The Ideal Customer Profile (ICP) and Related Metrics

Live from Schenectady, New York, it's SAS Talk with the Metrics Brothers, Groth and CAC.

And I'm Groth, better known as Ray Reich, founder and CEO of Benchmarkit.

And I'm CAC, better known as Dave Kellogg, EIR at Balderton Capital, independent consultant, and the author of Kellogg.

And together we are the Metrics Brothers.

And we go together like GPUs and AI.

What? Where did that pairing come from, Dave?

Well, I watched Jensen Huang's livestream keynote at the NVIDIA GTC conference last week.

Well, are you starting to wear a black leather jacket or be like Jim Cramer and name your dog NVIDIA?

No, no, no, no, no. But, but I am going to stop apologizing for putting too much math, too much math in my presentations.

That guy does a ton of Well, speaking of numbers, which I know we both love, what's on tap for today's SaaS Talk episode?

Today, Ray, we're going to be talking about the ideal customer profile, also known as the ICP, and related metrics to the ICP.

That's a great topic that I can buy into. But before we dive into it, let's hear a word from our sponsor. The Metrics Brothers is proudly sponsored by Benchmarkit, the B2B AI and software industry's largest, broadest, and most contextualized benchmarking index. Dave Kellogg and Ray Groth Wright have put the Metrics Brothers podcast on hiatus for remainder of 2026. All episodes we have ever recorded are still available on your favorite podcasting app. You can reach Dave at Kellogg and Ray on LinkedIn at Ray Reich. Thank you so much for listening to the Metrics Brothers podcast.

Okay, Ray. Well, you know, today let's talk about the ICP. Uh, the core concept of the ICP is ideal customer profile. Uh, simply put, the person we want to sell to, or the person with a problem who we want to sell to. Uh, put differently, it's the customer we'd like to replicate. Um, oftentimes in a startup, you may have 5 or 10 early customers and you want to look at them and for a bunch of different reasons, maybe what vertical or how big you think their TAM is, or maybe it's the right persona. You look at that and say, you know what? Of the 10, these 3 are the ideal. These are the 3 we want to replicate. And usually when you come down to defining an ICP, it comes down to the combination of a company and a role. For example, the director of FP&A at billion-dollar companies. So kind of a company constraint, billion-dollar-plus companies, or the VP of sales at 50 to 250-person companies. Those are typical ICP definitions, right?

Well, you know how we like to reinvent terms here in the B2B tech industry. So what I'm hearing is you are combining firmographic information. Old days, we'd say company size or industry, which is now people are calling firmographic, and then demographic data, which is really the buyer personas that we're looking at. So I understand ICP. It's a combination of firmographic and demographic attributes.

Jesus, Ray. Uh, you're going to win the $2 word contest today, but, but thank you for that demographic and firmographic. And the demographic, let's be clear, demographics are sometimes like, you know, uh, Irish Catholic or, you know, whatever. We're not talking about those kinds of demographics. We're talking about your work profile demographics, uh, like title, for example. So I might even say persona or role. Um, but in any case, to me, it comes down to company, Ray's words firmographic, and role in Ray's words demographic. But let's be clear, the role is typically a title. And the company typically is constrained by size, especially for newer stage companies, and often by industry. For example, at MarkLogic, we sold to the SVP of digital products. That's the title or the role at media companies. And that was the vertical. Sometimes, particularly for platforms, it needs to include a problem, a.k.a. a use case. I'll add the tech speak before Ray does. So I like to say it's a role, an industry, and a problem. And Ray's going to go dress it all up for Sand Hill Road. But the problem might be SVP of digital products at media companies doing custom publications. So that's the problem or the use case, or a director of flight operations at a major airline doing electronic flight bags. So to me, usually with those 3— role, company, industry, and problem— so that's 4— role, company, industry, and problem, uh, you can nail an ICP.

Thank you. You know, me and my research assistant were getting ready for this episode, and by the way, my research assistant, I've named him ChatGPT. But I wondered, like, when do we start using ICP versus the 4 things you just said? And ICP—

Boy, all your tricks now. People are gonna stop listening to the podcast, right? They're just gonna go to ChatGPT.

