Refine your ICP to kick off 2024 (TEMPLATE)
How to uncover high-value prospects + three mistakes to avoid
DEAR STAGE 2: I saw last week’s GTM predictions for 2024 and I noticed a few of them tied back to ICP. I’m the second AE at my company and I don’t think we have a clear profile of who we are going after. Maybe that’s normal and we’re still figuring it out, but wanted to see if you have any thoughts on how I can better spend my time on high-value prospects. ~READY TO SELL
DEAR READY TO SELL: Ideal Customer Profile (ICP) is a hot topic right now. After a slow(er) year for software sales in 2023, many teams are turning a lens inward and refocusing their time and attention on their best customers — learning what makes these customers a great fit, how to replicate that success, and how to proactively go after similar customers.
As an AE, of course you want to operate within your ICP — why waste your time on deals that are less likely to close? Or with customers who are more likely not to activate or churn in the future?
But… where to start?
Set aside 15 minutes and document your current thoughts. You likely already have some early hypotheses on what makes for a long-term healthy customer, but this exercise should help you further refine your ICP. You’ll be able to narrow in on the segment of customers who derive the most value, have the highest propensity to pay and are the easiest to close consistently in the near term.
Then, share it with a few other members of your organization to validate and get additional feedback. Once you have a draft, here’s a bit more food for thought:
Mistake 1: Defining too broad of an ICP
Almost every company I work with starts with too broad of a definition and is too inclusive when defining ICP. One way to combat that is to use a Red/Yellow/Green framework - make a copy of this template!
Green: This is who you want to sell to all day long! You should prioritize your time/effort against these opportunities and build proactive plans for outbound targeting
Yellow: You would sell the deal if they come inbound and would consider running well scoped/time bound experiments to determine if another segment should move to “Green”
Red: Immediately DQ these leads, even if they are coming to you
Mistake 2: Ignoring your defined ICP
In the framework above, “Red” is the hardest bucket to define and follow because it’s tempting to spend time on any company that expresses interest. With such limited resources, it’s critical that you don’t waste time on deals that are unlikely to close.
Set up a few systems/checks in your process:
For every deal in your pipeline — is it in the ICP? If >20% of deals are outside of your ICP, you have a problem and need to review both 1) your deal sources to see where these are coming from (ex: is there a marketing program that’s driving the wrong profile of inbound leads? Or are your BDRs targeting non-ICP accounts?) and 2) your qualification process. You might find that you need to extend/expand your ICP over time, but most likely, you should be pushing harder on your team to spend time on the *right* companies.
For every customer you close - is it in the ICP? If not, why are you closing the deal? Why are you making this exception? And make sure that you segment your Leading Indicators of Retention by ICP v. non-ICP accounts to understand customer health over time
Mistake 3: Not reflecting or experimenting
Long term, the goal should be to spend 80%+ of your time on “Green” accounts and ~20% of time on “Yellow” accounts or experiments.
One way to do this is to set up a campaign-based experiment framework with your BDR or AE team to track relative performance of your potential target segments. These potential target segments could be added to the “Green” portion of your ICP over time if they perform. Example:
Pick 200 companies in a defined segments
Enroll all in a 20-30 day cadence (2-3 contacts per account, multi-channel is critical)
Measure CAC, conversion/DQ rate, ASP, deal cycle, etc. to determine if this new customer segment is worth pouring more energy into
Investing the time to define your ICP today will make sure you have a strong start to 2024.
Until next week!