The Ideal Customer Profile (ICP) is used to identify, source, and prioritize your best prospects – but how do you create an accurate ICP in the first place?
First, let’s level-set on why you should go through this exercise in the first place. Two words: finite resources.
It takes time, money, and people to attract, convert, and delight new customers! And as a savvy business professional, you want to ensure that your resources are allocated to those prospects who will deliver the best return. You can’t market to everyone.
Besides ensuring that your existing customers are a long-term fit, the ICP also tells your teams what resources are needed to keep them feeling valued, supported, and part of your community once all of the new customer activities subside. If you know your ICP well, than you’ll be keenly aware of how you can solve their pain points now and in the future.
What is an Ideal Customer Profile?
Your Ideal Customer Profile is defined by company firmographics: the set of qualitative and quantitative characteristics of your best-fit accounts. (The company-level ICP is often confused with the Buyer Persona, which is focused on qualities of the individual buyer.)
Developing an ICP should be viewed as a strategic exercise that must involve sales, marketing, and leadership to develop and agree upon the definition and parameters of the characteristics feeding into that definition.
How do you rally? Help sales and marketers understand what a good ICP can do for them:
- Increase effectiveness from focusing the efforts of your teams on repeatable and scalable strategies that reach and nurture the right prospects with the right message.
- Shorten sales cycles by reducing time in the awareness stage of the buyer’s journey. Highly qualified prospects may already be using your competitor or looking for services like yours.
- Increased closed-won deals – those entering the pipeline are more likely to have the budget, interest, and talent needed for your product to have value.
- Better fit prospects and opportunities won turn into better fit customers who have a lower churn rate
Sold yet? (How could you not be??) Now, let’s get into the how you do it.
“To get the right message to the right person at the right time you first need to get the right data to the right database at the right time.” – Jessica Williams, Red Pill Media
Step 1: Find the data
Start simply: Take stock of your current customer base and uncover their common characteristics.
Export opportunity data from your CRM and append account information as needed. Then build it out with more data points relevant to your activities and industry.
Then, look for patterns. It’s different for every business. You might notice that they are concentrated in a particular region of the country, a certain industry, a similar size, or involve a specific buyer.
Who are your best companies and individual buyers? Learn more about AccountView
Step 2: Identify your best customers
Take the exercise above a step further by not just looking at your entire customer universe, but honing in on your very best customer universe.
Again, it varies by organization; you’ll need to determine what “best” means to you. Here are some common criteria:
- Highest NPS (Net Promoter Score)
- Highest ACV or TCV (Annual Contract Value or Total Contract Value)
- Highest potential for growth
- Highest retention rate or longest time with your company
- Highest Customer Health Score
You should also consider the customer accounts that have been the most profitable.
Once you have come up with your criteria, repeat the exercise above. Aggregate the data and look for patterns or similarities amongst this cohort.
Step 3: Find the Similarities
Some patterns may jump out at you. Others may be harder to see at first glance.
Here are some questions to ask to get you started:
- Do they have a geographic location in common?
- Are they all organizations in the same stage of life?
- Are they in a similar industry?
- What’s the employee count at these customers?
The granularity of your data and segmentation tools is the only limitation here.
This set of characteristics of your best customers becomes the foundation of your ICP. You know it truly represents your best future customers because it’s based on your very best existing customers.
DiscoverOrg has a tool that stack-ranks your best prospective accounts for you! Learn more about AccountView.
Step 4: Prioritize and implement
Based on the results of your evaluation, develop a best-fit rating rubric to evaluate how well an account aligns with your Ideal Customer Profile. You can then use this rating system to prioritize and align your resources and strategies, as well as identify future target companies and leads.
Here’s an example:
- Best Fit: US-based companies, with over 500 employees, who manufacture and sell software security
- Good Fit: North American companies, with over 200 employees, who distribute software security
- Bad Fit: Non-North American based companies, with less than 100 employees, who do not manufacture or distribute software security
This works in prioritizing and qualifying Inbound leads – prospects that have come to your organization – to determine how you follow up or if they get passed to sales.
It also provides strategic direction for your outbound or account-based target lists, ensuring that your team is reaching out the best-fit accounts for your offering.
The Ideal Customer Profile is the North Star for your sales and marketing teams; if a company does not fit the ICP, there’s a good chance they’re not a good fit for your product – so don’t waste your time drifting around aimlessly in the vast ocean of prospecting possibilities.
Last piece of advice? Revisit your ICP data to evaluate fit ratings over time – say, once a year – and also to reassess resource allocation and strategies. Bon voyage!