Uh, then I'll have to move over to Grok, but I know that has a different meaning, but The Predictable Revenue book.

Cybertruck now, right?

Right. By Aaron Ross. That was the first time that I saw it.

Predictable Revenue, great book. Yeah, I agree.

And then companies like HubSpot, Salesforce, Drift, you know, the analysts, Gartner and Forrester, all in that 2011 to 2013 timeframe, they started talking about ICP.

I'll buy that as a historical— look, in marketing, we've always done Like when I went to business school, which was well before, unfortunately, well before 2011, we called it STP, which I remembered. I think it was a motor oil. There was a race car term, STP, and it stood for segment target position. So, you know, for the longest time, marketers have been, you know, what do marketers do? They segment, you know, you know the joke, a flock of geese. I often say an abstraction of developers. Well, it should be a segment of marketers, right? Because, because what do marketers do? They segment. So segmenting, targeting, right? Segmentation means break the market up into segments. Target means pick a couple to aim at. And position means build a message for those target segments. So, you know, everything old is new again. The concepts here is not new. The notion of calling it an ICP looks like it stems back per Ray to 2010, which jives about right to me. Sounds about right to me. Anything else you wanted to add on it, Ray, before I went into the next topic?

No, but I love giving history lessons. STP, it was an oil conditioner manufactured by Union Carbide, and Richard Petty, who's the king of NASCAR, his car was the number one advertiser for STP. Okay, back to 2025.

So I'll leap us forward several decades, right, and just say that Billy Strings, who I think we talked about in one warm-up, does a song called Richard Petty. It's a beautiful 4-part a cappella harmony. And if you're interested in a beautiful song about Richard Petty, go indirectly about Richard Petty. Listen to Billy Strings, Richard Petty. Now, sometimes in an ICP, we talked about what I think the 4 elements are: role, company, industry, and problem. Sometimes you'll find other things like adjacent systems, like, oh, they use NetSuite because we don't want somebody on QuickBooks because we don't have an integrator to QuickBooks, or we don't have integration to Xero. So, It's not going to be in our ICP if we can't connect to it. Geography is usually implicit in ICP, like they should be in North America. If we find somebody who meets the other criteria, but they're in Italy, it's probably not good because we don't have operations there and a local version of the documentation. And then price point is often found in the ICP. Oh, you're looking to solve this problem. How much money do you have to solve it? And if I'm spending, you know, my software costs $50K and you've got $5K, then I'm going to argue you're out of the ICP. So sometimes you'll find those criteria, particularly I would argue adjacent systems. I think they're awesome for targeting, right? Because I know how to go find a list of NetSuite users, right? So I like adjacent systems. But sometimes, Ray, you cross this line from ICP into sales qualification where it's no longer kind of about the market, like, oh, I'm looking for, you know, media companies doing custom publications, and you're looking like— Much closer, like oh I want to find people using NetSuite who can't build financial plans, and that would be you know planful today then host analytics. So at some point though you'll find things like BANT, you know like budget authority need time frame, and I think ICP is over here on the right, then BANT is over on the left, which is some of this is clearly clearly sales qualification criteria. Do you have any budget? Do you have the money to spend it? Do you have a need? Do you have a timeframe, right? That's really about a person and an opportunity. Whereas the ICP is in some sense more of an abstract thing. In general, we're looking for people who look like X, and X might include specific things like they use NetSuite. But in general, it's going to be higher-level things. Thoughts on kind of sales qualification versus ICP criteria?

I do want to talk a little bit about band and scoring of those top-of-funnel leads, but One more highfalutin word. You talked about adjacent systems. A lot of people on Sand Hill today are calling that technographic information. Oh, you only want people using AWS or NetSuite. That's the technographic component of—

I thought you were gonna say tech stack, Ray. Come on. You can say, if you like the -ographic ending, you can do that. But another one might be we're targeting people on this tech stack. And look, it's a super practical targeting criteria. I don't know deep down If it's an ICP or not, I tend not to include them in ICP, but the first thing I go to as a marketer and say, okay, what's our ICP? Now, who are we targeting? And they go, oh, the ICP is VPs of FP&A at $100 billion companies. Got it. Anything else I should know? Yeah, we only connect to NetSuite. Oh, okay. Now I'm gonna change my targeting radically.

