Strategy

Narrowing Your ICP Is Terrifying in a Downturn. Do It Anyway.

When the pipeline thins, every instinct says widen the net. That instinct is wrong, and following it is how efficient companies become inefficient ones.

Hilal

Hilal

Partner in Growth

20 March 2023
9 min read

When the pipeline thins, the instinct is to widen. Open up an adjacent segment, take the deals you'd normally decline, say yes to the enterprise prospect whose requirements will consume your roadmap. Every instinct points that way and every instinct is wrong. Widening is how a company with an efficiency problem acquires a much larger efficiency problem.

Why widening feels right and isn't

The logic seems unanswerable: fewer buyers in the market, so address more of them. What it ignores is that your win rate is not constant across segments. Deals outside your ICP take longer, need more customisation, close less often and churn faster. So you spend a scarce sales team's time on a lower-probability, lower-value pipeline at precisely the moment you can least afford it. The revenue arrives later, smaller, and with a support burden attached.

What narrowing actually buys you

Everything gets cheaper at once. Your messaging gets sharper because it addresses one person. Your content gets deeper because it isn't hedging across four audiences. Your sales team gets faster because they've had the conversation before. Your product roadmap stops being pulled in incompatible directions. None of these are marketing wins in isolation; together they change your cost of acquisition structurally rather than cosmetically.

  • Sales cycles shorten because objections become predictable
  • Content deepens because it addresses one buyer, not four
  • Win rates rise, which improves forecast accuracy โ€” valuable when cash is tight
  • Support and success costs fall because customers look like each other

How to find the segment worth keeping

Not by revenue. Pull your customer list and rank by a combination of win rate, sales cycle length, expansion and retention. The best segment is rarely the biggest by revenue โ€” it's usually the one nobody's noticed because it's unglamorous. In one engagement, the segment with the strongest economics was the one the sales team found least interesting: small, unfashionable, but closing in weeks and never churning. That's the segment to concentrate on when money is tight.

Saying no without losing your nerve

You will get an inbound enquiry from a large company outside your ICP in the first fortnight. It will be tempting. The discipline is to have decided in advance what you'll do โ€” either decline cleanly, or take it with explicit, written acknowledgement that it's an exception and no roadmap commitments follow. What destroys companies isn't taking one out-of-ICP deal; it's taking five and quietly becoming a different business without ever deciding to.

In a good market, a broad ICP is inefficient. In a bad one, it's how you run out of money while appearing busy.

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