The ICP Formula: Precision GTM for Early-Stage Teams

Commercial

Richard Thornton

The third part of the Commercial Excellence Playbook explains how to define, operationalise, and continuously refine your ICP—giving founders a precision tool for targeting high-value customers, avoiding costly drift, and building a repeatable GTM engine.

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The role of the ICP

A common mistake early on is trying to sell to everyone. Different industries. Different company sizes. Different personas. The result: shallow traction, inconsistent feedback, and limited insight into what is actually working.

An Ideal Customer Profile (ICP) defines the type of customer that consistently finds your product valuable. These customers exhibit distinct characteristics that indicate strong potential for engagement, retention, and expansion. It allows you to focus your energy—commercial, product, GTM – on the subset of the market where repeatable revenue can be built.

This chapter provides a structured formula to construct an ICP that is flexible enough to evolve with scale, but focused enough to drive immediate traction by defining your earliest, strongest cluster of customers, enabling faster learning, better positioning and building a repeatable GTM motion.

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Why ICP Matters

The goal of an early GTM motion is density and finding a tight cluster of customers who share the same pain, behave similarly, and convert predictably. These customers:

Experience acute and consequential pain
Experience the pain repeatedly indicating ongoing need.
Are actively looking for a solution or experimenting to solve it
Have internal momentum to adopt
Have allocated a budget and ownership to act

This is your wedge.

At early stages, identifying and refining these traits is not easy. How do you know if a potential customer is experiencing pain because of a problem or lack of solution? How do you know how often a pain point is being felt or whether they are engaged in seeking a solution or have a budget to invest in addressing the issue? Symptoms often look similar–long sales cycles, inconsistent feedback, unexpected objections. But beneath those symptoms are structural truths:

Some prospects experience the pain but lack urgency
Some have urgency but no budget owner
Some have budget but no internal sponsor
Some have a sponsor but no technical readiness

Developing an ICP allows you to identify the intersection where pain + urgency + readiness + ownership converge. While early ICP development may rely on intuition and anecdotal feedback, it should revolve into a technical exercise continuously refined blending customer calls, product data, buyer psychology, technical readiness, and team feedback loops.

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Where

Market Fit, Firmographics, and Focus

Your product does not win everywhere. It wins somewhere specific. Find that edge by starting with four firmographic dimensions,

Geography: Where are you realistically willing to sell, support, and iterate?
Industry vertical: Which markets experience the problem most viscerally?
Company size: SMB vs mid-market vs enterprise have very different buying cycles.
Business model: Are you targeting SaaS, platforms, marketplaces, or government entities?

This is a creative process but not a guessing game. Over time your ICP will be shaped by two things – data and direct experience. Leverage your internal data obsessively. Track where deals convert fastest, where retention is highest, where expansion is stronger, pay attention to ACV, NPS, sales cycle and growth signals.

But do not rely on dashboards alone. The best insight comes from staying close to the front line - hearing from your team, shadowing calls, weekly reviews, speaking to active and churned users. Patterns often emerge in the anecdotes before they appear in the metrics.

Narrow beats broad. A tight, and well-defined segment gives you faster feedback loops, higher win rates, and clearer positioning. Your biggest constraint is time, not market size. Operate at the smallest unit that gives you signal.

Example: Slack began with a single focus – small engineering teams inside high-growth early stage companies. The initial focus unlocked a viral expansion model and built the foundation for a broader GTM motion.

Segmenting by company size can also reveal structural dynamics,

SMBs have simpler organisation charts, shorter cycles, and tightly held budgets, and hence less complex to navigate and understand. But not necessarily any less complex in terms of addressable pain points.

Enterprises are more fragmented with multiple buyers, stakeholders, budgets and the decision-making decentralised across departments, functions, and managers. This means the complexity is high(er), structure challenging and the size of the problems likely greater, yet the cost of complexity is real.

Your job is to find the pocket where need is high, urgency is real, and the sales cycle is winnable.

