Why gross profit (not revenue) should define your ICP

That “whale” client you brag about? They might actually be killing your business.

On paper, they look huge. They pumped your top line, made a flashy case study, and gave your CEO a win to boast about. But in reality, the deal was a nightmare to deliver. Margins got crushed, the team burned out, and finance quietly ate the loss.

Revenue is the peacock of metrics: flashy, loud, and mostly useless once you look closely.

Credit where it’s due: a lot of the thinking to follow comes straight from Mason Cosby in CXL’s B2B Sales & Marketing Alignment course. His take? If you’re defining your ICP by “biggest deals” or “fastest closes,” you’re optimizing for the wrong thing. 

Your true north star isn’t revenue. It isn’t even lifetime value (LTV). It’s lifetime gross profit (LTGP) to customer acquisition cost (CAC). 

Profit per dollar of acquisition. 

This is the only metric that reveals your real “best customer.”

This article builds on Mason’s framework, showing how to spot bad ICPs, rewire your targeting around profit, and win leadership buy-in without playing the vanity metric game.

Revenue-based ICPs: The myth, the mess, and a better way forward

Most ideal customer profiles (ICPs) are built on lazy shortcuts: company size, industry, revenue potential, or (let’s be honest) whatever the sales leader wants to chase this quarter. 

That’s not strategy. That’s office politics dressed up in a spreadsheet.

Even worse, they celebrate revenue whales that tank the business:

• Big revenue, low profit: The giant customer that eats every resource, pays slowly, churns fast.
• Fast closes, fast churn: The prospect who demanded a two-week contract, then bailed when “results” didn’t show in four weeks.
• Dream logos, nightmare delivery: “Let’s go after Apple.” Great, except your business has zero success in enterprise. 

If your ICP is built on revenue, you’re glorifying the wrong customers

Here is the reality:

• A million in revenue that costs $900,000 to deliver is a bad deal.
• A smaller deal that is easy to deliver and expands over time is better for profit and morale.

Revenue-only targeting bloats costs, burns out delivery teams, and leaves leadership demanding more while getting less. On top of that, your reputation ends up suffering because customers don’t get outsized returns and pipeline generation only gets harder next year. And the year after. 

We need to stop calling this growth. 

If your ICP ignores cost to serve, churn signals, onboarding friction, adoption, and referrals, it’s not an ICP. It’s a wish list.  

You’re chasing logos, rather than building a business.

How to calculate LTGP-to-CAC (and why it’s the only ICP metric leadership will care about)

Most marketers stop at the LTV to CAC formula: lifetime value divided by customer acquisition cost. But that misses the point. 

Revenue doesn’t equal profit. 

The correct metric is lifetime gross profit to CAC.

• Lifetime gross profit (LTGP) = Revenue – cost of goods or services sold over customer lifetime
• CAC = Sales + marketing spend ÷ by customers acquired

That’s it. The math is simple:

• LTGP $500,000 ÷  CAC $50,000 = 10:1 ratio. A superstar customer.
• LTGP $300,000 ÷  CAC $150,000 = 2:1 ratio. Dead weight.

That’s your LTV vs CAC calculation reframed. Same structure, just sharper.

It’s the true way to compare customer acquisition cost vs lifetime value. If you only use revenue, you overstate customer value. Gross profit reveals reality.

Tip: Ask finance for profitability data by customer or segment. If they don’t have it, start tracking it. This shifts the conversation from “more leads” to “more profitable customers.” That is how you win budget and alignment.

Why this shift matters

When you define ICP around gross profit, three things happen instantly:

• Marketing stops chasing vanity leads: You’re no longer reporting “MQL volume.” You’re targeting accounts that produce the fattest margins.
• Finance finally gives a damn about marketing: You’re talking their language—profit, not pipeline fluff.
• Leadership alignment stops being a fight: If you’ve ever struggled to get leadership buy-in, that’s a lever you can pull. Executives don’t care about your attribution model. They care about profit and “more leads vs more ROI” is a conversation you win.

And this isn’t theory. Private equity firms run this playbook every day.

How private equity already runs this play

Look at how PE firms generate returns. They don’t chase TAM slides or pray for logos. They buy companies, analyze the customer base, and rebuild the business around the top 20% of most profitable customers. 

