The Ultimate Framework to build your Ideal Customer Profile for SaaS startups.
Step-by-step guide incl. free Miro template
Hey - it’s Alex!
Welcome to Startup Business Tips, a bi-weekly newsletter, where I share with you 3 actionable growth tactics that will help you quickly grow your SaaS business from €0 to €1 million ARR 🚀.
Today we cover:
1️⃣ The Ultimate Framework to build your Ideal Customer Profile
2️⃣ The 6 ways to build your ICP & how you know you found your ICP (or getting closer)
3️⃣ The ANTI Ideal Customer Profile
👉 Bonus tip by Robert Onesim (Co-Founder & CTO of Timesact)
👉 Bonus material (software, content, news) - this time 150 Top SaaS Angel Investors
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1. The Ultimate Framework to build your Ideal Customer Profile (ICP framework)
A powerful ICP (Ideal Customer Profile) for B2B consists of 2 parts:
1. The Ideal Company
2. The Ideal Personas (Buyer persona + User Persona)
Each of the elements needs to be described in the best possible way - the characteristics, attributes, and criteria that define your ICP.
So let’s break them down together.
The Ideal Company
Here you get specific about the:
Company Size
Company Stage & Type
other company-specific criteria
The Ideal Personas
Most of the time you need to deal with multiple personas.
The User Persona - the person who is using your product
The Buyer Persona - the person who's making the buying decision
(and of course most of the time there are even more personas involved like CEO, IT, Procurement, Legal, etc.).
Who are these people?
This includes:
the exact job titles (e.g. check LinkedIn profiles)
the department they work for
the team size
the education & qualification
and interest & hobbies
Jobs to be done, challenges & pains and activities, responsibilities and KPIs and metrics
Now once you know who these people are, we need to get deeper. A great way to learn more about these people is ‘a day in the life of your customers’. You will learn about their:
daily activities
responsibilities
Success metrics & KPIs
Jobs to be done
and their pain points & challenges
What they consume, where they hang out, what their surroundings look like
I recommend you get very specific about:
what other software tools do they use
how they normally purchase products (learn about the decision and purchasing process)
who else is selling complimentary products and services to them
the top content they consume (websites, newsletters, YouTube channels, people they follow, events, communities, podcasts, etc.)
Trigger events & buying intent
What can you observe from the outside that gives you a proxy/indicator that there is a high chance that they face a specific problem (you are going to solve for them) and they are ready to buy?
Have a look at the 17 persona & company-related trigger events.
2. The 6 ways to build your ICP & how you know you found your ICP (or getting closer)
The 6 ways to build your ICP
Getting all the information about the ICP can be a challenge. Especially if you don’t have a large amount of customers you can analyze or talk to. So here are 6 ways to find answers on your ICP.
if you already have customers
Analyze your CRM data (lost vs. won deals)
Your ideal customers show:
🔸 Higher ACVs
🔸 Shorter Sales Cycles
🔸 Higher Win Rates
Analyze your Product Analytics
Your ideal customers show:
🔸 Show strongest adoption/engagement
🔸 Low(er) Churn rates
🔸 Got the most value from the product
if you do not have customers yet
Build your Dream 100 Customer List
Market testing (A/B testing with outbound campaigns)
Research communities (to figure out who has the pain points you're solving)
Qualitative feedback from sales calls
👉 Based on the list of ideal companies (you've built with the methods above), you need to analyze them to find their unique attributes and get insights about them.
How you know you found your ICP (or getting closer)
Sometimes it’s not easy to know if you already ‘found’ your ICP.
Good indicators for having a powerful ICP and knowing how to communicate with them (message-market fit) and how to keep/make them happy (product-market fit) are:
Increase in conversion rates
🔸 ad conversion rates
🔸 cold email response rates
🔸 website (to demo/signup) conversion
🔸 activation rates
🔸 deal win rates & free trial to paid
🔸 retention rates
Great customer feedback
🔸during the sales calls & demos
🔸NPS
🔸customer support interactions
🔸shorter sales cycle (they push actively)
(First signs) of referrals and virality
🔸share and invite others (from the same ICP)
🔸talks about you in niche communities
👉 Before you read on:
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❤️ Get exclusive benefits for sharing my newsletter with your SaaS network.
3. The ANTI Ideal Customer Profile
It can be very helpful to have a profile of companies & personas you DO NOT WANT as your customers. Someone you should not serve - your ANTI-ICP.
These are personas & companies that are NOT a good customer fit for you because:
❌ don't value your product
❌ don't have a pain or need that you solve for them
❌ don't fit strategically into your business
To find them, ask yourself what type of persona/companies:
❌ have long sales cycle and low win rates?
❌ have low contract values?
❌ high churn rates?
❌ high support volume?
❌ low engagement and satisfaction?
So building your Anti ICP is learning who your best customers are not.
Your Anti-ICP is very helpful when it comes to qualifying your prospects, either in your sales discovery or in your product onboarding - but also obviously when it comes to building campaigns.
💡Best tip, failure, and learning by Robert Onesim (Co-Founder & CTO of Timesact)
Tip: In a competitive space, consider developing a disruptive pricing model to establish a leading position in the market.
Context: When we launched Timesact, we entered a market with numerous competitors, each following one of two prevailing business models:
Charging a fixed monthly subscription fee.
Employing a freemium model where the first product added to pre-order is free, and users pay according to the number of products they wish to have on pre-order.
Both of these models had their shortcomings, as they charged customers even when the app didn't bring them any value, such as when customers didn't sell any pre-orders.
We adopted a different approach by billing customers based on the number of pre-orders they sold each month (—> awesome example for value-based pricing)
This approach, combined with great customer support, boosted us to 1st place in the pre-order category in the Shopify app store.
🧠 Do you want to be next and share your best tip with 1700+ SaaS professionals? Reach out to me via Linkedin.
💪 Bonus material (software, content, news) - this time the Top 150 SaaS Angel Investors
ARRtist and Addedval created a list of the most active business angels in SaaS operating in Germany organized in verticals. So if you’re early-stage and want to raise your Pre-Seed or Seed-Round, have a look into the list.
Happy growth 🚀.
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Work 1-on-1 with me - GTM Advisory for early-stage SaaS founders on their way to €1 million ARR (1 free spot - limited to 8 founders).
Extremely valuable!
Great template that summarises all to know.