Further Readings: When it Comes to Market Leadership Be the Gorilla by Andy Rachleff, Why You Should Find Product-Market Fit Before Sniffing Around For Venture Money by Andy Rachleff, A Framework for Defining and Refining Your ICP by a16z

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Who

Buyer Personas and Stakeholder Maps

Companies do not buy. People do. And people have agendas, incentives, and constraints. A strong ICP includes a clear stakeholder map of who you are selling to inside the organisation,

Economic Buyer – Owns the budget (e.g. CFO, CTO)
Champion – Drives adoption internally (e.g. team leads, operators)
User – person living in the product daily (e.g. practitioner)

Define each of these personas by,

Titles, maturity, and seniority
Mandate, and KPIs
Department, team structure and role in buying process
Influence on buying and renewal cycles
Preferred channels (where and how they research e.g. Slack, GitHub, conferences)

Once you have an overview of the organisational structure, have mapped the key stakeholders within it, you can then focus on understanding each persona in relation to their peers, and the overall sales cycle.

In technical companies, the best champions are often the most frustrated users. Find the operator trying to duct-tape together a broken workflow—and turn them into your entry point.

Example: Selling a developer tooling product? Your user may be the Staff Engineer. But your buyer is likely the Head of Platform or CTO. Build for the first, but equip the second with ROI.

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What

Value Proposition and Product Fit

Your product should not solve every problem. It should solve one problem exceptionally well and for one type of customer. Map the value exchange explicitly:

What pain does this customer experience that you are solving?
How do you resolve it better than alternatives?
What is the operational or financial payoff for them?
What happens if they do nothing?

Anchor your proposition in value, not features. If you have multiple products or modules, map each explicitly to its ICP profile(s) by identifying a primary ICP, secondary ICP, which module maps to which, which sequences work first and where expansion happens. Over time you can also build the sophistication of what you are aiming to sell, align it with other components of your proposition e.g. pricing, channels-to-market, and messaging.

Example: Salesforce positioned itself not just as a CRM software but it sold a vision of zero-maintenance, cloud-based sales workflows—faster, cheaper, and scalable.

Do not describe what your product is. Describe what it enables. Clarity beats cleverness.

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Why

Buying Triggers and Conversion Logic

The best GTM teams know why a customer buys a product. Not just the pain, but the trigger – the internal or external catalyst that forces customers into the buying cycle and committed action. There are two classes of triggers:

Internal: new leadership, budget cycle, headcount pressure, security incident
External: regulatory change, funding round, competitive pressure, market volatility

The best GTM teams also equally understand the nuances of the “no” – common objections, reasons for hesitation, friction in onboarding, inertia in incumbent solutions, integration fears, data and privacy blockers and how to counter them.

Example: a company building an Application within cybersecurity may find that deals close fester when dealing with data breaches, regulatory compliance shifts or leadership changes within the IT/security function.

Create a trigger map across your ICP defining triggers, conversion cues, champions, friction points, timeline sensitivity–this becomes a forecasting and qualification multiplier.

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Evolve

Bending not Breaking

Your ICP will change. This is a feature, not a flaw. What matters is how deliberately you evolve it alongside your company maturing, capital raised, and market dynamics shift. Some of the key metrics for ICP evolution,

Pre-seed/seed: validate problem-solution fit with initial adopters, identify early champions, learn integration and security constraints, test pricing elasticity
Series A: optimize for sales repeatability, standardise messaging, industrialise onboarding, strengthen qualification, discover “fast lane” segments
Series B+: expand into adjacent verticals and buyer types, geos, formalise partner motions, strengthen enterprise readiness, broaden global reach

Review your ICP every 6–12 months minimum. Drift is common, especially as commercial teams grow and chase broader logos. Some of the key metrics to guide evolution include,

Retention and expansion rates
Sales cycle length
Churn reasons
NRR by segment
Win/loss by buyer persona

The goal of ICP work is not a static document. It is directional conviction—shaped by data, tempered by feedback, and used daily by product, sales, and marketing.

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