But let me answer the question you actually asked me. And that is where kind of who you're targeting blends with sales qualification. I see a lot of companies are measuring fit, ICP fit, using some type of scoring mechanism. You know, do they have the right demographic, firmographic, and technographic information? But then they're looking at some level of engagement. Maybe I had 3 people from an account engage with our content over the last month. And they're saying, well, I'm scoring ICP fit. And I think classically, that's a wrong definition because they're leveraging sales qualification criteria Into scoring ICP fit? Yeah.

What would I say? I think the ICP is really about the 3 things I mentioned, really, ultimately, company, role, industry, maybe use case if it's platform. Everything else to me is either marketing targeting or sales qualification, right? Just say you meet all the ICP criteria and let's just say you meet the targeting criteria, like you're on NetSuite, But say I bump into you and you don't have any money. Well, that's clearly, you know, it's, it's, it's got everything going for it, but it's not a good sales opportunity. So you throw it back to nurture. Now, in terms of this notion you talked about of kind of ICP score, I think it's actually a good idea that sometimes gets abused. Because people get arbitrarily complex around this and they can often use it as an excuse for not focusing. So I prefer to think of an ICP like a dartboard and like right in the middle is that red center. And that has to be a big enough thing that you can hit it, right? And in my example, it's pretty well defined, right? VP of FP&A at $100 million companies who are building budgets. Let's just say that that's the dead center of the ring. And then we could talk about, well, that's the bullseye, but what does somebody look like who's a little bit off the bullseye? Like, okay, the company's $250 million or $260 million. So it's just a nudge outside of the top of our range of $100 to $250. Okay, that might be, if we're good at bigger systems and we can solve most of their problem, then that might be ICP ring 1. Or say they're doing board reporting, not just budget preparation. Well, we can help with that, right? So you can build some notion of ICP rings. And just to be concrete, let me do it again. That center bullseye would be VP of FP&A. I'm going to keep changing the numbers. Apologies, audience, but I'll be consistent from here out. $200 million to $1 billion. So that's our ring 0. I might say ring 1, VP of FP&A, $1 billion plus, if they don't need complex international consolidation, right? Because the reason I drew the boundary at $1 billion is I can handle the consolidation up to that. But once they get bigger, in general, I can't do it. So I need to have a conversation with them. They might be a good prospect. Then ring 2, director or VP of FP&A. So now I'm loosening the title constraint. Okay, VP is better, but you know, I'll talk to a director at a $100 to $200 million company. So I'm back in my size range, but if they have, well, actually, sorry, I'm below my size range. My ideal size range on this example is $200 million to a billion. So now I'm below it. These guys are a little too small, but if they have prior EPM experience, uh, and have the ability to spend $50K, then I'd still go sell to them. Right. So what I'm trying to do is relax some of the criteria on each of those dimensions really, right? The company size, the title, The problem, maybe the industry. I didn't do it here, but you kind of think of imagining, you know, relaxing one level on each of the dimensions and then kind of prioritizing that into ICP rings. And I think ICP rings are super useful.

Yeah, I don't think we covered this, but we're talking about ideal customer profiles. So is ring 0 really the ideal, or do you consider these rings all part of the ideal customer profile?

I think it's a bullseye, Ray, right? The center of the center, right? Because look, I'm being pretty specific here. There's a hundred— there's thousands of other job titles. There's lots of other company size segments. There's lots of other problems, right? So you could think of it as it's all one bullseye or one target with multiple rings. But, but the ideal would be the red dot in the center. Like, that's it. That's the perfect one. But. You don't always find them. So what does it look like if we relax it a little bit? And the issue is you can't relax it too much. If you relax it to accountants at $100 billion companies, then you've overdone it, right? You've got no focus at all. So the intent here is to make a good faith effort to focus marketing and sales on people where we think we can win. And also be commonsensical about where we relax that and why. Like in both cases where I relaxed the constraint, I asked for something in return. I said, okay, you can be over $1 billion, but you can't need to do European subconsolidation because I can't do that. Or I said, okay, you can be under $200 million, but you have to convince me you got $50K to spend on an EPM system because a lot of smaller companies only want to spend $20K and I don't sell my stuff for $20K, right? So you're not really my ideal, but you're still in that, you know, color-graded bullseye.

