ICP Development - Why companies can get it wrong.

But there are steps to make it right.

For most companies, crafting an accurate Ideal Customer Profile (ICP) is essential for growth. Yet many companies fall short. Whether misalignment across teams, relying on gut instincts and not data, or not having enough time to get the right feedback from the right customers - cracking it on the first try can rarely happen.

Here’s why—and how to fix it.

Common Pitfalls in ICP Development (from

1. Data Overload, No Action: Companies today collect vast amounts of data but often fail to turn insights into actionable ICP criteria. This leads to broad targeting and wasted resources on poor-fit prospects. They become trapped in analysis loops, forever refining their understanding without actually operationalizing it.

2. Confusing Users with Buyers: Many focus on end-users (e.g., accounts payable staff) instead of decision-makers (e.g., CFOs), resulting in misaligned messaging that doesn’t convert. Marketing teams can focus their ICP development exclusively on user characteristics without addressing the needs, motivations, and pain points of the actual decision-makers.
   This misalignment can lead to messaging that resonates with users but fails to convince those holding the budget.

3. The Homogeneity Trap: Companies often model their ICP after early customers, creating a narrow profile that stifles growth and ignores adjacent opportunities. This happens often and can be a very costly mistake. A company I recently worked with had initial success in the Real Estate vertical. Early marketing and sales efforts were expended against generating more clients in the same industry to limited success. A more effective strategy was to identify the fundamental pain points and needs their platform addresses, then look for those characteristics across multiple industries. Instead of defining their ICP primarily by industry.

4. Ignoring Red Flags: Most ICPs focus on ideal traits but overlook disqualifiers. Effective ICP development isn't just about identifying ideal characteristics—it's equally about recognizing negative indicators that signal poor-fit prospects. Many companies focus exclusively on positive traits while ignoring warning signs.

   This can lead to wasted resources pursuing prospects that will never convert or, worse, quickly churn. The most sophisticated ICPs include both "green flags" and "red flags" that help teams qualify out unlikely prospects early.

5. Static Thinking: The most critical error in ICP development is treating it as a static exercise rather than a dynamic framework. In rapidly evolving industries like Fintech, both financial services and technology transform continuously, along with customer needs and expectations.

   Those that define an ICP once and consider it complete soon discover they're targeting outdated customer profiles while missing emerging opportunities. Market leaders can implement structured quarterly reviews to reassess and refine their ICP, ensuring their targeting remains aligned with current market conditions and business objectives.

How to Build a Better ICP

• Turn Data into Action: Translate insights into clear qualifying criteria for marketing and sales.

• Map Decision Journeys: Understand all stakeholders, not just end-users.

• Expand Thoughtfully: Test adjacent markets to avoid overly narrow profiles.

• Document Disqualifiers: Include red flags alongside ideal traits.

• Factor in Regulations: Build compliance into your ICP framework.

• Iterate Regularly: Review and refine your ICP quarterly to stay aligned with market shifts.

Easier said that done I know, but Fintech companies that treat ICP development as a dynamic, evolving process gain better targeting, faster sales cycles, and stronger customer retention. Getting it right isn’t optional—it’s the foundation for sustainable growth.