There is one crucial difference between fantastical creatures and the ideal customer.
One of them is already using your software.
The right customer helps your business flourish in the long term.
The wrong customer will bring you cashflow right now, but will harm your business in the long-term. You'll spend your time putting out fires, stopping them from churning and hurt your profit and theirs.
The best businesses know that the way to stand out in even the most saturated markets, is to find the right customer and nail the messaging for them.
Don't believe me? Take ConvertKit's example.
ConvertKit could have been another mediocre version of MailChimp.
They had a similar product. They could have been just another email marketing product trying to make it in a saturated market.
But instead, they hit $1.81M in MRR and acquired 29,883 customers.
By targeting the right audience with the right messaging.
Check out what Nathan Barry, the founder of ConvertKit had to say:
I brought in higher quality customers who were more likely to stay long-term. That also switched our focus to the specific niche of bloggers, rather than just anyone who happened to need email marketing. The new messaging and focus was a game-changer. Now our fans had clear language to describe us: "Email marketing for professional bloggers" and "The power of Infusionsoft, but easier to use than MailChimp.
Nathan Barry knew he needed the 'right' customer for his business to take off.
But who are these right customers for your business? Who are the wrong ones?
And is your Ideal Customer Profile still ideal?
The market is dynamic. Your product is evolving. Customer needs are changing.
This is not a conversation you can have once, and never look back.
Regularly evaluate your best customer profile, adapt to market dynamics, and refine your messaging to stay ahead in the ever-evolving SaaS landscape.
How to build an Ideal customer profile by asking the right questions.
Before you solidify your Ideal Customer Profile (ICP) into your messaging strategy, it's crucial to understand some key stuff about your target audience.
Things you to know about your ICP:
- Why they need your product
- What they use your product to do
- What outcomes they want to achieve
- The industry they're in
- Any other criteria that makes them starkly different from each other, which would impact your messaging (eg. CEOs vs part-timers)
You need to evaluate who your best customer is periodically, and reorient your messaging.
Now, how do we find the ideal customer?
Individual markers like high LTV or quick conversion aren’t enough.
If you have a lower-priced SaaS product, people might subscribe and never ever use your product—making high LTV a bad judgement of customer quality. Your best customers might not even close immediately, but research well and make the decision after considering all options—so quick sells are out.
Even bad reviews could be about anything from customer support to one-time issues, and cannot qualify customers as right or wrong.
Here's how you can really find that elusive ideal customer for your business:
1. What pain does your product solve? Who are the people who feel the pain?
What is at the core of your product—what problem does it really solve?
Say you have a tool that creates custom audiences based on chosen attributes. Your tool ensures that people are sent only emails relevant to their interests/needs/desires.
Now the main problem you solve is boring, irrelevant emails that customers aren't interested in. The solution you provide is engaged customers who love your brand.
Objectively, this product might be useful to a number of people.
E-commerce clothing stores might want to group their customers based on their preferred gender, so they can recommend clothes from categories people are more comfortable buying.
Law firms might classify clients based on the type of cases they're on.
Poetry Magazines that know you go hard for e.e.cummings (who doesn't?) might want to recommend Sylvia Plath to you, but perhaps might want to wait a bit before guiding you towards John Ashbery.
But here's the thing:
📌 You may have created a product to help send segmented emails for different customers, but maybe it is being used to route customers to the right support agent, based on their attributes.
Once you start looking, you'll find the real problem and the customers it solves it for.
Customers could be using your product to do something entirely different from its intended use.
Even if they do use the product for the purpose you intended, they could be calling it something very different. And this is an important step for your messaging.
Your job is to:
- Write down the problem you think your product solves.
- Write down all the people you think will find the product useful.
- Find what your customers really use your product for.
- Test out different use-cases for your product.
Segment your audience based on:
- Why they need your product
- What they use your product to do
- What outcomes they want to achieve
- The industry they're in
- Any other criteria that makes them starkly different from each other, which would impact your messaging (eg. CEOs vs part-timers)
2. Which sections of the target market love your product the most?
Now that you've made these lists, you have a vague idea of who might care.
But within this list, there will be a few hardcore fans, your core ride-or-die customers who find value in your product like no other.
