I cannot remember a single startup actively trying to limit its market size by segmenting its market. During a mentoring session with a startup CEO, we were asking about their companies focus. The CEO replied by showing us a slide with the six segments that they were ‘focused’ on. I think focus means ‘one’. Often we do not want to define our Ideal Customer Profile thinking it will limit the markets for our company’s products and services. The opposite is true. Defining our Ideal Customer Profile allows us to focus our limited resources and time on those prospects that are most likely to become our customers quickly. We have another posting (must-read material!) on the difference between a problem focus and a common feature focus here.
How to set the first ICP
The ICP is set to meet whatever the critical milestones are in the short-term. They are not intended to last forever! The first ICP may be set to build a pipeline for the product as it exists today (and the next release) for the next six months. Our initial ICP can either be based on our successful and happy existing customers or can be a hypothesis on who we think should be our best customers. The ICP starts by selecting the companies then selecting the individuals in those companies. Companies are selected based on a combination of industry, size (employees or revenue), stage of maturity, funding, location, technologies that they use, environmental factors. Contacts are selected based on responsibilities, budget authority, title, department. Combining these factors identifies the person in the companies that own the problem that we solve, is responsible for solving the problem, and has the authority to spend the money to solve it. (blog: Are we making it easy to buy?)
The ICP that we have identified meets our company goals and objectives for a specific period of time. As an example, this initial ICP is used to close a number of accounts, with a total value in revenues or bookings within a specific number of months. We will constantly update and modify our ICP based on better information and progressing our market acquisition.
This exercise is the single most important to complete and is used by every other function of the Startup. It should comprehend the market that is targeted, the alternatives to our solution from the incumbent vendors and competitors, and the value that we offer that is so compelling that our contact is willing to do something now. Note: the alternative that ‘wins’ most deals is the status quo or ‘to do nothing’.
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