they use, which SKUs of yours do they have, their NPS or customer satisfaction scores, and how their team is structured. Add as many attributes as possible.

• Buyer Demographics: Name, department, title of your primary champion.

• Sales Metrics: Close date, sales cycle length, ACV, contract length, NRR (if available), deal source, rep who closed the deal, and which modules/products they bought.

Much of this data will be easy to collect via your CRM, sales intelligence and data enrichment tools. Depending on your scale, you should then consider doing a line by line review of each opportunity with your reps to fill in the gaps and confirm data. If data is still not available, you may need to scrape data, leverage third-party research firms, or even use offshore talent or AI to gather details. (See CRM & Data Enrichment section below)

Step 2: Talk to your best sales and customer success people

Now comes the qualitative portion. Go to your sales team and ask them about the best customers they have ever signed up, and why. Ask your customer success managers who are the best clients to work with: who has been the most successful and happiest with the product, and was easiest to grow? Who does your team focus on in their territories? How do they know when someone is going to buy or renew versus churn?

Your best team members will naturally gravitate towards the best accounts and will be a wealth of information. Many times they don’t even know that they have the answer but when you ask them the right questions they can actually be the best source of information.

Step 3: Analyze & Identify Your Pockets of Gold

Once you've collected all that information, look for patterns.

#1 - Who are our most successful customers? (High retention, high NRR, fastest sales cycles)

• Once you know who these are, you need to ask yourself what attributes do these top customers share? (e.g., location, growth rate, industry, revenue, size of employee base, technology stack, etc)

#2 - Who are our worst fits? (Longest sales cycles, worst close rates, highest churn, most customer dissatisfaction)

• Once you know who these are, again you need to ask yourself what attributes do these worst customers share?

The goal is to distill your findings into 7- 10 defining attributes of your ideal customers, and if possible as many attributes that your worst customers share.

For example, your ICP might be:

• Currently using Netsuite

• Purchased Netsuite in the last year

• Operating in retail or technology

• For-profit companies

• $100M+ in revenue

• Based in the U.S. or Canada

• Procurement/AP teams with at least 5 members

And your IBP might be:

• Head of Procurement or CFO as the champion

• Director-level employees as key influencers

Putting Your ICP to Work

By narrowing your ICP and IBP, you will create clarity and focus across the organization.

It will enable marketing to craft the right messaging and content for the right audience. It will focus your sales team on the right accounts. It will enable your product and engineering teams to move faster to build the right features. It will accelerate business development, and your ability to find and build the right partnerships.

Share the findings with your leadership team

You will want to ensure you have buy-in from your leadership team. Make sure that they understand the work that you did to get here. Make sure they understand the results of the research, including the attributes of your ICP, the titles of your ICP, and the data that stands behind it.

Explain what this means for the business, the changes you are going to make and where the company goes next. This is critical to get alignment on with your leadership team before proceeding.

Get buy-in from critical team members

Speak to and get buy-in from your critical team members. At a minimum these are the top performers in your go-to-market functions. You will probably end up changing how territories work, switching ownership of accounts between Accounts Execs and Success Managers, and narrowing the target market in a significant way.

You will want your product managers and engineering directors/managers on board. Your ICP will likely have implications on the priority of new products and features and how the team might be organized.

Present your findings to the entire company

Only after these conversations and buy-in should you then present your findings to the entire company.

You will want every employee to understand why you have done this and the data and research that is behind it. You will want everyone to understand the opportunity that this presents to the business, and why it should be personally exciting to them.

To do this successfully, you will need your leadership team to have your back, and managers across the company to be armed with answers to the many questions that will come up. For example, your customer success team may ask what this means for existing customers that aren’t in your newly defined ICP. The product team may ask what this means for the upcoming roadmap given they used feedback from non ICP customers to prioritize the roadmap.

With your ICP properly defined and your team onboard, you can then re-align your company strategy around your ICP and IBP. Here is how:

1. Sales Territory & Account Assignment

• Prioritize your ICP accounts in your CRM.

• Assign (for example) 25-100 ICP accounts per rep (this varies based on ACV and deal complexity).

• Ensure contacts match your IBP (e.g., don’t waste time selling to mid-level managers if CFOs make the decision, or vice versa).

Note: after doing this exercise you will almost certainly end up with fewer accounts per sales rep. This normally drives anxiety with the sales team.

Tell them this is like a trust fall. We know this is going to work, they need to trust a little. As soon as they start calling on/reaching out to these accounts they will know that this is different, and they will do much better with fewer accounts because they are the right accounts. The reality is that every account you assign them should be a customer one day.

