Ideal Customer Profile (ICP)
Components of an ideal customer profile (aka Ideal Account Profile – IAP):
- Company size (# employees is more available than revenue)
- Geography
- Industry
- Other
Anything criteria which (a) correlates strongly with win rate and (b) is readily available as a data source (ex: technographics; # people in a given job function; etc.). I recommend excluding information that can only be gathered through discovery.
One may also wish to articulate an ‘anti-ICP’ – the types of companies know to have poor LTV:CAC.
Buyer Personas
Components of a buyer profile:
- Job title (level & function)
- Key responsibilities, objectives, and/or priorities
- Messaging
Addressable Market (TAM/SAM/SOM)
- TAM (total addressable market): TAM is the total market demand for a product or service, regardless of who the provider is.
- Example 1: The total global market for sunglasses. Note that this is not the global population since many people may not want or need sunglasses.
- Example 2: The total global market for HR Information Systems (HRIS) software.
- SAM (serviceable addressable market): SAM is the segment of the TAM that a company can realistically reach and serve. It is typically defined by factors such as geographical location, customer demographics, and product or service capabilities.
- Example 1: Non-prescription sunglasses sold in the United States. One might further adjust if the vendor’s current line of sunglasses have design features that are purpose built such as for fishing, skiing, etc. or for a particular gender.
- Example 2: HRIS sold in the United States to businesses with fewer than 500 employees.
- SOM (serviceable obtainable market or share of market): SOM is the portion of the SAM that a company can realistically capture in the short to medium term. It is typically defined by factors such as the company’s competitive landscape, marketing and sales resources, and financial resources. Pricing strategy affects SOM especially due the price-value positioning relative to competitors.
- Example 1: Adjust the SAM based on your production capacity, marketing budget, and competition. As such, you might expect to capture 4% of the SAM in year x.
- Example 2: Adjust the SAM based on your ability to create and capture demand. This is a function of your sales & marketing budget / effectiveness, competitive positioning, etc. As such, you might expect to capture 4% of the SAM in year x.
Segmentation