Okay. So We are the Metrics Brothers. So we've talked about these, what ICP is, the ICP rings.

Yeah.

Is there any metrics involved here with ICP we can talk about?

We get to talk about metrics, Dave. I got it. Um, yeah. So yes, this is all a long tee-up to saying, and by the way, Ray, because we're using Zoom today, not Riverside, I can't see any timer. So you're going to have to remind me, uh, of where we are. And we started with some warmups. So good luck. I hope you started the timer, but In any case, yes, there are metrics in your future. They're right now. The idea is that once you define these ICP rings, and typically I like to go ring 1, ring 2 as the kind of core. Like, I like a 4-ring model and I like the first 2 to really be the focus. Yeah, ring 1 is perfect, but ring 2, and I'm indexing from 1, not 0. I sometimes do the other, uh, European versus US elevators, but those first 2 rings are What I like to really focus on. And then I measure percent of pipeline within ICP Ring 2, right? Hey, if we want to sell within ICP Ring 2, then gosh, we should be finding opportunities within ICP Ring 2, right? Percent of the forecast within Ring 2, percent of new ARR last quarter. What— how much did we sell? If we sold 100 units, how many of it went within Ring 2? You know, if it's only 5%, I'm going to say we're not very focused on our ICP. Even if it's only 20%, I'm going to say we're not very focused on our ICP. I'd like to see half or more.

Right.

Ideally 80%, right, coming in within ring 2. Percent of ARR base with an ICP ring, right? So you can basically look at these rings, make a 3 or 4 ring model, make it really count at ring 2. So you've got 2 rings where you can kind of have an ideal and then relax it a little bit. And then you start to track. First, are we executing within our ICP pipeline forecast, new ARR? AR, install base.

Okay, so I understand those metrics, but at the end of the day, I want to know, is my ring 0 and ring 1, are they really my most efficient types of customers to acquire? What are some of the metrics that you recommend to say, hey, if this metric is better for ring 0 and 1 versus ring 2, we validated it's probably the best ICP?

Yeah, so, um, And the best ICP itself is an interesting construct, right? Because it's like there's the ideal, but there's the best ideal. So I'll skip from that for 1 second. I understand the question. And the question is, let me restate the question differently. Is the ICP actually a better place to sell than outside the ICP? Because it's quite possible it is, right? As I like to say, the ICP starts As an aspiration, right? We hope to be able to sell to people who look like this, and we hope they'll like their, our stuff, and we hope they'll buy it, and we hope they'll renew, and we hope they'll expand, right? So that's the aspiration, usually an educated guess, right? But over time it becomes a regression. Just, we should just do a regression about who actually expands, who actually renews, where are our ASPs, our average sales prices higher, where are our ASCs, our average sales cycles shorter. Right. And we can actually decide if indeed there is no place like home, uh, i.e., ring 0 is the best place for us to sell. Or in fact, holy cow, out at ring 3, we've got a new vertical with a different buyer and they're actually doing better. So maybe we should switch the ICP. So what you want— so the short answer to your question in terms of metrics is, how do I tell if the ICP is better than non-ICP, right? Or put differently, if ring 2 minus is better than ring 2 plus.

Yeah.

I look at win rate within the ICP versus outside. I look at ASP within the ICP. I look at average sales cycle within the ICP. Those would be the top 3. Do I win more? Do I win bigger? Do I win faster? There are certainly other metrics you can talk about.

Yeah, and I'm gonna double-click on a couple of those other metrics that I traditionally use to determine my best ICP. I love the gross revenue repeat.

So you're sticking with us. All right. I gave you a chance to get out of that.

