Speaker 1Welcome to the Revenue Builders podcast, hosted by John Kaplan and John McMahon. This podcast is brought to you by Force Management. In today's segment, Dan Sparing, founder and CEO of Align ICP, breaks down a mistake most revenue leaders make when defining their ideal customer profile. The instinct is to chase the highest lifetime value customers, but those segments are often the hardest to win, the slowest to close, and the first to break when the market shifts. This clip focuses on how to balance three critical factors inside your ICP. Dan explains why ignoring any one of these creates a pipeline risk and how leaders can avoid over-rotating into segments that look great on paper, but fail in execution. For leaders responsible for predictable growth, this is about making smarter trade-offs, not just better targeting. Let's dive in.
Speaker 2Where does propensity to buy fit into the ICP?
Speaker 3Okay, so guys, this is such a fascinating topic. So, and this will share some of kind of the learnings on our journey. So, this idea that when we think about who to target, and if we start with this idea of product market fit, and you say, okay, these customers are the highest lifetime value. So, these are the ones to go after. So, when you start with this idea of product market fit, and you say, okay, these customers are the highest lifetime value. So, when you start with this idea of product market fit, and you say, okay, these customers are the highest lifetime value. So, when you start with this idea of product market fit, and you say, okay, these customers are the highest lifetime value. So, when you start to look at the metrics associated with message market fit, meaning like our win rates, ASPs, and velocity, often the ones with the highest lifetime value are the hardest to acquire. So, like this idea of like going to a revenue leader and say, hey, guys, you need to focus on ones where you have the highest product market fit. And then they say, okay, well, you know, what are our win rates, ASPs, and velocity? And you're like, they're 25% smaller deals to start out with. Your win rate is 50% less. And, you know, the velocity is 25% more. Like, that's the recipe to get a sales leader fired. And so, we've had customers who are, you know, they're in a situation where they got to hit their number to earn the right, you know, they have to deliver a strong quarter to earn the right to solve the bigger problem. And we've seen situations where clients, even though they have the data, will still focus on where is it easiest to win. So, an ICPC. So, an ICPC segment, from my perspective, it needs to have three things in common. It needs to be, you know, high LTV, happy customers that drive inbound. It needs to be relatively easy to win in comparison to your other customer segments. And then three, this is a really, really important one, because this trips us up all the time as go-to-market leaders. It needs to be a sizable segment and one that's healthy. And so, a real-life example. There's a client that we have in more of like the HR space, and they sell the B2B SaaS companies. And when Silicon Valley Bank imploded, all of a sudden their pipeline started to dry up, deals weren't closing, and they couldn't figure out why. They did a big, massive data analysis, and what they realized was that one of their segments they sell to in manufacturing was strong, but like 80% of their business was coming from B2B SaaS. And that was a big deal. And that was just an unhealthy market, because the dollars from the VCs were drying up. And so, if you believe that markets are dynamic and constantly changing, I would say that we need to be thinking about measuring, you know, the health of the market that we're selling into, and is it getting worse or better, and what are the implications for our business?
Speaker 2Yeah. I've always thought about that part, Dan, is like the sales complexity part, where I have a small company, I got, you know, 10 salespeople. I don't really want to, even though some of these companies might have been really high when I looked at the ICP, maybe like you said, product market fit, the persona, the use case, and they came up really high. The next thing I would hit it with was propensity to buy. So, let's say I was selling like a cloud database, you know, is the company all in on the cloud? Do they hire the best developers? Do they have many applications? Do they buy the latest development tools? So, I'm looking for those type of buy signals that align with it. So, that's what I call propensity to buy. But the third piece is what you're talking about is sales complexity. So, you know, if I'm a really small company and, you know, the government and insurance and financial services show up at the top, I have to eliminate those people because I'm going to run into a long legal process, long procurement process. It's a multi-stakeholder, multi-level, multi-stakeholder. It's a multi-division, multi-division, you know, location sale. They're very bureaucratic. So, I have to cross those people off my list to go after like when I'm a small company because I don't have the time to put in to go after those types of companies.
