Who should be your first customer? How can you grow sales for your new product? Who should you target for Outbound sales or Inbound marketing? How can you speed up your sales cycle? Or should you simply pivot to adapt to actual market needs? The most sure-fire way to achieve rapid growth in your business is to define the Ideal Customer for your startup.
You may know today Play-Doh as a colourful modelling compound. Did you know that it was first launched in the 1930s as a wall cleaner, designed to clean the black residue that coal heaters left on walls? However, less than two decades later, demand dropped. After discovering some teachers were turning to the product for toddlers to play with, the founders reworked the product and marketed it to schools in the 1950s. Since then, Play-Doh has shipped over 2 billion cans worldwide.
As a B2B tech entrepreneur, one of the most important things is for you to define your ideal customer profile (ICP). Your ICP helps identify the type of company that is most likely to become your first customer. Your ICP articulates your target audience, potential market, decision-maker persona and clarifies your beachhead market.
Here is how to define your Ideal Customer for your B2B tech startup in 4 steps.
Step 1 – Define your target audience
Which company has this pain point? This is the company that is most likely to benefit from your solution and to buy from you. Consider the following to identify your ideal customer:
Use case & Applications
Which customer faces the specific problems that your solution tackles?
Which specific business process along the customer journey can you address?
Do you have credible customer references or proof of value for this use case?
Can the customer use your standard plug & play solution immediately?
You might offer a stand-alone solution for end users or indirect distributor sale.
Or is your solution a component which needs to be integrated before use?
You might offer an embedded hardware or software solution for OEM or integrators.
What technology solutions does this company currently use?
Are they using legacy solutions that your product or service can replace?
Or are they already using a competing solution?
Who are the key decision-makers at the Process vs. Innovation levels?
Are decisions made locally e.g. at facility?
Or centrally e.g. at a global Center Of Excellence?
Step 2 – Identify your potential Market
Once you have defined your target audience, the next step in creating an ICP is to identify your potential market. This segmentation is based on firmographics or characteristics of the company within your target audience, such as:
- What industry (or industries) are they in?
- How many people are in the company?
- How big is the department you sell into? Is there a minimum or maximum size?
- Is there a typical revenue band your ideal accounts are in?
- Where are they located?
- What is their business model (i.e. B2B or B2C)?
Make sure you tackle markets where you can provide reliable after-sales services. While a larger company brings bigger opportunities, it runs a more complex buying process. This might slow down your sales process and require additional resources.
Step 3 – Define your decision-maker Persona
Next, you are ready to define the decision-maker who has the authority to buy your solution. Sometimes identifying the right decision-maker can be difficult. To further define the Ideal Customer for your startup, you can articulate your decision maker’s persona around the job title and tenure.
Here you should match the decision-maker to the size of the company, for example:
- 1-10 employees – CEO/CTO, Managing Director
- 10-50 – VP, Head Of Engineering, Head Of Innovation
- 51-200 – Business Development Manager, Engineers
- 200-500 – Regional Heads
Ideally, you want to understand the current state-of-art by talking with people close to the target business process. Once you have a good understanding of the existing process, you might go upward into the hierarchy.
The speed of implementation of your solution will also affect the persona you will address:
- Today – prefer Product Owner, Operations Manager, Product Engineer
- Tomorrow – prefer Head Of Innovation, Head of R&D
Be sure to adapt your message to the target persona to maximise your chances of success. Some example of keywords you could use:
- Sales – increase sales, new leads, improved pricing, better deals
- Finance – higher productivity, lower costs
- Supply Chain – optimise supply chain, secure traceability, reduce inventory
- R&D – unique, patented, breakthrough, publications
By developing your Persona, you will gain a better understanding of your ideal B2B customer to tailor your messaging, positioning, and sales strategy accordingly. Since the market changes rapidly, you will need to review your Persona as your business grows to ensure it remains relevant and effective.
Step 4 – Start with your Beachhead market
Can you really afford to tackle all ICPs at once? Startups have limited resources, money and need to stay focused. As you define the Ideal Customer for your startup, the beachhead market helps you focus your initial target market to establish a foothold and build momentum.
Your ICP informs the selection of your beachhead market, as the most promising segment to focus on initially. The idea behind a beachhead market is to concentrate your resources in a specific area to gain traction and momentum before expanding to other markets or segments.
You can identify your Beachhead market through iterative Business Development sprints and analysis of customer needs and preferences. By dominating a beachhead market, you can establish yourself as a credible player in your industry and use that reputation to grow and expand into other areas.
Adapt your Ideal Customer for your startup
Whether you are bootstrapping, raising Seed or Series A, defining your ICP is a crucial step in building your successful B2B tech startup. By identifying your target audience, potential market and decision-maker persona, you can focus your sales efforts on the companies – beachhead market – most likely to buy from you.
But like Play-Doh, your ICP will change as your business grows and market conditions develop. In constant interaction with the market, you will redesign your product to tackle new market opportunities and new persona along with revised budget requirements.
You want to dig deeper into this topic? Check this other inspiring articles & books:
Steve Glaveski Top 10 Company Pivots for more great examples pivots!
Myk Pono, Ideal Customer Profile (ICP): How To Create A Comprehensive Customer Profile
Mike Northfield, How to define your B2B ideal customer profile (ICP) [template]
Steli Efti, Customer intimacy: How an ICP unlocks insights that drive revenue
Where to play Marc Gruber and Sharon Tal
The Lean Startup, Eric Ries
The Customer-Funded Business, John Mullins
The Art of the Start 2.0, Guy Kawasaki
Tell us, what is your Ideal Customer challenge? Let’s get in touch and discuss !