Episode 312: Find Your Ideal Customer Profile with Eric Holmen

GUEST: Eric Holmen, Former CEO of Splash

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Many startups get their Ideal Customer Profile (ICP) wrong.

The results?

Low-quality leads, decreasing revenues, and unhappy customers.

It's time to fix that.

How can you identify your ICP to achieve higher win rates, lower cost of acquisition, and better customer retention?

To help us with this today, we have Eric Holmen, Former CEO of Splash. Eric brings more than 20 years of experience in sales, marketing, and leadership to his work. He has consistently driven growth, innovation, and customer success in the mobile and digital industries. Throughout his career, Eric has held key leadership roles at companies such as Airship, cielo24, Invoca, and Silverpop, an IBM Company.

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How Can Understanding the Ideal Customer Profile Transform Sales Strategy and Long-Term Success?

There's a common misunderstanding in sales about the Ideal Customer Profile (ICP), with Eric highlighting its critical role in targeting customers who will not only buy initially but continue to support and expand their business with a company over many years. An ICP is far more than just a demographic or industry type; it represents customers who feel the product was tailored to them from the start, which leads to higher win rates and lower acquisition costs for the sales team.

“I think it's one of the most misunderstood parts and misused parts of terminology in sales. A lot of people have a very generic idea of what it is: It's a customer who comes from a certain industry and they will buy your software. In reality, what you're looking for, particularly in businesses that have recurring revenue, is a customer who continues to buy and expand for years and years and years. And that's a different thing than how salespeople or sales management think about an ICP”.

Eric Holmen, Former CEO of Splash

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Narrow Focus on Your ICP

When it comes to product development and sales efforts, especially around the concept of ICP, many startups rush to broaden their market too quickly, often pushed by Venture Capitalists to develop platform technologies that promise wider reach but lack a targeted buyer. Eric advises selecting a few specific customer profiles to focus on and to avoid diluting the product's appeal. Moreover, he stresses the importance of narrowing focus further over time, learning from customer feedback, especially those who don't renew their contracts. Chasing big but not ideal accounts might seem promising due to their size. But ultimately, they distract and drain your resources.

“I think you need to get as specific as you possibly can and get more specific over time”.

Eric Holmen, Former CEO of Splash

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Balancing Your Sales Force

To effectively prepare sales teams to target your ICP, the entire sales pipeline needs to collaborate closely, starting with marketing, which has the role of ensuring they are capturing the right leads with content that speaks directly to the ICP. Young, enthusiastic Sales Development Reps (SDRs), fresh out of college, often find themselves in the deep end, tasked with conducting more business conversations than anyone else in the company.

By simplifying their scripts to focus on a single buyer profile, including their language and specific business needs, they can quickly master the art of value selling. This allows SDRs to sound like industry experts and create a virtuous cycle of efficient and effective qualification, where every team member plays a significant role in sharpening and applying the ICP criteria throughout the sales process.

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Scaling Smart

While many startups begin targeting small to mid-sized businesses, most aspire to attract enterprise clients, which requires major adjustments in product development, processes, and compliance. A common entry point into the enterprise market can be through existing customers who have grown into larger organizations and are familiar with the startup's offerings.

Eric advises these companies to proactively engage with these clients' procurement teams to ensure their product meets the broader and more demanding enterprise requirements, such as obtaining SOC 2 compliance and providing round-the-clock customer support. Also, be selective with your clients, especially if you're a startup with a limited runway. You should focus on hitting your target market precisely before considering expansion. When expanding, a well-defined ICP fosters growth and enables a business to serve multiple markets effectively. 

“I'm a big proponent of understanding what your requirements are before you start making commitments”.

Eric Holmen, Former CEO of Splash

‍Now that you know how to identify your Ideal Customer Profile (ICP), discover the full list of episodes at The B2B Revenue Executive Experience. If you enjoy the show, instructions to rate and review it are found here.