Startup team alignment is spelled. I.C.P.
Ideal. Customer. Profile.
If and only if you have a clear ideal customer profile, then you can align and optimize all your customer-facing teams - sales, marketing, customer success, product, support, founders - to pull in one direction.
Defining the ideal customer profile from all your data and insights across all your teams and tools is a key responsibility for the founders of a company - this is the heart of product-market fit, which drives EVERYTHING customer operations.
Your ideal customer profile is never “done”.
Whether you have revenues of $50 or $50 million, the process of defining and re-defining WHO you are targeting and how you align your product, go-to-market, and customer-facing teams around your ideal customer profile.
To really understand this, you need to hear it from a CEO who has grown a startup to a public company.
Brian Halligan, CEO at HubSpot, wrote a bare-all disclosure on how they scaled-up through focusing on a particular type of customer which aligned all their customer-facing teams - product, marketing, sales, customer success - in one direction.
It gave product permission to say NO.
It gave marketing permission to focus on one type of lead and content instead of spreading across two.
It let their sales team focus on closing the best-fits of a single customer type.
The core problem was that we had a relatively low retention rate that made it hard for us to increase the total lifetime value of our customers. Our annualized customer retention rates were around 65% and our annualized revenue retention rates (adding upsells to the customers who stay) were around 70%. Too low to scale up on.
What it took to fix the problem was that we had to stop making small tweaks to improve retention in product or services. We took a hard look in the mirror at ourselves and finally really attacked the problem with every employee in the company. The initiative we came up with was our “Mary-MOFU-Monetization” playbook. The playbook was a big change in strategy and focus for us back in 2012 and involved literally every employee in the company. Let me explain how the plays worked and what happened.
Dive into the full post - particularly this part which explains their pivot, transformation, and team alignment. This was written after HubSpot ($HUBS) went public - for their CEO to put so much emphasis on HubSpot’s ability to scale on WHO they were selling to and aligning every team around that speaks volumes into the value of ideal customer profiles at all stages of a startup’s lifecycle.
So how do you drive this sort of alignment and steer the whole ship at your business?
Start by redefining your “personas”.
Too often, personas cause more problems, confusion, and team mis-alignment than they’re supposed to solve - a misleadingly “complete” job.
Personas can survive as wooly, loose statements.
Personas can mean different things to different people.
Personas can be too vague and abstract to be useful.
We live in a data-driven world. What real value does “Debbie, the a 34 year old suburban Mum who drives a Toyota Prius” give our teams?
How does “34-year old Debbie” direct their decisions, automate workflows, personalize communications, and scale your customer operations?
This is why we need a tight, data-driven definition of your perfect customers. The Marketoonist has a great comic for this.
Your sales, marketing, customer success is only as good as your data
Without a tight, data-driven definition, your teams will go and invent their own. YOU (as founders… revenue operations… the “masterminds” behind your companies success) completely lose control of this go-to-market process!
There is no substitute for data in this process.
So what is an ideal customer profile?
Your ideal customer profile (or ICP) is your definition of your best kind of buyer. The set of buyers which is the most profitable to sell to and you strategically want to focus on.
An ideal customer profile for companies selling to other businesses will tend to focus on company account information, whereas personas tend to be only about people. Of course, the people element is important, but in large companies it’s the company that has the defining characteristics, not individual people.
Creating and sharing an effective “ICP” will align your teams, help identify the data you need, and become the building blocks of your personalized customer journey, including:
In this guide, we’re going to walk through an example of how to build an ideal customer profile for us at Hull.
When working with data-driven startups, we encourage different teams within an organization to come together and discuss their ICP.
To start with, write down a starting definition of your ideal customer profile. You don’t need a template to get going here - just a simple sentence to describe the sorts of persons or organizations you’ve sold successfully to in the past.
Don’t try to be perfect at this stage. All we need a broad statement.
Of course there will be different variation between different people and different teams - you know your team, your product, and your market best.
The output of this just needs to be something relative short and simple. For example, our ideal customer profile at Hull could look something like this:
Growing startups with many sales and marketing tools
Now we’ve some raw material to work with, let’s see how we can improve it.
Remember, the goal is to turn this statement into something that’s truly data-driven.
Your use of language is vital to an effective ideal customer profile. Just to bring you back to school, nouns are to identify “things” like people, places and objects. Verbs are actions and states.
Some examples of nouns (“things”) for ICPs:
Some examples of verbs (“actions”) ICPs:
Using nouns and verbs make it clearer who you’re targeting. They’re easier to classify and tie data to than other types of words like adjectives.
For instance, in our example, the word “growing” is actually quite vague. Growing in what way? Two startups who are adding their second customer and seven thousandth customer are both still growing. And that assumes growing means revenue growth. This ideal customer profile doesn’t exclude growing headcount, number of offices, or anything else.
So let’s tweak our definition in our ideal customer profile example:
Growing startupsStartups with millions in revenue with many sales and marketing tools
This is starting to look a little better. Where you can…
Specificity is strategic.
What are the specific characteristics of customers who are easier to close and make successful? Dig into your existing data, and lean on your team for insights. - particularly your customer-facing support, sales, and success teams.
