An ideal customer profile (ICP) is really important to your go-to market strategy. It requires defining, finding and understanding your best customers, and then pushing that understanding through your GTM plan.
Do you really know your ideal customer?
One of the more common mistakes companies and Marketers make is not having a clear enough understanding of their ICP, or ideal customer profile. An ideal customer profile is a set of characteristics that describe the types of companies that are experiencing the problem you solve and are most likely to buy your product. What types of companies actually need your product enough they would pay for it? What is it about their revenue, industry, technology, or business model makes them an ideal fit? Companies need to ask themselves: out of the entire universe of potential customers we could be targeting, which kinds will be the most valuable to our long-term success?
Why do you need an ICP?
Having a clear understanding of your ideal customer is not an academic exercise in futility. It’s not something you give to marketing to keep them busy. It’s a critical part of your go-to market that when done right has direct ties to driving more revenue.
- Messaging that resonates. Let your customers know that you understand their problems, you know what they’re trying to accomplish, and lay a path to solutions that meet their requirements.
- Generate business value. With a clear understanding of your ICP, you can shorten sales cycles, lean into higher win rates, and lower your acquisition costs.
- Faster qualification. Enable your sales and marketing teams to find and target high-quality leads faster, while building confidence that they’re pitching and ditching the right people.
- More focused product roadmap. Support your product teams by bringing the voice of the ideal customer to the product development process, ensure you’re building the right feature set and prioritize high-value initiatives.
- Improved customer success playbooks. Having an effective ICP can mean the difference between happy customers and churned customers! It is also an input to help you create and refresh onboarding and support services.
Building the ICP for your organization
“I get it, having a clear ICP has benefits. How do I do it?”. The general process to build your ICP follows 3 steps:
- Data collection and customer analysis
- ICP creation
- GTM alignment
Data collection and customer analysis.
To get to your ICP you need to first define your best customers. Here is a sample set of criteria to define these customers – your actual criteria should be based on your business goals.
- Business value. Have seen noticeable and positive impact to their business?
- Utilization. Are they using key features that are indicative of a user receiving value?
- Retention. How long have they been a customer? How many renewals have they gone through?
- Expansion. Have they upgraded or expanded their investment with you? How frequently?
- Experience. Have had positive engagements with your support and service teams?
Now that you have a definition of your best customers you need to actually understand them.
- Why are they your ideal customers?
- Why have they stayed for so long?
- What made them buy your product?
How to find these answers? Use every tool and outlet at your disposal! Here’s some inspiration:
- CRM data. Have you thoroughly dug through the data you already have at your disposal, especially things like win-loss?
- NPS scores or similar satisfaction metrics. Who are your happiest customers? Why are they happy?
- Public reviews. What are your customers saying about you on sites like G2, Capterra, Reddit, and other public forums?
- Customer interviews. One of the most important, get out and hit the street and actually talk to your customers. (Here’s a sample questionnaire that’s worked for me!)
- Internal teams. Don’t sleep on your internal teams – particularly those that are customer facing: sales, customer success, support.
Pro tip: Mistakes to avoid when collecting and analyzing your customer data.
- Don’t assume you can create an effective ICP in a silo! You need the input of your go-to market teams, especially those that are customer facing.
- Overly rely on quantitative data – even if it seems easier. The most valuable insights you’ll get are from getting on a call and actually talking to customers.
- Let good be the enemy of great. Your ICP initiative is not an academic exercise – it’s a plan of action. The faster you can get to market, the faster you can begin to validate.
You’ve done the heavy lifting with your data, now it’s time to start piecing your ICP together. The simple question to ask once you’ve defined and found your most valuable customers: What makes them similar? What are common attributes, does anything stand out about them?
Look at things like:
- Company size (employees)
- Industry and areas of expertise
- Organizational structure
- Annual revenue and growth rate
- Existing technology stack
- Product requirements and limitations/key challenges
- Compelling events, challenges, decision-making factors
Once you’ve culled out commonalities, this becomes your ideal customer profile! Drop them into a template and you’re off and running (see the swipe file at the top of the page).
Note that the above is ideal for organizations with an existing customer base. For early-stage companies without an existing customer base developing an ICP is critically important to finding product-market fit – even if it’s more of a hypothesis at this stage. Don’t stop at TAM as it’s far too broad – you need to find customers that will be an “ideal” fit, not just a fit.
Pro tip: Mistakes to avoid when building your ICP
- Don’t just focus on your most profitable customers. Profitability doesn’t necessarily equate to long-term value, and by relying too heavily on just dollars and cents you miss out on other important attributes that indicate value.
- Using too much fluff, not being specific enough. “We sell to small businesses…” is not a strong attribute of an ICP – when you think you’ve got the right description, go through two more cuts of focus.
- Don’t be afraid of niche’ing down. Your ICP doesn’t prohibit you from exploring targeting other parts of the market so don’t be afraid to be rigorously focused when building your ICP, even if it means narrowing it further into niche segments.
GTM alignment. You’ve defined your ICP, now what?
Your sales, marketing, and customer success efforts should all be based on your ICP. But what does that look like? Here are some ideas you can share with your teams:
- Personalized sales sequences and more tailored discussions
- Industry-specific sales materials and enablement programs
- Identifying key buying signals sooner
- Better lead scoring by leveraging the demographic detail in your ICP
- More personalized campaigns and ABM efforts
- Adjusting and mapping buyer personas to the new or refreshed ICP
- More informed, focused, and customer centric product roadmap
- Deliver a more consistent product experience across their entire journey.
- Better prioritize feature requests and improve product decision-making when you start from your ICP.
Customer success uses
- Ensuring post-sale resources are directed to the customers that will deliver the most long-term value.
- Develop “ideal customer behaviors” stemming from a clearly-defined ICP in order to speed adoption and customer success. (check out ICBs here!)
- Pre-empt, or better forecast, potentially churning accounts by mapping them to your ICP.
Your company in general benefits from go-to market teams working from, and aligning behind, a common ideal customer profile by helping create sustainable, repeatable, and efficient revenue growth.
Pro tip: How do you know if you have the right ICP?
- Sales velocity is improving. Are you closing bigger deals, faster, and more frequently? That’s a good sign! If your sales velocity isn’t budging, you may have an ineffective ICP.
- Business metrics are trending in the right direction. CAC, LTV, NRR, feature adoption, churn, customer ROI – all business metrics that indicate you’re targeting the right segment.
- It adapts. If you’re not evaluating your ICP on a quarterly basis, there’s a good chance it’s outdated. Buying behavior changes – so must, then, your ICP.
Wrap It Up
While the output of this exercise is a discrete artifact (a view of your customers) you should be continuously validating, refining, and updating this definition to ensure you’re keeping up with the problems of the market and becoming more and more intimate with the customers that will ultimately be of most value to your company.
Identify your best customers + translate into specific criteria that describes them + insert into your go-to market processes. While not always easy, it’s that simple. Your GTM will thank you!