After starting with "why", the Golden Circle expands to "what" (the product or service you'll sell) and then "how" you'll actually sell, acquire customers, and make money.
While all these areas are super important, I think one component the Golden Circle lacks is the "who?" Who are you going to sell your product or service to? Who will be your long-term customers?
At my startup, Terminus, we recognize how important the "who" component is to our company's success. We even folded "who" into our mission statement.
"Terminus is on a mission to build a best-in-class account-based marketing (ABM) platform and community that makes B2B marketers heroes in their organizations."
See how we combined the "why" with the "who"? Having this clearly defined mission statement has been essential for our growth as an early-stage B2B technology company.
By putting our customers first, and including them as part of our mission, we've been able to scale rapidly since launching our product in 2015.
But this has not been easy. Along the way, we've encountered one major problem that every startup deals with: churn.
Churn, or losing your customers, can be the downfall of any startup. Your company can lose millions of dollars by failing at customer retention.
On the flip side, if you can work backward on the Golden Circle philosophy--thinking about "how" you'll keep your customers happy, "what" you'll provide them, and always remembering "why" you're in business--then your company's churn should diminish as well.
At Terminus, one of our top three priorities this year was decreasing customer churn. One way to prevent churn is to know who your best-fit customers are, and that's where an ideal customer profile comes into play.
So what exactly is an ideal customer profile? You may have heard the acronym ICP before. Essentially, it's the wish list of traits in a company you want to acquire as a customer.
Think about it this way: most sales processes start with a single point of contact. This person is potentially a good fit for your business, and you determine whether they're a good fit using certain criteria, right? That list of criteria is what will help you build an ideal customer profile.
Finding your ideal customers isn't like trying to find a needle in a haystack. There are thousands of different B2B marketing technology (#MarTech) solutions out there to identify which companies match your ICP.
But remember, software is nothing without a strategy. If you're leading a startup, it's so important to sit down with your core team--marketing, sales, customer success, your executives, etc.--to write out your ideal customer profile. My team at Terminus has gone through this exercise on a whiteboard many times to refine our ICP.
Starting our company and having a well-defined ideal customer profile helped us scale rapidly. We hit that magic number of our first 100 customers within nine months of launching our product because we had a clear ICP. Knowing who you should be selling to is essential to a startup's success.
Here are four criteria for creating your ideal customer profile:
Identifying the right industry (or multiple verticals) is different for any startup. Personally, I think an entrepreneur should focus on one industry first, finding out if you're in the right market, then pivoting if needed.
2. Company size
Startups going after enterprise accounts (more than 1,000 employees) may have a harder time gaining traction due to long, complex sales cycles. Yes, the deal sizes may be larger, but most startups want to grow quickly, right? An increasing number of startups today see success by targeting small to mid-size businesses (SMBs) as their ideal customers.
Narrowing your ICP means defining which departments in those companies you are going after. For example, we focused on selling to marketing to departments at B2B technology companies. Being marketers ourselves, we understand how marketers at other companies can use our product, and now that we've grown, we're expanding our ICP to also include the sales department.
4. Job titles
We have identified several different job titles of the people who make up the buying committee at our customers' companies. Instead of trying to sell directly to a busy CEO, we consider various roles and responsibilities within the marketing function. Remember that you are not selling to an individual; you are selling to a group of people with different priorities who each have a say in the purchase decision.
I've been working in B2B marketing for years, and this "who" idea is what helped us jump-start a revolution for account-based marketing. I have seen firsthand how a well-defined ideal customer profile can help companies grow by acquiring and retaining truly ideal customers.