3 Things You Need to Know About GREAT Ideal Customer Profiles

SaaS companies with a well-defined Ideal Customer Profile (ICP) see their win rates increase by as much as 68%. For early-stage startups, having a strong ICP can be the key to hitting product-market fit faster and more effectively.

Now, the question is… If ICPs are so powerful, why isn’t every SaaS company out there dominating its market?

The truth is, while many companies understand the importance of ICP, few have mastered the process of crafting one that truly drives growth.

After working on over 250 ICPs across my own businesses, with the founders I coach, and with the companies I’ve worked at, I’ve identified three core principles that can transform how you create your ICP. By following these principles, you’ll not only refine your target audience, but also accelerate your company’s growth trajectory.

When I launched my last SaaS company, ToutApp, we were pioneers in the sales engagement space. We started as an email productivity tool, and on our website, I listed a wide variety of potential users who could benefit from it. Thankfully, our features were strong enough to gain traction.

As we worked on scaling, it became clear that to truly drive growth, we needed to focus on a specific market. That’s when we realized how crucial it was to define our ideal customer profile. Once we did the ICP exercise correctly, it completely transformed our growth.

What is an Ideal Customer Profile?

An Ideal Customer Profile (ICP) is a clear, actionable description of the type of customer that would benefit the most from your product or service. It’s not as complex as some people make it out to be. In fact, there are just three key elements that make up a solid ICP:

1. The Right Problem

Your ICP should target a segment of the market that faces an urgent and important problem that your product solves effectively. This ensures that your solution addresses a real need.

2. The Budget

It’s crucial to focus on a market segment that has the financial resources to invest in solving the problem. If your ideal customers don’t have the budget, growth will be challenging.

3. The Opportunity

Your ideal customer should be in a market that is underserved. This means there isn’t heavy competition, so you have room to differentiate your solution to gain traction.

Though defining your ICP seems simple, the true challenge lies in getting the details right. It’s not just a matter of identifying a broad customer segment. You have to make precise choices that will dictate the direction of your entire Go-To-Market strategy. Every decision you make, from which market to focus on to how deeply you understand your customers’ needs, impacts the success of your ICP. And this work is actually tedious and requires deep analysis.

That’s why in my Go-To-Market program , I guide SaaS Founders through a meticulous 29-point analysis to properly build their ICP. It’s the attention to detail that can make all the difference in whether your ICP drives real growth or falls flat. The clearer and more specific you get, the more powerful your ICP becomes.

But for now, I’ll walk you through the three most critical elements that truly make an impact when you’re deploying your Ideal Customer Profile.

Principle 1: Be 10X Better Than Your Competition

When defining your Ideal Customer Profile, one critical principle is ensuring that your solution is 10X better than the competition. This means you need to not only solve a pressing problem but also significantly outperform any alternatives your target market might be using. Here’s how to think about it:

As you approach a particular market segment, your product needs to address an urgent need, but that alone isn’t enough. You should also focus on serving a market that is underserved– meaning your potential customers aren’t already overwhelmed with other strong competitors. Your solution should stand out as 10X better than what they’re currently using, even if that “competition” is something as simple as a spreadsheet.?

I’ve worked with Founders who underestimate the challenge posed by seemingly basic tools like spreadsheets. The potential customers were resistant to change because the spreadsheet worked well enough for them. Even though it was a manual solution, they weren’t eager to switch to a new platform, especially one that required paying and migrating all their data.

On the other hand, I’ve seen Founders struggle in crowded markets where competitors were already dominating with well-established products. In these cases, it’s nearly impossible to go head-to-head with these giants across the entire market. Instead, you need to find your 10X angle:

• A specific feature
• A particular use case
• Or a niche within the market where your product truly outshines the rest

This focused differentiation will help you win over the right customers and carve out your space in the market. The goal is to find that one segment where your product isn’t just incrementally better, but 10X more effective, and build your ICP around that.

Principle 2: Leverage Revenue Data

When working on Founder’s ICP, we leveraged their revenue data. The best ideal customer profiles are actually influenced by revenue data. When you have revenues, it’s really important to look at that revenue data and start to understand where you are winning deals, why, what makes you different, and beat that back into your ideal customer profile.?

It’s a very specific analysis where you can start to see where you win and where you lose. This feeds into the ICP which can completely transform your company’s growth.?

