Here's why it isn't the best for your company:
- SDRs will miss quotas frequently
- heartburn despite the effort
- it will cost you lost revenue and
- a high opportunity cost.
Your company cannot afford to market to every customer you come across. In the account-based strategy, you target specific accounts and create focused content for contact points within the target account. But how do you select these target accounts?
The ideal customer profile plays an essential role here. Articulating your ICP can help you gain clarity about your customers and solve the problems your sales reps are facing more immersively. Let's talk about how you can go about creating an ideal customer profile to shift the conversation from "pitch your product" to "live your user's life enough to describe the user" for your account-based approach.
Table of Content
- What is an Ideal Customer Profile?
- What is the Difference Between an Ideal Customer Profile and a Buyer Persona?
- Why Do You Need an Ideal Customer Profile?
- How to Identify an Ideal Customer Profile?
- How to Create an Ideal Customer Profile?
- Road Ahead
What is an Ideal Customer Profile?
An ideal customer profile or ICP is a fictional profile. It builds a hypothetical description of the type of company that would realize the most value from your product or solution. It defines your most valuable customers and prospects who are also most likely to buy. The more detailed ICP, the better it is for you to identify ideal accounts to target.
What is the Difference Between an Ideal Customer Profile and a Buyer Persona?
While ideal customer profile and buyer persona are often used synonymously, they are not the same. An ideal customer profile defines the customers who are likely to be most valuable from within the target market. It describes the kind of companies you would want to prioritize from the available market.
On the other hand, a buyer persona defines the buying patterns of prospects within your ideal customer profile. Essentially, the difference between the two is the focus.
ICP drives attention towards the most successful customers. In comparison, buyer personas focus on the buying patterns of the different kinds of customers in the available market. It doesn't talk about which customers are more likely to be successful for you but helps understand your prospects better.
Why Do You Need an Ideal Customer Profile?
The farther away you are from targeting your ideal customers, the lesser are the chances of succeeding. Why is it so? It is because having an ideal customer profile in place has manifold benefits. Some of these include:
Optimize Available Resources
Improve Win Rates
Bring Down Sales Cycle
Create High-value Customers
Most companies have an ICP because of the limited available resources. Finding and attracting new customers involves expending time and effort on research and creating customized resources. Each time you spend time pursuing a prospect that is a poor fit, you lose out on accounts that could have been potentially better fitted. ICPs ensure that the ideal customers that are more likely to become long-term revenue-generating accounts are targeted.
Having an ICP helps you improve your win rates. It does so by helping you identify target customers that are likely to be valuable. Not just this, having an ICP framework makes sure that your ideal customer profile is integrated with your marketing and sales activities. Having a unified positioning and messaging on all these fronts increases your chances of winning high-value customers.
Without an ideal customer profile in place, you would have to go through trial and error to reach your prospective customers. Having an ideal customer profile gives you direction as to who to target and thus makes your sales cycle shorter.
ICP ensures that you target potentially high-value customers. Targeting only the best-fit customers from your ICP framework increases customer satisfaction and encourages renewals. Also, remember that happy customers are the best advocates of your product or service to new potential customers.
How to Identify An Ideal Customer Profile?
An ideal customer profile, as already discussed, is a fictional profile. While it is unique for each organization, specific characteristics are common to most ICPs and can be used to identify an Ideal Customer Profile. These characteristics are instrumental to determining if the target account would be the right fit or not. A few common characteristics of an ideal customer profile are as follows:
It refers to the industry to which a customer belongs. Most businesses have a product or service that aligns with the challenges faced by some sectors. While determining the ideal customer profile, it is essential to restrict the industry from which customers are being targeted. However, this might not be the case in all kinds of businesses.
Size here refers to the size of the business of an ideal customer. The size can be in terms of the revenue generated by the business or the number of employees it staffs. It helps ascertain the kind of organization that would be the right fit for your product or service.
Determining the budget of the ideal customer is essential to identify the target customers. If the target customer's budget doesn't match the cost of the product or service, they might not be the best fit.
Timeline is the expected time the ideal customer expects to see results. It might be so that a target customer expects results in less time than can be achieved by your product or service. In this case, the target customer might not be the right account for you.
