Have you ever received an advertisement that made no sense to you? You may be a real estate company receiving an advertisement related to Medicine or Sports; Weird, right? Not very effective you may think, and I definitely agree. That is because most companies just tend to market their product to everyone, not taking into consideration that it is not effective and costly to do so.
What is an ICP?
Many mistake ICP for buyer persona or target market, but that is not the case. Let’s start by defining what an ICP is. An Ideal Customer Profile is a description of the type of company that will receive the most value from your product or solution. These companies tend to be the quickest and most successful accounts in your sales cycles, with the highest customer retention rates. To define your ICP you use firmographics, like:
- The average size of the company
- The average company revenue
- The location of the company
- The ideal industry/industries
While ICPs define companies, buyer personas characterize the type of people involved in the purchasing decision. Buyer personas are defined by role, job title, function, age, and income. Conversely, a target market is more commonly used in a B2C setting. Rather than describing a company, your target market describes a group of customers that would be interested in the product or service. Always keep in mind that your ICP needs to be updated from time to time, as there may be a change in your products, market dynamics, economic changes, and so on; it is vital to make sure your ICP is up to date.
Why is Defining Your ICP Important?
Your ideal customer profile allows you to target companies that will make the sales cycle shorter with a higher chance of success. If you do not have an ICP you will find yourself outreaching unqualified leads, wasting your time and resources. Knowing the companies that are willing to purchase from you is crucial for your outreach strategy. The more you know who is going to buy from you, the more effective your outreach is which leads to a better sales cycle and more won deals. Customer profiling helps with:
- Identifying better prospects and increasing close rates. Since you are already familiar with who will benefit from your solution, there is a higher chance to close a deal with that specific prospect. Also, knowing that this customer will receive a lot of benefits using your product or solution, will lead to better reviews and happier customers.
- Lowering Customer Acquisition Cost (CAC). CAC is the money you spend on marketing and sales campaigns to attract a certain customer. Defining who your customers are will help in decreasing the money spent on marketing and sales because you will only spend money on targeting customers who are actually able and willing to purchase from you.
- Allowing you to serve customers in a better way. If you are familiar with your customers’ goals, attributes, and characteristics you will be able to deliver a superior customer service experience. Predict issues before they arise and proactively provide helpful resources, and better align with their needs if they reach out.
- Reducing customer churn. Customer Churn is the percentage of customers that have stopped using your service or product. Creating a customer profile from the beginning allows you to serve customers who actually want and will benefit from your product or service; as a result, you reduce customer churn.
How to Identify Your ICP?
Step 1: Start by narrowing it down
The best way to approach this is by identifying what problem your company solves and identifying the companies that will benefit the most from your solutions. Also, if you have an existing customer base, it is very helpful to take a closer look at them and their behavior. You need to understand who your customers are, how they benefit from your products or services, and why they use it. In addition, understanding your customers allows you to develop a more effective and impactful message to target them.
Step 2: Dig into Customers Demographics
Start digging into customer profiles. Start with external demographics, then dig deeper into needs, and lastly look at what your company offers.
Some questions that will help with defining your customer profile:
- How many employees do they have? (Helps identify the size of the company; Example: 50 employees,100, 5..)
- Where is the company located? (Example: Located in the Middle East, Europe, Africa.)
- What is the company’s average revenue? (Example: They make in revenue around $3 Million, 6 million.)
- What industry does the company operate in? (Example: Real Estate, Healthcare, Sports.)
- What market does your product serve best? (Example: Real Estate, or/and SaaS?)
Step 3: Speak to your target company and analyze feedback
Now that you have a clearer idea of the target company that you want to sell to and how you can benefit them, find a way to hear it straight from their mouth. It is very easy to rely on the data that you collected throughout, but it is very hard to predict how your customers are without spending time with them. You need to find a way to meet your customers to get a better picture of how they are. A possible path you could take is running interviews as they are one of the best resources when building a customer profile. Interviews allow you to speak to your customers face-to-face, which allows you to see their reactions to your questions and uncover valuable information that doesn’t show through data.
Step 4: Dive Deeper into contextual details
Once you have previously defined the external factors, it is vital to dive deeper into contextual details. Now is the time to think of your prospects and ask questions that will help you understand what they need and what they do.
- What are their pain points?
- How do they assess problems?
- What are their long-term goals?
- What do they struggle with the most?
- What type of technology do they utilize?
- How can you help solve their problem today?
Use these answers to develop a fictitious company that would be your ideal customer. Now that you have identified the external factors and contextual details, you have a pretty strong grasp of your potential customers’ general make-up and goals. After this, and to complete your customer profile, you need to see how you can help them according to the information you have extracted.
- What value can you give them (Save them money, save them Time, Increase their revenue, and so on.)
- Are you able to solve their key pain points?
- How does your solution lead them to their goals?
- What differentiates you from competitors?
Step 5: Make sure that you build your buyer persona
Now that you have identified the companies that you want to target, you need to keep in mind that you are marketing to people with actual personalities and feelings. Once you have identified the attributes of the company you want to target, the next step is to identify the individuals in the company that you need to reach out to. This is a crucial step as they are the decision-makers and establishing a relationship with them is vital. Figure out who they are:
- Title & Position
- Income Range
- Education level
- Social media platform they are active on
- Their work responsibilities
This will help you find them and to create content to hit the right people at the right time, with the right content.
Step 6: Analyze and keep updating your customer profile
Now that you have your customer profile, it will guide you through all your questions. What products you should build, what marketing platform you should utilize, what type of messaging to use, and so on. Without a customer persona, you are at a high risk of offering products or services that do not resonate with them, or you can end up marketing on platforms they are not present on. You should keep your customer profile in mind when changing anything in your business to make sure it aligns with them. When building your customer profile, gather all the external factors and contextual details you gathered and develop a deep understanding of how your business adds value to them.
Creating an ICP can help in identifying better prospects and increasing close rates, reducing customer churn, and lowering customer acquisition costs which will lead to happier customers down the line. The more detailed your ICP is, the more value you can extract from it, making your marketing and sales process exponentially more effective and valuable for your customers.