2. CRM & Data Enrichment

• Populate CRM records with as much ICP data as possible. Becoming good at this will become a competitive advantage for your business, and there are many ways you can collect and enrich your CRM with this data including:

  • Sales data enrichment solutions like Clay.

  • Leveraging ChatGPT Operator or other AI solutions.

  • Engaging with your Rev Ops and Data teams to build scripts and other automations to keep your CRM continuously updated.

  • We used people on Upwork who specialized in data collection & CRM enrichment to collect this data, and this is still an option. But I would explore the above alternates first.

  • Over time, you can start using webinar polls and customer surveys (etc) to ask questions that can be leveraged in your ongoing data enrichment efforts

• Make sure that your reps have all the relevant info (e.g., which technologies prospects use, their key challenges and attributes, etc.) and are trained on how to use this data before engaging with anyone.

3. Marketing Strategy

Like sales, your marketing strategy will vary widely given the dynamics of your product and business. But regardless, when you truly understand your ICP and IBP you should narrow and refocus all of your marketing efforts on them. Narrowing your focus will increase your conversion rates, lower your customer acquisition cost, and vastly improve your customer lifetime value.

If, for example, you deploy Account Based Marketing a properly defined ICP and IBP could allow you to:

• Marketing Efforts: Marketing aligns its initiatives and spend to focus only on ICP accounts. This could include:

  • Digital marketing focuses only on ICP accounts & IBP profiles across LinkedIn ads and targeted email campaigns.

  • Content marketing builds custom content for different ICP segments.

  • Note:

    • You can try to get more targeted with some marketing strategies like paid search, but the reality is that you will not be able to get very targeted in some areas.

    • This does not mean you should not make some level of investment in these initiatives, but they become more like using a big net to throw out and catch stuff, versus targeted spearfishing.

• Sales Tactics: Each rep selects 20 priority accounts and works on a customized engagement plan.

  • Example: Host an exclusive dinner with a partner, top customers, and key prospects in a high-value city like Austin.

  • Personal touches: Send handwritten invitations, do exec outreach, and provide a VIP experience.

4. Product Delivery

Your ICP will also impact your roadmap and the organization of your product, design and engineering organizations.

You will re-assess and reprioritize your product roadmap with your ICP and IBP in mind — you should not build anything that does not serve these customers. Solutions for their problems should become the priority, as should immediately resolving their bugs or onboarding blockers.

Features or entire product areas that you had scoped out for other customer segments should be removed from the roadmap. Scrap any existing development efforts that are not targeted towards serving your ICP. These roadmap changes may kill the roadmap for entire teams so that you can re-focus those valuable resources where they matter most.

The Impact of a Well-Defined ICP: According to 5 CEOs

One recent company I’ve been advising had 10,000 accounts in their CRM. After we completed this exercise, we discovered that only 2,000 of them really mattered. More often than not I find that companies fill their CRMs with as many accounts as possible, when in reality only a small percentage of those contacts should be there.

So don’t just take my word for it—hear from other CEOs on the impact of defining their ICP:

1. When Howard Ting joined as CEO of Cyberhaven, he found there was no ideal customer profile or commonality in their customers. They found that targeting mid market companies was the best approach, given their disruptive product and incumbents entrenched in the enterprise. Cyberhaven also focused on tech-centric, tech-forward companies with lots of intellectual property and high employee turnover.

2. Tom Buiocchi, former CEO of ServiceChannel, joined when the business was targeting any business in “retail”. He found that their close rate was terrible. They segmented until it hurt, narrowing their target to large food and apparel companies, with more than 100 locations that were geographically distributed, US based, and company owned (not franchises) — among many additional attributes defining the ICP and IBP.

3. Andrew Lau, Founder and CEO of Jellyfish, noted that their Ideal Customer Profile has changed over time. They currently focus on mid-market software and technology companies, but are moving up market. Their Ideal Buyer Persona is the Head of Engineering, CTO or CPO, but their users span many team members.

4. Melanie Fellay, CEO and Co-Founder of Spekit, notes her company’s ideal customer profile has evolved and narrowed over the years: today they focus on mid-market companies with a minimum of 100 employees who do not yet have a knowledge management solution. Spekit finds success with targeting enablement functions, and ideally engaging marketing and RevOps teams.

5. Zachary Smith, former Co-Founder and CEO of Packet, talks about how their product was explicitly not for everyone. Packet served developers, but they intentionally built for customers who they defined as the top 1,000 technology enterprises of today or the future.

Remember, segmentation is not a one-time exercise — it is an ongoing process. As your business evolves, revisit and refine your ICP and IBP regularly. Do the work early and often.

Don’t try to be everything to everyone. Find your pockets of gold, focus there, and watch your business thrive.