How to define your ICP in the early days

I often ask founders who they’re targeting. What’s their ICP?

I get a lot of different responses, but they’re all pretty generic and easy to target.

Series A SaaS companies. Startups. SaaS companies with 80 engineers. Product teams at SaaS startups.

And this causes a massive problem in the early days.

A lot of founders view ICPs the same way as you would create a filter in LinkedIn SalesNav.

And the problem is that 90% of the sales gurus out there are teaching them to do this.

Create a target list on SalesNav, then start your outreach.

The problem is that if you go too broad in your targeting, then you lose your relevance. Which usually means you get subpar responses to your outreach.

In this newsletter, we’ll go through how to come up with the right targeting for your ICP.

Table of Contents

• The problem with targeting without positioning

• Understanding your positioning

  • Why positioning matters

  • Components of Minimum Viable Positioning

• So what does an ICP look like?

The problem with targeting without positioning

Let’s dive right into it.

Most founders I meet, when they walk me through how they’re prospecting, they’re going through basic targeting based on fluff they’ve heard online.

They’ll use firmographic data mostly, like location, employee ranges, team size, funding rounds, etc.

The first problem is that it’s really easy to target on this. Which means everybody else is targeting the same way.

The second problem is that there’s very little in this type of targeting that tells you anything about the context the company is operating in. And that’s really where the magic happens.

Understanding your positioning

From a prospecting perspective, you need to cut through the noise. And the quickest way to do that isn’t to be better. It’s to be different.

And this is what positioning will help you with.

Why positioning matters

Positioning is mission critical to the success of an early stage startup. If you get it wrong, you’re invisible. Positioning is the work that’s involved in defining the problems you solve, the capabilities you have, the uniqueness of your features, the outcome they drive, and the people who really really care about it.

One of the unique parts of running sales as a technical founder is you don’t have the support you usually get once there’s a sales and marketing team in place. You probably don’t have a product marketer yet, working on your positioning, messaging, and sales narrative.

You need to create this from the ground up, yourself.

There are selling systems out there designed for sales professionals, but they generally miss this critical component of early-stage founder selling. They typically work with sales leaders who have teams, and assume Marketing is already coming up with positioning. This is a major downside of a lot of sales trainers, coaches, and legacy methodologies.

The flip side is you have amazing resources, consultants, and coaches out there that can genuinely help with positioning and messaging. The problem there is that the resources are focused on the process to come up with positioning and go as far as crafting the sales pitch, but don’t really connect the dots with the rest of the prospecting system.  You still need to figure out how your positioning helps with prospecting approaches, tactics, messaging, etc.

What we’re going to do in the next two sections is go through the core elements of crafting your positioning theory.

Components of Minimum Viable Positioning

Your prospects need to understand your unique point of view on the market. You need to be different from the alternatives. You need to provide more value. Why else would they make the switch, or go with a lesser known product?

And through positioning, you can identify who cares a lot about the problem you’re solving. Which is what ends up defining your ICP.

Let’s go through a simple process for getting to “good enough” positioning and start testing it through your prospecting system:

• Alternatives: If a prospect doesn’t use your tool, what would they use? Often founders will only think about direct competitors. Sometimes they’ll say they don’t have any competitors. But reality is, the prospect is doing something. Are they trying the problems manually? With spreadsheets? Using another tool that isn’t designed to solve the problem? A direct competitor? What are they using?

• Unique Features: How are you different than the alternative? Not better, but different. This is important. Better is subjective. A lot of founders who launched a “better” CRM compete against Salesforce. But Salesforce is better for many companies because of the integration and ecosystem of professionals who know how to use the tool. Better is subjective, so focus on what’s different.

• Why it matters: Dig deep into the problems your unique features solve. The outcomes it generates. What value does it bring?

• Who cares: Finish with who really, REALLY, cares about this differentiated value. What types of companies? What functions or roles? Use firmographics and qualitative aspects here. Identify traits. This will really help isolate your ICP and targets for prospecting.

So what does an ICP look like?

Based on this positioning exercise, you can see how an ICP is different than simply targeting.

It needs to include traits and jobs to be done of companies and job functions that really care about your problem.

For example, if you have a tool for engineering teams, it’s not enough to say “I’m targeting SaaS companies with minimum 50 engineers.”

What are the specific jobs to be done by engineering teams that would have your problems? What are the problems? What are traits of companies where your problem would be more likely to exist?

So you might say instead “I am targeting engineering managers at SaaS companies who have a high amount of dev velocity, with lots of integrations and daily active users, who are at risk of losing a lot if there’s extended downtime.” This is way more precise.

When you have this kind of precision, then your lists isn’t simply SaaS companies with 50+ engineers. It can now become SaaS companies in verticals that have daily active users (like email, collaboration, HR, fintech, etc) with lots of integration points.

When I was at LevelJump, we first targeted SaaS companies, Series A+, with minimum 20 sales reps. But we realized that the biggest problem we helped with was onboarding new sales reps. So our ICP became more about organizations that were hiring or promoting lots of sales people every month. That ended up changing our targeting. We started looking at sales team headcount growth, open jobs, promotions, etc. It wasn’t about if they had 20+ sales people already, it was about if they were going to be hiring 20+ sales people yearly.

So the signals changed. The targeting changed. The messaging changed.

And everything became way more relevant.

It took 4.5 years to get to $220k ARR. It took 18 months to get to $1.7M ARR after we made the change.

So get as precise as you can with your ICP definition. It will help you isolate who really cares about the problem you’re solving.

Let me know what you think of the newsletter! Always want to cover topics that you care about.

For more practical early-stage sales tips, connect with me on LinkedIn.

If you’re looking for more hands-on help implementing your first sales process, reach out for coaching packages.

P.S. I have one seat left open for September 19 start. Ping me if you’re interested.