The Real ICP: Why “Ideal” Is Wrong

Every company talks about their ICP, the so-called “Ideal Customer Profile.” You see it in pitch decks, in strategy workshops, written on whiteboards and pinned up on the walls of sales rooms. On the surface, it makes sense. Define who your best-fit customer is, then orient your marketing, sales, and product strategy around them. It feels logical. It feels strategic.

But most ICPs are built the wrong way around - they are inside-out, not outside-in. They often don’t reflect the real customers at all. They reflect what the company wants to believe. Marketing grads are taught to define an ICP as part of their strategy development and GTM planning - they are never taught how to validate the ICP is right.

I have sat in workshops where leadership gets in a room and decides who the “ideal” customer is before there is any evidence to support it. Boxes get filled on persona slides, demographics like industry and headcount and ARR are filled in, job titles are imagined, and then everyone claps themselves on the back for defining the market.

But it is just a story.

A Story About “Everyone”

At one company I worked with, the CEO and CMO were utterly convinced their platform served everyone. Every shopper mattered. Every product category was essential. The story he carried was that the total addressable market was theoretically infinite, and that anyone with a credit card and interest in a category was a potential buyer. We decided to pull the data and see what was really going on, and what we discovered was the real customer was the complete opposite of “everyone.”

Eighty percent of active customers came from just two suburbs, one about an hour and a half from Sydney and the other the same distance from Melbourne. These were not the glossy, aspirational buyers the CEO had in mind. They were large families with an average of five people in the household, often running on a single income and making very practical purchase decisions. Extremely specific and clear as day.

But when we brought the findings back to the CEO, he brushed them off completely. He told us he didn’t want to hear it, because it broke the narrative that the product was for everyone.

We went ahead and acted on it anyway. We adjusted the way we marketed and what we offered so it spoke directly to those consumers. The response was immediate - we saw conversions in that group go from zero to nearly four percent.

How ICP Went Inside-Out

The way most companies approach ICP today comes straight out of traditional marketing playbooks, back when you segmented markets using blunt instruments like demographics and psychographics and we put broad functional-needs markets under the microscope. You might have divided your market by age, income, or job title, or by company size and industry, or even by the values and aspirations you thought people held. Back then, this made sense. If you were buying TV spots or building direct mail lists, you needed these generalizations to decide where to place your bets.

Why Companies Cling to “Ideal”

If this approach is so flawed, why does it still dominate? The answer is a mix of pressure, culture, psychology and comfort.

Investors want certainty, and no founder wants to stand up in front of a room and say, “We’re not totally sure yet who our best-fit customer is.” A neat ICP slide is a signal of confidence, even if it is fiction.

The culture of many long standing organisations also reward guessing. Marketing is often asked to define the market before sales or product have generated enough signal. The result is a paper ICP made in isolation, and rarely is it measured against reality.

And finally, it is comfortable. There is safety in neat personas and tidy slides. It is harder, more uncomfortable, to admit that your strongest traction might be coming from unexpected corners of the market.

Inside-out ICPs survive because they are easy to produce and easy to believe. They also give us a sense of control, so we want to believe it.

The Cost of 'Ideal'

The cost of chasing an imagined “ideal” customer is noise, leading to inaccuracy, and then failure. Marketing budgets get poured into targeting people who never buy. Sales teams waste time chasing accounts that look perfect on paper but churn fast once they land. Product roadmaps get influenced by personas who never actually use the product. And internally teams see the gap between the ICP slide and the reality of who is buying, and they lose trust in the strategy. It turns into theatre, a nice show for investors or leadership, but ultimate is the enemy of meaningful progress.

The Outside-In Shift

The alternative is to flip the process. Instead of deciding who you think your ICP should be, you let the market show you who it already is.

This is what I call the real ICP. It is not about building a customer from imagination. It is about uncovering the one that is already showing up in your data. You ask who onboards the fastest, who sticks around the longest, where repeat expansion and referrals are happening, and what pain points those people consistently share.

The real ICP is not “ideal.” It is observed. It is evidenced. And it is always evolving.

From “Ideal” to “Real”

Making this shift means moving from demographics to behavior. Instead of chasing “CFOs at mid-market firms,” you might find that your stickiest users are operations managers in logistics companies who cannot live without your workflow integration.

It means moving from aspiration to validation. Instead of saying, “We want fintechs,” you admit, “Healthcare IT is where the traction is, so let’s understand why.” And it means moving from static personas that live in slide decks to evolving targets that become more accurate each day. The real ICP is never finished. It changes as new customers discover your product and as your product itself evolves.

You don’t draw the map first and then force reality onto it. You go out, explore the terrain, and update the map as you go.

How to Identify the Real ICP

So how do you actually do this? Here is the method I use.

Start with an ICP baseline analysis. 

You need a place to begin exploration, with a firm plan to thoroughly validate it.

Gather customer data like MRR, LTV, and churn, identify the users who are most engaged, and add any competitor or market context. Then review those findings with sales, marketing, and product to confirm patterns such as industries, company sizes, and roles. From there, draft a baseline ICP document that covers budgets, pain points, and decision-makers, and include a set of quick-win recommendations that can be acted on immediately.

Next, build or refresh personas. 

Run interviews, PMF surveys, collect user feedback, and gather sales insights. Understand if they are truly advocates, or higher value than other cohorts. Then workshop those insights into real human narratives that highlight goals, pain points, and buying triggers, anchored with actual quotes or usage data. Package them as one-pagers or detailed profiles and make sure they are easy for teams to find and use.

Then prioritize your segments. 

Break down revenue and retention by industry, size, and geography, and spot the strongest growth signals. Rank them with leadership, balancing market potential against internal capability. Present the results in a simple segment matrix and recommend specific tactics for the highest-priority areas.

Finally, expand. 

Once you know your baseline, look sideways. Pull external data like market trends, competitor moves, and analyst reports, and identify adjacent industries or use cases. Review them with product, sales, and marketing, and assess feasibility in terms of resources, readiness, and ROI. Deliver a report on the most promising opportunities and outline entry strategies or pilot plans to test them.

Why This Works

This approach works because it forces preparation that is rooted in evidence, not assumptions. It brings in production that involves people closest to customers, so nothing lives in isolation. And it results in delivery that creates assets teams can actually use, from GTM strategy to product roadmaps.

It keeps your teams honest, curious, and it keeps you on the right track.

Because the real ICP is often not what you wish it was. It is who is already buying, who is already adopting, and who is already telling you that they cannot live without your product.

If you'd like to engage Signary to identify your real ICP, contact us here.