When developing your ICP, one of the most valuable insights you can use comes from your own revenue data. Instead of guessing who your ideal customer is, let your sales history guide you. An ICP shaped by real revenue data helps you focus on what’s working and identify areas where you can improve. Here’s how you can leverage it effectively:

1. Analyze Your Wins and Losses

First, analyze your revenue data to uncover patterns in your wins and losses. Which customers are buying from you consistently? What types of companies, industries, or personas are driving your highest-value deals? Are there specific characteristics or use cases that lead to quicker sales cycles? By digging into this data, you can identify the commonalities among your most successful customers.

2. Examine the Reason Behind Your Wins

Why did these customers choose you over the competition? What problem did your product solve for them better than anything else on the market? Understanding what sets you apart and how your product meets their specific needs ensures that your profile reflects the types of customers who are not only a good fit, but also bring in the most revenue.

3. Don’t Overlook Your Losses

Look for patterns in the deals that didn’t close, whether it’s pricing issues, feature gaps, or other reasons. This analysis will help you refine your ICP by avoiding market segments where your product isn’t resonating or where competitors have a stronger foothold.

When you continuously feed this revenue-driven analysis back into your ICP and your 29-Point Analysis (which I help clients through), you’re not just refining who your ideal customers are, you’re also aligning your sales and marketing efforts towards the type of customers that will fuel your company’s growth. Having a data-driven approach can transform your business by making sure you’re always targeting the right people with the right message.

Principle 3: Mobilize Your ICP and Track Through GTM

Creating a strong Ideal Customer Profile is only the first step– you need to actively mobilize it through your Go-To-Market (GTM) strategy and continually track its impact. Here’s how to ensure your ICP is driving real results across your business:

Start by integrating your ICP into every stage of your GTM motions. This means tracking whether your leads, opportunities, and closed deals are ICP customers.?

• Are they leads coming in fitting your ICP??
• Are the opportunities being created with ideal customers??
• When deals close, are they ideal customers?

9 times out of 10, your win rate will be higher with ICP-aligned customers, and those customers are more likely to stay longer and churn less.

At ToutApp, we took this concept to heart. We got so focused on our ICP that we built it into our sales commission structure. Our sales team didn’t earn full commission on non-ICP deals. To earn their full commission, they had to close deals with ICP customers. This approach significantly shifted the behavior of the entire organization. It aligned sales, marketing, and customer success with working with customers who were the best fit for our product.

To truly mobilize your ICP, don’t just create it and move on, keep it front and center in your GTM motions. Make sure you’re tracking every lead, opportunity, and deal to see how closely they align with your ICP. When you have this data, you can continuously refine your GTM approach, improve win rates, and reduce churn.

You might be wondering how to attract those ideal leads in the first place. Your ICP is the central asset of your GTM strategy, but there’s more to it. If you’re interested in learning more about creating an actionable Go-To-Market strategy, grab a complimentary copy of my 5-Point SaaS Growth Strategy Guide . It outlines the key steps to building a complete GTM machine that drives growth.

In Conclusion

Your Ideal Customer Profile is the foundation that can drive your SaaS company’s growth. Don’t fall into the trap of creating an ICP and then forgetting about it. By making sure your solution is 10X better, leveraging your revenue data to refine your profile, and tracking your ICP throughout your GTM efforts, you’ll position your business for long-term success. Keep your ICP at the heart of everything you do, and when your entire organization aligns around serving the right customers, the results will speak for themselves.

TK was CEO & Founder at ToutApp (backed by a16z, Jackson Square Ventures and prominent angel investors in Silicon Valley). After scaling ToutApp, it was acquired by Marketo where TK went on to join Marketo's executive team and serve as their Senior Vice President of Strategy. After running a 2-year transformation as part of the executive team, Marketo was acquired by Adobe for $4.75bn.?

TK now spends his time as a Strategic Advisor to 300+ B2B SaaS Founders globally. As the Founder of Unstoppable, he helps other SaaS Founders grow their startups faster through his Weekly Youtube videos and his application-only SaaS Go-To-Market Program .?

Want to learn more about building a proper GTM strategy for your SaaS business? Grab a complimentary copy of my 5-Point SaaS Growth Strategy Guide here.