Ideal Customer Profile

Determining the Ideal Customer Profile (ICP) is a crucial step for all companies as it shapes sales and marketing strategies and aligns resources effectively. Too often I find that Revenue Operations team either have a tangential hand in or no hand at all in shaping the ICP.

RevOps should just keep their heads down and focus on business systems.

Nothing could be farther from the truth.

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Here are handful of ways the Revenue Operations team drives impact with the ICP:

• ABM campaigns

• Win/Loss Reviews

• Segmentation

• Account scoring

• Territory design

• Enablement

• Voice of the Customer process

Now there's a fair criticism that Revenue Operations is Sales Operations 2.0. I personally believe this is a symptom of the fact that Chief Revenue Officers primarily are hired from sales backgrounds.

And guess who has worked with these sales leaders hand-in-hand with for years?

You guessed it. Sales operations.

Over tike I hope we see more leaders from other backgrounds step into the RevOps role. A diversity of backgrounds and experiences make for a rich tapestry to continue shaping the profession.

Sales Operations overly focuses on Win Rate

Businesses strive for growth. The natural tendency is to lean on the sales and marketing engine to acquire new customers and dollars. This myopic view overly concentrates the Go To Market resources to acquisition.

RevOps leans on the major acquisition Key Performance Indicators (KPIs):

• Deal volume

• Win rate

• Sales cycle

• Average sales price

In other words, the components of the deal velocity equation.

But there's a danger in only focusing on these metrics. What happens when you bring in the wrong customers?

Company growth rate is dependent on repeat customers

I'm going to use an analogy for a second. Bear with me.

Now when digging a hole in dry sand you have to maintain a 33 degree angle otherwise the hole in the ground will collapse.

Now when growing top line you have to maintain a certain retention rate and expansion rate otherwise the growth rate will collapse.

Okay I'm not sure that landed but just trying something new out.

Which of the following scenarios would you rather have?

Option 1:

• Customer base of $50M ARR

• 30 sales reps with $1M quotas and 90% average attainment

• $15M expected churn

• $5M expansion

Option 2:

• Customer base of $50M ARR

• 30 sales reps with $1M quotas and 70% average attainment

• $5M expected churn

• $10M expansion

With option 1 the NRR of the business is 80%.

With option 2 the NRR of the business is 110%.

The performance of the sales team with company 1 is fantastic! 90% average attainment for the team. With the team of 30 reps with a $1M bag the total team attainment would be $27M.

The performance of the sales team in company 2 is average at 70%. Total attainment is $21M.

Company 1 books $67M while company 2 books $76M. That's a pretty big difference!

And the sales team of company 2 is average!

I'd rather bet my money on company 2 over company 1. Repeatable remarkable sales performance is difficult to sustain.

From my Sales Operations course

Energy to overcome inertia and reaching the correct velocity

Inertia is the tendency for an object to remain unchanged. At the current trajectory Company 2 will grow so much faster than Company 1. Despite the sales heroics Company 1 will always need stellar sales performance to at least stay at par. One underperforming year is all it'll take for growth to decline.

So what has led to this outcome?

It could be any number of things but I suspect it's because the business rarely says no.

It accepts any deal won as good business.

Even if that type of customer churns more often.

Even if that type of customer is a royal pain to serve.

Even if that type of customer wasn't sure but you won them with a massive discount.

The second company is likely more disciplined. It focused the company resources on customers that made sense. Once they established a foothold with one customer segment they experimented and established themselves all over again with a second segment. Like golf, they won because of very few wasted strokes.

Where can Revenue Operations fit in?

RevOps tends to know what the data says. Bringing Product Marketing, GTM leadership, and enablement together RevOps can play an outsized alignment role to focusing the organization.

Here’s an optimal method to establish an ICP:

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