Pain points refer to the challenges or needs of your targeted prospects. An ideal customer profile identifies the pain points to help you determine the suitability of your product or service as a solution. If the pain points of the targeted prospects don't align with your ICP, you need to look back at your target market.
Remote selling has simplified expanding the target market reach. However, based on the available resources and capabilities, it is essential to clearly define your ideal customer profile's geographies and targeted marketplace.
How to Create an Ideal Customer Profile?
Having understood what encompasses a typical ideal customer profile, let's learn how you can go about creating your ICP. The creation and implementation of an ideal customer profile framework involve a series of steps which can be detailed as follows:
Step 1: Collect Data
Gathering and analyzing data related to customers is the first step in creating an ideal customer profile. Collecting such data is essential to identify trends and common attributes among the top customers. It determines what has worked for the company by identifying firmographic, behavioral and environmental attributes. The types of data that you can extract are as follows:
- Internal Data:
- Qualitative Data:
- Predictive Data:
Also referred to as quantitative data, it is derived by looking at historical customer data. Data derived from the CRM, sales automation software, and back-end software like ERP is used for analysis.
Qualitative data is derived through interactions with account managers, SDRs, and other internal stakeholders. It aims to get insights into customer data that goes beyond numbers.
Predictive data is an external data type. It is derived by analyzing different types of datasets, usually by a third party.
Step 2: Enlist Top Customers
The next step is to list your most successful customers from the past customer data. You can measure successful customers in terms of the annual contract value, contract longevity, or growth potential. You can also look at the customers who have been most profitable for the business. Customers might also be considered successful if they have advocated for your product or service, indicating happiness and satisfaction.
Step 3: Identify Common Attributes
Having identified your top customers, the next step is comparing their profiles. The profiles are compared to find similarities between the most successful accounts for your company. It's essential to collate this data to determine attributes that correlate to high-value customer accounts. There are usually three types of common characteristics that are looked at in this step include:
- Revenue - annual revenue generated
- Market Share - market share of customers owned by the company
- Number of employees - number of employees staffed by the company
- Growth potential - potential of the company based on projections and past year-on-year growth
- What were the customer's challenges that aligned with your product or service?
- Which marketing touchpoints engaged the customers the most?
- What was common in the customer interaction that encouraged renewal?
Firmographic attributes are the attributes related to the target company. Like demographics are for people, firmographics are for target companies and their nature. Some examples of relevant firmographic attributes include:
Behavioral attributes focus on the observed behavior of the most successful customers identified. It includes asking questions like:
Environmental attributes are related to the external environment in which the most successful customers function.
Analyzing these can help you build an ideal profile of prospective customers. You can further go on to create a good fit and even a bad fit profile. You can use it to prioritize the target customer accounts identified. By comparing the potential customers with the ideal customer profiles, you can prioritize based on relevance. It will help you focus on customers that are most likely to be successful.
Step 4: Segmentation & Integration
Creating your ideal customer profile framework doesn't end at making a profile. Based on the ideal customer profile, the target market is segmented. Each segment created is aligned with a tailor-made go-to-market strategy.
When the ideal customer profile is aligned across all the growth and revenue generation efforts, it streamlines essential activities. It optimizes prospecting, qualifying leads, designing sales pitches, or marketing messages. Integrating the ideal customer framework within the organization ensures synergy in brand positioning and marketing outreach.
Step 5: Measure & Control
Remember, the process of creating an ideal customer profile is perpetual that lasts as long as your company is selling. You must keep revising and reviewing your ideal customer profile to track the changing customer needs. Making corrections in your ideal customer profile is essential to target the right customers. It is also important to re-evaluate your resource allocation strategies periodically to ensure they are being utilized optimally.
Successfully implementing the account-based approach in your organization doesn't end at creating the ideal customer profile. You can break it down into defining the buyer personas and structuring your outreach strategy.
Having a robust ideal customer profile in place can improve the account win rates by nearly 68%. Make sure that you work towards creating your ideal customer profile well in advance to optimize your sales process. Instead of a stagnant ICP, revisit and review it periodically to ensure that it is updated. Happy selling!