5. Refining Your ICP for Early Wins and Repeatability
- Krish Subramanian Co-Founder & CEO, Chargebee
It took us close to five years to hit our first million in revenue and a mere nine quarters from that point to get to the next milestone of 10 million.
What changed?
We zeroed in on an ICP.
I’d like to share what arriving at that first, ideal customer required from us and how that hard-won clarity fuelled the high-growth trajectory that soon followed. There’s no perfect path here. It is, in fact, a pretty messy one.
I think that messiness is sort of the point.
Imagine getting upto 100, 500 leads a month. Real people signing up for your product for real use cases. Signs of an inbound engine that works. Right?? I wish that was true.
What actually happens during the early stages of a business is that despite having validated a problem statement, the search for customers who value (and are willing to pay well for) a solution often goes on for a frustratingly long while. There’s just too much noise to deal with.
We had thought that our choice of solving for subscription-based businesses would be a narrow enough filter. We were wrong (and that was a good thing). I remember situations where schools (tuition fees can be paid as subscriptions) were a potential customer type.
So were many other industries.
But that unexpectedly wide net helped us onboard our first 50 customers. And without those customers, we wouldn’t have gone through the process of building, iterating, and spotting important patterns in usage and in markets.
The different price points at which we could sell. The segments that rejected us outright (those rejections are so critical; please get comfortable with them). The segments that stuck around. All those realizations resulted from that non-linear process.
So, before you tread the path of setting up an inside sales org and what not, make sure to live those messy iterations as a founder. That’s indeed the only way to learn. By the time you land your 100th customer, you should know the 20-30 customers who are using your product the best (basically those who just cannot stop giving you feedback).
Obsess over them. Deeply. Talk to them as often as you can. Ask them how much they care about the problem and why, plus, who in their organizations cares the most. Ask them how they discovered you.
Learn where you can find others like them. Figure out whether you can start investing in a repeatable enough channel.
Personas matter. If you’re selling to developers/CTOs, unless your technical brand is at the level of, say, Stripe, it will be hard to get their attention via a typical inbound/outbound engine. You’d have to think very differently about your choices.
As you hone in on these good-fit customers, you’ll also discover what you’re really good at and how those strengths can help you differentiate.
That’ll help you make better bets. We deliberately took a hit of a quarter of a million in revenues, because we introduced a (first-in-the-category) freemium plan that could give us an edge in the coming years.
Even today, with all the verticals and personas that we serve, that same level of clarity is the connective tissue that allows us to bring repeatability and scale across functions. It’s a discipline. And, for us, it has stemmed more from the Product org.
We deliberately hired a Chief Product Officer before a Chief Revenue Officer as we were scaling (we already had an excellent VP of Sales).
A CRO hire at that stage could have pulled us in all sorts of directions (remember that noise from the early days, in a sense it never truly leaves you :)) in their search for where the most immediate pipeline opportunities were.
But because we had hired a CPO first, they prioritized different things for the long run. They dove into the data. They defined patterns across different customer types (‘this is who we’re really selling to, this where we succeed’). They defined labels for core (Scale-up and Grow) segments.
It’s still easy for amazing revenue talent to sell stories that get potential accounts excited, even stories that get internal teams excited about how a segment can bring in thousands of customers.
One tactical way that we’ve approached this is by instituting red-vs-green lanes for such high-tension deals. Red is reserved for only the largest deals in the Grow segment. It’s code for an executive council to step in and approve the deal. Green means everybody’s happy. We’re essentially saying, ‘go sell more of those.’
As I noted above, serving ideal customers is a discipline. We’re never done practicing.