Defining an ICP can be tricky. Most companies will have a decent understanding of what type of customers they want for profits to be high. But they might miss essential downsides of having those customers. Large, high-paying customers could be very expensive to maintain, or have a very low chance of reinvesting in the near future. There are countless reasons why you're probably wrong.

What should an ICP be?

Most importantly an ICP should be the kind of customer that helps your company grow. Growth in itself is relative to your organisational goals. But regardless of what you consider growth there are several key checkboxes your ICP should meet. Nevertheless, they should facilitate the scaling of the company. Not all customers fit the bill. Some can be too small, others can be too large. It's finding the sweet spot that will help you achieve greatness.

Here are some examples of ICP criteria;

• SaaS company:

  • Good product/customer fit

  • Fast implementation

  • Low customer support needs

  • Additional purchases within 2 years

  • Upgrade SaaS solution

• E-commerce:

  • Single purchase goal

  • Recurring purchase

  • Influencer mentality

  • Low return rate

  • Leaves product review

Common mistakes with ICP's

Focus on financial gains

The biggest mistake I've seen over time … and I admit have made myself, is determining the ICP based primarily on the financial nature. This approach is wrong for so many reasons, yet most companies tend to use it. The problem with this approach is that it only takes into account the upside of a relationship with this set of customers. It doesn't factor in the negatives, costs and overhead.

Only using your own perspective

A second mistake is not understanding the customer's perspective. An ICP is an ICP for a reason. Not just because they make you money or have a long customer life cycle. If you don't understand why they chose your product or service, your definition could be off entirely.

Why do yo need an ICP?

Nailing your ICP down correctly will not only give you a good understanding of what thrives your business, it will also help you with every strategy you'll make for the business.

• You can tailor your marketing to fit the ICP

• You can set achievable sales targets for your SDR's

• You can scale your business based the ICP

• You can have a better understanding of your full market potential

• You can finetune your solutions or future solutions, based on your ICP

Ready to get started? Good! Take these 5 steps in defining your ICP

Photo by mostafa meraji on Unsplash