Your ICP is costing you

Three years ago, a SaaS founder I worked with made a $100,000 mistake.

His product was solid.

The marketing team was generating leads. 

The sales team was closing deals.

But six months in, churn was sky-high, and the cost to acquire new customers was eating up all the revenue.

What went wrong?

He was selling to the wrong customers.

The problem wasn’t the marketing. It wasn’t the product. 

They never defined their Ideal Customer Profile (ICP) correctly.

I see this happen all the time.

Founders assume that more customers = more growth. 

But if those customers don’t stick around, don’t use the product, or don’t see value, then you’re just burning money.

Selling to the Wrong Customers Kills Growth

Here’s how to avoid this mistake and get your ICP right.

Lesson 1: Your Best Customers Leave Clues

The fastest way to find your ICP? Look at your best customers—the ones who:

✅ Stay with you the longest
✅ Get the most value from your product
✅ Refer others to your business

What do they have in common? Same industry? Similar pain points? Shared job titles?

Go through your customer data and find patterns. Those patterns define your real ICP.

How to Apply This:

• Step 1: Export a list of your top 10 highest-LTV customers. Use CRM data or analytics tools to identify them.

• Step 2: Identify patterns—look at their industry, company size, job roles, and how they use your product.

• Step 3: Interview at least 3 of them to understand why they chose your product, how they use it, and what problems it solves.

• Step 4: Document these insights and refine your ICP to match these ideal customers.

Lesson 2: Stop Selling to Customers Who Will Churn

Selling to the wrong ICP leads to high churn, lower LTV, and wasted CAC—and it happens more than you’d think.

⚠️ Red Flags:

• Customers with small budgets who demand discounts

• Companies that need constant hand-holding but never see value

• High churn within the first 3-6 months

How to Apply This:

• Step 1: Pull a churn report from your CRM. Identify customers who left within the first 6 months.

• Step 2: Find patterns—are they from a particular industry, company size, or budget range?

• Step 3: Create an Anti-ICP by listing the characteristics of these churn-heavy customers.

• Step 4: Share this Anti-ICP with your marketing and sales team to filter out poor-fit customers before they enter your pipeline.

Lesson 3: Get Hyper-Specific (Vague ICPs Kill Growth)

Saying “our ICP is B2B companies” is too broad. That’s not an ICP—it’s a category.

A real ICP looks like this:

• Company size: 50-200 employees

• Industry: Fintech & SaaS

• Pain point: Struggling with revenue forecasting

• Decision-maker: Head of RevOps

See the difference?

The more specific you get, the easier it is to find, market, and sell to the right people.

How to Apply This:

• Step 1: Define the 3 key traits your best customers share (e.g., industry, company size, common pain points).

• Step 2: Create a one-page ICP document that includes firmographics, pain points, and buying triggers.

• Step 3: Share this ICP document with marketing and sales so everyone is aligned on who your best customers are.

• Step 4: Use your ICP as a filter—only run ads, outbound campaigns, and content marketing toward this defined group.

Lesson 4: Validate Before You Scale (Avoid Expensive Mistakes)

The biggest mistake?

Guessing your ICP and scaling too soon.

Before you pour money into ads, outbound, or content, test your ICP first.

How to Validate:

• Run small LinkedIn/email campaigns targeting your ICP and track response rates.

• Check if your ICP actively engages with your content and sales calls.

• Interview existing customers to confirm their pain points.

How to Apply This:

• Step 1: Set up a test campaign on LinkedIn or email targeting only your defined ICP.

• Step 2: Track engagement—open rates, response rates, and conversion rates.

• Step 3: If engagement is low, refine your ICP by tweaking your targeting criteria or messaging.

• Step 4: Once validated, increase your budget and scale marketing and sales efforts.

Scaling Right: The Impact of an ICP Reset

The founder I mentioned earlier?

Once he stopped selling to the wrong people and focused on the right ICP, the MQL to SQL conversion rate improved from 4.5% to 18%.

This shift led to a $41.5 million marketing-sourced pipeline in just three months. 

Simple changes, massive results.

By focusing on defining, validating, and targeting the right ICP, you’ll scale faster, more profitably, and with less frustration.

You don’t need more leads. You need the right leads.

Until next time,

Karthick Raajha.