How easy it is to serve different types of customers may vary wildly. Different industries, geographies, company. cultures, and specific details that have made a significant difference to the companies and persons behind each customer’s success.
Choosing who you don’t target can be as important as who you do target - “anti-personas”. For instance, not selling to Government agencies or publicly traded companies. Or only selling to in-house teams, not agencies.
In our ICP example, we’ve said “many sales and marketing tools”. Strategically, we might take an interest in serving customers with specific tools. We might have had better results with less effort amongst customers with certain tool set ups.
Startups with millions in revenue
with many sales and marketing toolswho use Segment, Salesforce, and Amazon Redshift
Ah! Our ideal customer profile is beginning to develop into something that seems more and more useful. Now, there’s one extra tip to make this specific statement of nouns and verbs more useful…
Where possible, we want to have quantifiable measures too. This makes it much easier to tie to the right data.
With B2B marketing, there’s lots of metrics around firmographics like revenue, number of employees, amount raised and so on.
Larger companies (by whichever metric is most relevant to your business) may have larger budgets, but also different buying cycles. It’s important to tie this back to your sales and customer acquisition process whether it’s a low-touch, self-service product through to a high-touch sales process with sales teams (even field sales teams) involved.
One of our investors, Christoph Janz created a brilliantly simple model for this amongst SaaS businesses - Five ways to build a $100 million business - which compare the different account sizes and matching go-to-market strategy needed. What Brian Balfour calls Model-Market fit.
If you’re in B2B, have a firm grasp of the firmographics which matter to make your business model work.
In our example definition, we’ve said revenue is the specific metric we care about for identifying growing companies to sell to. But “millions” in revenue? How much really matters?
millionsmore than $5 million in annual revenue who use Segment, Salesforce, and Amazon Redshift
See how this is vastly improved from where we started! This is now a definition we can begin to tie data to, target accounts, qualify leads, and drive our customer data management strategy.
But there’s one trick which really helps.
If there’s one thing most persona templates do well, it’s naming them. In the case of HubSpot, “Marketing Mary” became common language across the organization. When someone mentioned a Mary, everyone knew what that meant. It aligns everyone in shorthand - you don’t have to keep reiterating the entire statement each time.
You can create a made up character or company, or tie to an existing, successful customer - for instance at Hull we look to named customers which encapsulate our ICP. Successful, case-study worthy customers are known throughout the organization. We can say “they’re not like X” or “that sounds similar to X” we can draw alignment across teams through real life names, companies and success.
Your ICP is only a target.
The challenge is knowing if your leads, users, and customers fit that ideal customer profile.
This is only possible with gathering data - customer profiling.
Customer profiles are made up of data - who people are, what they’ve done, and (for B2B) the company they work for. This data is tracked and gathered in multiple different sales, marketing, product, and customer-facing tools and databases.
Only when you’re capturing and combining customer data into one complete customer profile can you truly see if a lead or customer matches up to your ideal customer profile.
With data-driven profiles, your different customer-facing teams can effectively create and processes to decide how to handle each account. It also means you can...
Your clear data-driven ideal customer profile is useless unless your teams and operations adopts it.
Your ICP needs to be built into every teams processes and decision making, so your teams are all aligned and tied together with a united focus and one customer journey.
For marketing, this means designing content, creating precise marketing segments, and lead qualification for sales that attracts, identifies and nurtures your ideal customer profile (even at the expense of other sorts of profiles). Marketing is also responsible for laying the groundwork of profiling each lead for qualification.
Sales need to take the lead profiles that marketing has built, marked as qualified and passed over. With a clearer understanding over what the ICP values, and a complete profile with all their clues and conversation starters, sales reps and account executives can hone in on what closes the best-fit deals for the whole business - optimizing beyond booking sales, for the whole business. A key lever for drawing alignment here can be your sales compensation playbook. C-Suite alignment can drive this - in the case of HubSpot, they adapted their sales compensation to focus on their Mary-MOFU-Monetization playbook.
Customer success can focus on best-fit accounts. Instead of trying to make a total success of EVERY account, they can tier accounts by fit, and channel their constrained resources into the accounts which drive the best results for the whole business. With sales and marketing alignment landing more best-fit accounts, customer success has more accounts within a more similar profile, and less bespoke work to retain and upsell customers.
Product, like CS, can focus on fewer types of customer. They can dive deep on solving the most important problems for the ideal customer, and enrich the features there - as opposed to building everything for everyone.
Every team can line up and optimize your entire customer operation around your ideal customer profile.
As Brian Halligan’s lesson show’s, revisiting your ideal customer profile is at heart of solving for product-market fit, aligning all your teams, and driving startup growth at EVERY stage.
But even outside of C-suite driven team alignment, the process of creating an ideal customer profile is the same process as every single campaign and communication.
It’s the starting point of any personalized message and your personalization strategy - the first of the six elements of our personalization framework is WHO are you sending your message to.
And this all ties back to data.
Ideal customer profiles align your teams at all stages of your startups story. This is why it needs to be an ongoing process, not a one-off task to please your investors or check a box. “From startup to scale-up” as Brian Halligan says.
Follow the four steps:
And don’t forget this is an ongoing process. Keep looping around to redefine your ideal customer profile - it’s only the heart of optimizing your customer operations.