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Get from ICP to Buyer persona quickly, otherwise I C pain
What does ICP mean for sales and marketing? What is missing after you create an ICP?.
Defining an early-stage startup's Ideal customer profile (ICP) requires a combination of data-driven insights, market research, the founder's vision, and willingness to iterate as the business scales. It's an ongoing process.
When you start accurately outlining an ICP, it becomes your North Star. However, you need to have conversations next with your buyer persona. It fine-tunes your targeting, amplifies your conversion rates, and most importantly reduces what I call the scatter matter. Scatter Matter is “stuff” you introduce into a resource-constrained startup that makes people do different things which feels good but does not move them in the right direction.
Here are two categories of questions (which 99% of startups have a hard time answering) when they refine their ICP
Where does your Buyer Persona really want to go?
Most buyer interviews focus on what they are doing now and what are they solving now.
This is where you have to ask questions that are a little more on the “strategic” side of things. What your buyer is doing most of the time is to get things done and busy with their heads down solving problems. Depending on the day you catch them for a conversation, they might not have time to talk about the future because they are busy fighting fires.
Target state the buyer wishes to achieve
You want to catch your buyer persona where they are in the “mood” to paint the future and talk about the ultimate goals they want to achieve.
Let’s take an example: Let’s assume your buyer persona is a Chartered Professional Accountant (CPA) who runs a firm of 10 or more accountants underneath her and offers tax services. If you ask her goal it might be “to flatten the peak workloads during tax season”.
What does it take for your Buyer to get there?
If your Buyer has a big pain point that exists right now where you can offer a solution, you are in luck. At this point, you start documenting this (preferably in a Jobs to be done format which I will write about later). This documentation is also important for product marketing ie. explaining what customers do if you did not exist
Cost of doing nothing
If the pain is not big enough, the Cost of doing nothing is usually low. This is especially true for B2B sales in enterprises.
Let’s take an example, let’s say you have a system that produces a company XYZ’s weekly sales reports. This system runs very slowly and takes around 12 hours to produce this report. The company XYZ’s COO has figured out a workaround and has a team of support staff in India working over the weekend to ensure that they trigger a weekend job and get the report ready every Monday morning. Now let’s say you promise to reduce the pain by running this report for the company XYZ in 15 minutes automatically by this new software ABC. Let’s do some quick math.
License cost of software ABC = $50,000 annually
Cost of operating team India = $5000/month = $60,000
Cost of operating team India > License cost of software ABC
BUT, this difference is not big enough for the company XYZ’s COO to consider the new software and moreover, the company XYZ’s COO enjoys having a human to walk her through the report every Monday morning.
Cost of switching from their current way
Let’s assume somehow in the previous example, the cost of running a team was 10 times higher. Then let’s see what the components of switching costs are:
Implementation and integration - Time, labor, and costs involved in installing, configuring, integrating, testing, and rolling out the new software.
Data migration - Effort required to securely and successfully migrate data from old system to the new system.
Training - Resources required to train employees/users on the new software. This includes the development of training materials.
Customizations - Work involved in customizing the new software to match critical workflows or functionalities that existed in the old system.
Productivity loss - Potential dip in productivity as employees learn and get accustomed to new software.
Vendor lock-in - Time and costs associated with extracting data and transitioning away from the incumbent vendor.
Contract termination fees - Any fees or penalties for canceling the contract with the existing vendor.
Legacy system maintenance - Costs of keeping the old system running during the transition period.
License fees - Costs of licenses, subscriptions, and onboarding for new software.
Technical support - Costs of vendor technical support during and after transition.
Upgrade hardware - Potential need for new servers, network infrastructure, and client devices.
Project management - Internal project management costs overseeing the transition.
If I was the buyer, I would be careful before recommending a new software vendor to the other stakeholders (part of the buyers journey)
As a startup, as you put an offer together, you want to show value to your buyer along with reducing risks that she can take forward to other stakeholders who might be involved in the buying decision