Replace the bottom 80% with more of the top 20%, and you’ve doubled your profitability without adding overhead. That’s exponential value.

Marketers can steal this exact play.

Who’s doing it right (and who’s not)

Bad ICPs sound something like this: “SMB CEOs.” “Marketing VPs.” “Tier A in industry X.” 

Then someone admits how they built it: “Sales said so.” “Gut feel.” “Past customers that looked big.” That’s not strategy—it’s astrology.

Mason Cosby shared how his ABM agency sourced $15 million since 2022 with a 16x ROI. The secret wasn’t chasing “stars”. It was relentlessly going after mid-market SaaS firms where delivery was smooth, margins were high, and customer retention was long.

He dropped a bomb most marketers need to hear:

“ABM is not for moving upmarket. It’s for getting more of your existing best customers.”

How to calculate LTGP ÷ CAC and build a profit-driven ICP (in 6 steps)

Building a profit-driven ICP takes effort, but it’s not rocket science and can be done in about a month.

Step 1: Get the numbers

Pull lifetime revenue per customer and subtract cost to serve. That is LTGP. 

Add up sales and marketing labor plus programs and divide by new customers to get CAC. This is your real LTV CAC calculation.

Only now it reflects profit, not just revenue.

Step 2: Segment and rank 

Group customers by industry, size, product line, or maturity stage. Calculate LTGP to CAC by segment. Then rank them and identify the top 20%.

Step 3: Layer in success indicators and risk factors 

Add what correlates with profit and retention: 

• Onboarding success
• Adoption
• Expansion
• Referrals
• Engagement 

Document red flags like:

• fast closes with unrealistic expectations
• solo marketing teams that churn your champion
• low engagement after purchase
• mergers that destabilize the account. 

These patterns predict churn. Bake them into your ICP as disqualifiers.

Step 4: Tier the target account list

• Tier 1: Perfect ICP and highly engaged. Prioritize for pipeline in 3–6 months.
• Tier 2: 70–80% fit with some engagement. Nurture with content.
• Tier 3: Fit but cold. Light marketing only until ready.

Step 5: Fire the wrong customers

If a customer drags down margins and pulls you off focus, part ways.

“Based on the feedback you’re providing, you’re actually asking us for services we don’t offer. I think it’s fair to say we’re not the best fit for you at this time. I’d love to help you find another agency.”

Replace them with more of the top 20%. Gradually, you’ll start to see tangible results: your culture improves, profit spikes, hiring gets easier, and execution quality rises. 

That is how you build a reputation that makes next year’s pipeline easier.

Step 6: Speak the language leadership buys

Executives don’t wake up caring about account-based marketing. They want sustainable growth, efficiency, profit, talent, culture, and innovation. 

A profit-driven ICP delivers all of it. 

Pitch your programs in that language. Avoid baggage-triggering jargon like “ABM.”

Practical barriers (and fixes)

Of course, this isn’t easy. That’s why most teams don’t do it. Here are some challenges you may face and how to overcome them.

• Data silos: Finance tracks margin, marketing tracks pipeline, sales tracks closes. Nobody connects the dots.

Fix: Run the exercise department by department. Build the full picture over a month, not a day.

• Access problems: Finance data is locked down. Marketers rarely see profit at the customer level.

Fix: Ask the CFO directly: “Who are our highest-profit customers?” That single question reframes your role overnight.

• Overwhelm: It feels massive. ICP workshops collapse under debate.

Fix: Stop debating. Prove it. Filter your CRM: take anyone’s “ideal” ICP definition, add the “is customer” field, and see how many actually exist

The only ICP math that matters

The smartest ICPs aren’t defined by size, they’re defined by staying power. Align around accounts that stick around longer, expand faster, and refer more. Start with the ones already engaging with your brand. Then scale programs that create more of them. 

That’s how you earn leadership trust, budget, and long-term growth.

If this feels hard, good. If this was easy, everyone would do it. 

Remember: LTGP ÷ CAC: This is the only formula worth memorizing. Everything else is marketing theater.

Do the math, build the list, and commit. Faster always wins.

Want to explore further? CXL’s course on B2B Sales & Marketing Alignment is the  playbook for turning theory into revenue-backed practice.