I tried so hard. But I just couldn't stop saying the word best or better. But I also include gross revenue retention and net revenue retention as a metric to say, is this my ring 0, ring 1 ICP? I also use something called pipeline coverage ratio that we've covered on a previous episode. And then there's another one. When I was in a multi-product company, I would look at how many of our products did a new customer buy? I called it the product penetration ratio. So if I had 5 products in my product platform and they would buy 2.1, to me that helped me understand whether they were in the ICP ring 0, ring 1 versus outside of that. So there's the 4 others I've used.

Yeah, correct. And basically, look, let's summarize this. The, the first is, are we executing to our ICP? Which is we should look at how much of our pipe, how much of our forecast, how much of our new ARR is coming within our stated ICP. And most startups frankly do not execute within their ICP. Or they define 8 rings and by ring 6, you're like air-breathing mammals, you know, is the criteria to be included. Earthlings would be ring 8, right? So there, there is no focus. So the first thing is, do we execute against our stated focus? I.e., how much of our— I'm just going to call it Ring 2 ICP— how much of our new metrics are within our Ring 2 ICP? And the second one, which Ray brought up, is, is the ICP indeed better? And just to make it simple, I'm going to say there's ICP and non-ICP, right? Ring 2 less, Ring 2 or more. And, or to be technical, Ring 2 or less, Ring 3 plus. And is life better within Ring 2 than it is outside? And of course you can look at other segments. Well, if you find good signs of life outside in ring 3+, you might not look at all everything that happens out there, but you might say, hey, I noticed a pattern in insurance solving this problem. We've got 5 customers, even though they're not in any ring at all. They're in like ring 5 called other, but somehow we found them and they seem to be doing well. So let's go run some numbers. Let's do some regressions and see, are they performing on the metrics that matter? Not only the acquisition metrics that I talked about, but also the expansion ones that Ray talked about. And if you have a platform strategy, the product penetration metric as well.

Well, unfortunately, we do have to wrap up, but I have a last question and sorry to put you on the spot here in the last minute of this episode. Is there a rule of thumb that you use that X% of our new customers should come from our ring 2 minus ICP?

I'd say more than half, half or more. I mean, it all depends on the startup, but for example, I'm just gonna go back to the financial planning example I've been using. If I were backing a company that sold budgeting systems to SMBs, I would just say it was that horizontal. I would probably say I want 80% plus within SMB budgeting systems. So if it's super focused, just say it's a broader platform that does a lot of different things that I still want some experimentation going on. I might drop it to as low as 40 or 50 and say, okay, we've got 2 primary circles because now you're talking about industries and use cases and we're really not sure, right? So we're selling— just to pick real examples, we're selling new drug approvals to pharma companies, we're selling flight manuals to airlines. They're completely different. We're not sure which one is better. So I'm going to be looking at them as 2 alternative kind of ICP profiles. So, but because I really don't know and it's so early, I'm going to allow stuff to be outside the core ICP because, because I'm not really sure where I want to sell yet. Discovering the ICP is another episode, but largely it's involved throwing spaghetti at a wall and seeing what sticks, right?

Gotcha. Well, unfortunately, we got to wrap this one up with the ideal customer profile. Don't need to worry about which is best or better.

Better ideal. The good, better, and better ICP brought to you by Ray.

Okay, Dave, thank you for this episode.

It was a blast. Take care, everybody. The Metrics Brothers: AI, SaaS, and More is a production of the Metrics Brothers Growth and CAC and a member of the Benchmarket Podcast Network. By accessing this podcast, you acknowledge that the Metrics Brothers make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided or the humor content of the jokes told. Ray? Information, opinions, and recommendations presented are, according to our spouses, probably wrong and provided for information purposes only. This podcast should not be considered professional or for that matter, unprofessional advice. We disclaim any and all liability for any direct, indirect, indirect, misdirect, incidental, special, ordinary, consequential, inconsequential, or other damages arising out of any use of, or God help you, reliance upon the information presented here. Ray Grothreich is based in New York City and available on X @rayreich. Dave Kellogg is based in Silicon Valley and available on X @kakellogg. Kellogg. Schedectity, which is French for unspellable, is not our actual production location. Thanks for listening.