Speaker 3Yeah. And so, yeah, there's a couple of things you said there. The first one that comes to mind is this propensity to buy. And so, a lot of the attributes that you talked about, for example, like the size of the technical team. What's really interesting is our ability to get access to that information has never been easier. So, going back to this idea of the types of data that gives us the propensity to buy, it really, it's pretty simple in terms of, for us, and there's a lot of ways companies can do it. And so, a great one is clay.com. And so, you can use clay to effectively scrape any attribute you'd ever want from a website, from job descriptions. And so, they have over 150 data sources that you can get access to through their product. We use them. And so, once you understand or once you have a hypothesis on what those variables are, then you simply run them up against win rates by segment. And then you'll start to see there's a pretty large variation. The other topic that you talked about in terms of, hey, there's some sales cycles that tend to be, you know, they're not going to be as good as they used to be. They're not going to be as good as they used to be. They're not going to be as good as they used to be. They're not going to be as good as they used to be. They're not going to be as good as they used to be. They're not going to be much, much longer. And they're not ones that we necessarily want to play in. I would argue that as part of calculating this idea of velocity, you have great insights into that. And so, I think that there's some pretty good ways to kind of back into that, Jack.
Speaker 4So, I am totally in sync with you guys. I think these are traditional inputs that we are using. And the world that, and you just said it. You just said it, Dan. With the world that we're in, I feel like the ground is changing under our very feet because of the access to data and what you can do with that data. Johnny talks about propensity to buy. I always talk about as well how they buy because if you don't get to that level, I feel like people can use a lot of tools to understand a lot about customers. They can, based upon that, they can come up with value propositions. They can come up with sales process and how we're going to engage. And they don't have an eye or a signal on how the customer is buying, how they're acquiring. And this leads us to all kinds of questions like around subscription, consumption, not just how they acquire products, but actually the things that they do inside their companies, committees that are formed, decision makers. You know, executives of AI now that are CAIOs, that, you know, all of this is changing right under our feet. And it's about, I guess I'd ask you for advice on how do you stay on the pulse? Because if you don't have an outside-in approach, I think you're going to get mauled. If you don't have an outside-in approach versus an inside-out approach, you're going to get mauled. And then also things are different. There's no like, your ICP, I believe, could be changing and your use cases could be changing under your very feet. What advice do you have for listeners that are like, hey, I locked in on my ICP. We started our budgets in October. We've got a great ICP. Based upon that, we're going to put these many in federal. We're going to put these many in manufacturing. And then the world starts to change under our very feet. I think Silicon Valley Bank was an easy one to sniff out. Anybody that was... Connected to that was going to get impacted. But that one was so pervasive. How do we not get caught off guard in the future when stuff is changing under our feet?
Speaker 3Yeah. Yeah. I mean, a lot of really great constructs there, John. And so a couple of different things to say. So one of them, in terms of thinking about the health of a segment, and one of the variables that we grab is the number of employees. So month over month, we see within an account. Is the organization growing or contracting? And then as we group these accounts into segments, then we can look at what the average is. And so that is a really kind of interesting way to start to get ahead of, like, is the segment healthy or is it contracting? Now, your point related to, like, our persona is changing. I've lived that firsthand. And so I used to work at a company called Webtrends, and they were founded as an organization that sold to more IT developers than over time became a marketing buy. and talk about the implications in terms of, you know, how you, how you run your marketing campaigns, how you build your product, how you educate your sellers. And so, you know, for things like that, like, I feel like I tend to be a little bit more old school. And I think a lot about, hey, our sellers, and our like account management teams are very active and, you know, servicing and working with customers. And this is where I think those, those frontline employees have a huge amount of kind of tribal knowledge in terms of what's happening within certain accounts. And it feels like the more that we can mine that data and surface it across the organization, the better off we'll be. But I like the inside out approach, kind of combined ideally from an
Speaker 5outside in approach. Thanks for listening to today's episode. If you enjoy the content, please subscribe, rate and review the show. To help us reach more people. This show is brought to you by Force Management, where we help companies improve sales performance, executing the growth strategy at the point of sale. Check out forcemanagement.com for more information.
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