You may have started off creating a product for everyone and anyone, but you will notice that your product serves one particular type of customer better.
Maybe Hyundai sedans are better for urban middle-class dwellers than for country-side dwellers with rough terrains. Maybe a WagonR is the right fit for stressed out Uber drivers who will complain about Mumbai traffic at least 5 times during the journey.
Maybe Maruti Omni vans are best suited for kidnappers.
Who is the kidnapper who needs your product?
The only way to find out is to ask and analyze.
- Who has been consistently using your product for the longest?
- Who leaves positive reviews for your business?
- Who engages actively with your support team?
- Whose suggestions and requests have been helpful in improving your product?
- Which features have you added to your product, and which type of customer do they benefit most?
- What kind of customer would find this set of features and this particular product most useful?
But wait. It isn't over yet.
3. Who is willing to pay to solve the problem?
No matter what SaaS product you have, there are people willing to pay over $100 to solve the problem and there are people willing to pay nothing above $20 to solve the same problem.
A limited-edition Rolex does almost the same job as a mid-range Casio, but they aren't exactly going for the same customers.
These companies have unique brands and their watches are crafted with their audience in mind.
Your job is to figure out which kind of SaaS product you are. Your pricing plays a HUGE role in who your audience is.
It goes both ways:
- Which kind of customer would find your product more useful? A freelancer who can pay $10 or a CEO who can pay you $300?
- Is your product complex enough/simple enough to fit the audience you have selected? Will they happily pay the amount for your product?
- Is your price right for the audience/Is your audience right for the price?
4. What kind of market are you in? What audience are your competitors targeting?
Look, everybody knows the story of Meta (formerly Facebook). There were other social media solutions in the market, but they emerged as a winner using niche marketing + solving a problem for a few customers (i.e. Harvard students).
If you want your product to take off, you might want to look at your competition before you select an audience.
If it's a very saturated marketplace, you might want to niche down and focus on a set a customers with specific needs. If your competitors are casting a wide net into the ocean, you might want to think about selling to people who like river fish.
If it's a new market, you can hook a wider audience without worrying about specifics.
5. What criteria do customers need to fulfill to succeed, using your product?
Before we get to the criteria, let's answer this question—
What does customer success look like?
Look at it this way: if self-help books simply do not work for me, would I keep buying more? No—because it would be a waste of my money.
I’d recognize that I’m not the target audience for The 7 Habits of Highly Effective People—and stick to reading LOTR for the 18th time.
Same with SaaS—if a product did not help me achieve the outcomes I wanted, I would quit it.
And so, if you target people who aren’t going to use your product or find value in it, you’re setting yourself up for churn.
Your best customers are ones that have the potential to grow and succeed using your tool. They're the ones who will use the product and bring great results to their business.
Now what you need to do is find the people who have the ability to succeed (in ideal conditions).
This can be done by asking the following questions:
- What does success mean to your potential customers? Can your product deliver the same success that they have in mind?
- What features does your product need to have to pull your customers to success? Do you have the right fit for the audience you're targeting?
- If your product requires another piece of software to make the equation work, does your potential customer use it? For example, if your product helps set up quick no-code apps for Shopify stores—it's obvious that you will need to target people who already have a Shopify store.
- Does your target audience have the resources to use your product to its full capacity? Do they have the time to invest in your product? Do they have the funds to purchase integrations and your pro plan? Do they have the team that needs to operate your product and drive success?
- Do your potential customers have the ability to use your product to maximize benefits? After training and onboarding, will they be able to use all the features of your product and understand it? If your product helps automate social media posts, do they know how to leverage social media to help their business?
When you've done ALL of the above and then some more, you will be able to find the right customer!
It’s a long process.
All of this involves research that takes time and resources. You’ll have to deal with confirmation biases. You’ll have disagreements on how to read the data you’ve collected.
You’ll have to promise your firstborn to a mysteriously nameless individual.
Jk, there are no shortcuts.
But in the end, you’ll get your great white whale.
Look, we know we've talked about the 'right' customer a fair bit. We've been going on and on about this mythical creature since we started in this industry. Legend has it, this customer loves your product.
