Guessing your ideal customer costs you profits
In business, understanding exactly who your customer is makes all the difference between sustained growth and wasted effort. But the truth is, many companies fall into the trap of guessing.
They throw together an ideal customer profile based on website analytics, buyer personas, or even A/B testing. While these tools do have their value, using them alone means you’re shooting in the dark.
Relying on guessing leaves profitability out of the equation. And if profitability isn’t at the core, the whole profile risks becoming irrelevant.
An ICP must focus on the segment that truly drives growth. Otherwise, companies drain their resources targeting people who simply don’t contribute to the bottom line. You end up building a customer base that’s broad but shallow—sure, it feels busy, but it’s a lot of work for little return.
Key takeaway: Targeting the wrong customers is like building a house on sand: it looks good until it doesn’t hold up.
Stop guessing and start targeting the right customers
Most companies go after potential customers with good intentions but overlook the deeper analysis that finds true value. Common tactics like A/B testing and buyer personas offer hints, but they’re far from the full picture. They’re easy to rely on but lack the real profitability focus.
When you base your strategy on incomplete data, resources get wasted on segments that aren’t contributing in a meaningful way.
It’s like throwing spaghetti at the wall and hoping something sticks. Real growth requires honing in on that profitable customer base from the start, and not guessing your way through.
Profitability is your compass—don’t ignore it
This is where the classic Pareto principle kicks in: roughly 20% of customers drive 80% of profits. Ignoring profitability in ICP development means missing out on identifying these high-impact segments, and that leads to wasteful marketing, strained resources, and a lot of missed potential.
Focusing on the profitability of each customer type helps companies better align resources and target the customers that make a real difference.
Match your approach to each type of customer for better results
Each customer segment has unique needs and expectations, and a one-size-fits-all strategy doesn’t work. Early adopters, widespread adopters, and laggards are distinct groups. To maximize engagement, businesses have to adjust their approach for each one.
One size doesn’t fit all—customize for each customer type
Understanding the differences in customer attitudes and behaviors is a must. Each group sees your product through a different lens, and tailoring your approach makes sure you’re speaking to them in a way that resonates.
1. Understand early adopters who are eager to try new solutions
Early adopters are like gold for businesses breaking into a market. They’re vocal, eager to share their experiences, and ready to give feedback. But they’re not in it for a flawless product—they’re willing to endure a few bumps as long as your solution meets their core needs. Their loyalty can help boost credibility and create a strong foundation in the market.
2. Learn what makes widespread adopters tick
These customers are cautious; they wait to see if your product delivers before they commit. Reliability is their top priority—they need to see your product works consistently before they dive in.
If your solution falters, they’ll walk away quietly, and they won’t bother explaining why. They’re very important for long-term growth, so reliability is key.
3. Get to know laggards and their reluctance to change
Laggards only embrace change when they have no other choice, typically because the industry has moved forward without them. They’re a challenging but important segment, and they require a compelling reason to make a switch.
Targeting laggards may take time, but once they adopt your solution, they’re likely to stick around since it’s often the last shift they’re making.
Focus on profitability to develop a winning customer profile
To develop a sustainable ICP, companies need to center their strategies around profitability. Post-revenue, the focus shifts from customer discovery to customer profitability, and that means zeroing in on the customers who matter most.
Use profit metrics to find your true core customers
Metrics like lifetime value (LTV), customer acquisition cost (CAC), and repeat purchase rates should shape the ICP, remembering that 20% of customers are responsible for 80% of revenue. Using these indicators, businesses can hone in on their most valuable customers and allocate resources more effectively.
Tools you need to measure profitability accurately
There are specific tools designed to shed light on profitability, helping companies see exactly where their revenue is coming from and enabling them to refine their targeting strategies based on real numbers, not assumptions.
Activity-based costing is a powerful way to measure customer profitability.
It’s a managerial accounting approach that provides granular insight into the costs tied to each customer. It helps businesses understand the profitability of each segment, enabling a shift toward the most profitable customer groups for a stronger, more scalable model.
Traditional customer definitions don’t work anymore
The days of assuming that the person saying “yes” to a product is the same person using or paying for it are over. Modern business requires us to think of the “customer” as a system of roles rather than one individual. Without this understanding, marketing teams end up misaligned and chasing the wrong leads.
Think beyond “customer” and embrace the ecosystem
When we redefine the customer as an ecosystem, we clarify the complexity of modern buying decisions. This acknowledges that the person making the purchasing decision, the one paying, and the end user may all be different.
Recognizing these roles helps companies align their messaging and streamline their strategy.
Identify each role in your customer ecosystem for precision
Each role within the customer ecosystem has distinct motivations, and understanding these differences refines the ICP, making every interaction more precise and effective:
- Deciders drive choices, target them first: Deciders hold the power to hire or buy. Targeting deciders with tailored messaging makes it easier to get a foot in the door.
- Know your payers to keep the cash flowing: Payers may not use the product, but they’re the ones signing off on budget allocations. Understanding their needs smoothens the sales process, often helping to fast-track decisions.
- Connect with users to boost engagement and feedback: Users might not have the final say or pay the bill, but they provide critical insights and are often the strongest advocates for your product. They’re the ones who will talk about it, provide feedback, and build credibility.
Master the fundamentals to hit the bullseye with your targeting
Getting back to basics is underrated. You need to know who’s behind each decision and targeting precisely for efficient and impactful sales.
What a legendary coach taught us about targeting basics
Coach John Wooden is known for making players master the basics, right down to putting on socks properly to avoid blisters.
In business, understanding and zeroing in on the true “decider” is just as critical to reaching that final goal. When your marketing gets this right, it’s like putting the ball in the hands of your best player—closing the sale becomes easier.
Finding your true target transforms marketing results
Knowing your true customer clears up the confusion. When the decider is identified and understood, alignment across the team falls into place, letting each interaction be more impactful and driving better sales success. In short, finding the right target simplifies the entire game plan.
Final thoughts
Are you focusing on the customers who truly drive your growth, or are you spreading your efforts thin, chasing the wrong leads? It’s not enough to target broadly and hope something sticks. The future belongs to businesses that know precisely who fuels their success.
Look at your ideal customer profile and ask—are you zeroed in on the deciders, the ones ready to propel your brand forward? Because in a competitive market, clarity on who your core audience are can be the difference between sustainable growth and getting left behind.
