The following is a guest post by Andrew Oddo, Director of Growth at Bowery Captial.
As a founder, forging your first ideal customer profile (ICP) and buyer persona can be a daunting, yet highly valuable exercise to identify who you should be selling to in the long run. It’s also a fun project for your company, as you can get many members of your early team involved: product, sales, marketing, investors, advisors, friends, your Mom, invite them all! Most importantly though, when figuring out what your buyer looks like, you should be experimenting with talking to the people who are facing the problem you’re trying to solve.
That is where many early entrepreneurs struggle in this exercise. They spend far too much time speaking with their inner circle, asking the wrong questions, and researching on their own about what their buyers might look like. What matters most is branching out beyond your comfort zone, sometimes through cold outreach, to potential buyers in your space to discover their characteristics first hand. Don’t take the path of least resistance on this front.
What information do you need to gather in this early exercise to properly build your first ideal customer profile and buyer persona template? The following template will help guide you on what to have a good understanding of before reaching out en masse to companies and buyers of your product.
Ideal Customer Profile (ICP)
What is an ideal customer profile?: An outline of the ideal company who would purchase your product.
1. Industry (aka vertical). Does your solution sell better into a certain vertical, or is it industry agnostic (horizontal)? Start by researching and talking to people in 1 or 2 industries at a time to test reception here.
2. Revenue (and other financials). Despite what you might think, higher revenue companies aren’t always the most likely to buy your product. Some products are best for orgs with $5MM that need to get to $50MM. Some solutions are cost-prohibitive to companies that make under $100MM. Properly identifying which financial characteristics boost your customer’s willingness to buy your offering will make your life (and negotiations) a lot easier.
3. Size. I’m sure you’ve heard the complicated terms. Are you selling to SMB, mid-market, enterprise? The reason sophisticated sales orgs specialize their reps around size (usually the number of employees, but sometimes the number of locations, etc.) is because receptivity changes, and so does the pitch, for each of these types of companies. You also may find that SMBs are most receptive to your pitch, but enterprise customers provide a bigger total addressable market for your product. Decisions, decisions!
4. Location. Are certain geographies more open to using your product than others? Example: This is uncommon, but I work with a company who specifically wants to sell to companies outside of the US with poorer tech infrastructure because these companies are willing to spend more money for this solution which many companies in the US already have.
5. Company Activity & Buying Signals. Some examples are M&A activity, public signs that the company is growing, a new key hire, opening a new office, bad/good financial reporting, and more. A real-world, classic example: After a tech company announces a funding round, do you know how many real estate brokers in NYC hit them up immediately to see if they need new office space? Office managers at these companies become so overwhelmed because sellers know they’re about to grow, and this is a strong buying signal. With that in mind though, think of company activity that’s harder to get, but still a strong signal for your product. I’ve personally been experimenting with different social listening tools on this front to dig deeper for Bowery’s companies.
What is a buyer persona?: An outline of the ideal buyer, within the ideal customer profile, who would use and/or purchase your product.
1. Title. Understanding “organizational structure” of your ideal customer profile is important, and this understanding is acquired over time. To start, figure out which titles within your target companies will be most receptive to your cold outbound, which titles would use your solution, who’s responsible for approving it, or even who would stand to block you from introducing your product further.
2. Role and Responsibility. This is answering the classic Office Space question, “What would ya say ya do here?”, usually acquired by way of looking at the LinkedIn profiles of the titles above, and this will change what they care about within your solution.
3. End User/Decision Maker. Identify if this type of buyer persona is an end user, a decision maker, or both. This will heavily affect your interactions with them. End users care deeply about how your products work, and also need to be armed sometimes to pitch on your behalf to decision makers. Decision makers simply do not care about all the bells and whistles but do need a clear outline of ROI, cost, and impact to the organization. Treat them as such, and when they’re bifurcated (usually the higher the cost of your product or more complex the org is, the more drastic this is), consider using an executive summary to support your end users and internal champions in pitching to their decision makers.
4. Feature Focus. What is this specific person’s main use-case for your product? What value props matter to them most? With that in mind, what features do you need to make sure you focus on for them? You should never show 100% of your product in a demo (buyers simply can’t absorb it all), so this is important!
5. Individual Activity & Buying Signals. Similar to company activity in your ideal customer profile, these are the signals this individual shows that signify they have a need. Examples: issuing an RFP (easy one), posting a question on LinkedIn about the best account-based marketing software to use (easy one), looking to get a raise internally by taking on a sales ops initiative for their team to find a new CRM (hard one). Compelling signals come in many shapes and sizes, but I’ve found it’s best to put your psychologist hat on and think about the following: what helps this type of individual get a raise, a positive performance review, kudos internally, or to hit their goals? They’ll work harder to sell on your behalf internally if your solution is aligned with those intrinsic needs they have, which they may be signaling, or you may need to dig out of them.
In conclusion, don’t start your marathon as a founder by sprinting in the wrong direction. With the exercises we just outlined in mind, you now have a huge part of the equation solved: Outlining who you should be talking to before you spend hours, days, weeks, or more with them. One thing we didn’t go over here is great questions to ask to get this info, mostly because there’s already a lot out there on “discovery questions”. What we talked about here are the answers you need to those questions, and don’t stop digging until you get them. Be fearless in your pursuit of knowledge here, iterate repeatedly on who you’re reaching out to, fill this in again, and treat it as your first sales goal. It’ll make all the difference in the long run.
If you liked “A Founder’s Guide: Forging Your First Ideal Customer Profile & Buyer Persona” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog.