Your Ideal Customer Profile (ICP) is the Key to Your Destiny As a SaaS CEO

One of the biggest problems that a growing SaaS business has is focusing on the wrong customer - what's called your ICP or ideal customer profile. If you get this wrong, or if it's not healthy, then your company is in a nosedive and you don't even realize it.

The key is ranking your "top" customers according to whatever metric you have. If your top customers are churning, you may not understand who your ICP should be.

If more than 1% of your total MRR is churning per month, you have a major issue, period. To me, the baseline is below 1%.

The word ideal is a slippery one and it can mean many things.

To many founders, ideal means the customers with the most "usage".

To other founds, ideal means the customers who "like them" the most. Or who they know the best.

Ultimately, if those things line up with your top MRR customers, then you are probably in good shape. But sometimes usage can be a sign of something else -- misaligned pricing. Meaning, your customers are getting a "bargain" and you don't realize it.

Your best customers need to be one that you can keep raising prices on for some time (whether explicitly or implicitly, via pricing model) because they are getting more and more value from the platform.

Because they don't resent the value you provide. In fact, the right ICP customers think you are a value despite the fact that you keep raising your prices.

SaaS founders should tattoo that last part on their foreheads ;-)