Ideal Customer Profile (ICP) does not just influence the sales for your organization. It also finds its relevance in marketing, product development, customer success, etc.
With a defined ICP you can not only reduce sales cycles, increase conversion rates, and run successful account-based marketing programs. It can also help identify the features that your product team should develop, and more.
Let’s dig deeper to understand what ICP actually is and how we went about defining one for your organization.
If you are already familiar with the concept of an ICP and its importance, then here is a free template to create and develop your ICP.
What Is an Ideal customer profile (ICP)?
An ideal customer profile is a fictitious organization for which your product or service would ideally solve for. This is an ideal customer that readily buys your product or service, remains loyal, and is likely to recommend your product or service.
An ideal customer profile is defined by
- firmographic data such as the size of the organization,
- the type of business they have,
- the average revenue they generate,
- the geographical location of the organization,
- the reasons as to why they would have a need for your product or service and so on.
While at times the ideal customer profile might include information about individual buyers, more often it is defined clearly when setting up buyer personas (see below).
An ideal customer profile is set up based on analyzing retrospective data derived from all the previous companies your organization has sold to.
As mentioned before, an ideal customer profile affects not just your sales teams but also other teams in your organization. Therefore, it is important that various departments of your organization to work together to define what your ICP will be.
Without an ICP, sales reps would end up chasing the wrong leads. This leads to loss of time, money and effort.
We have all heard the famous adage “Time is money”, however in this context, “ICP is money”. Revenue can be gained or lost just by defining the right ideal customer profile for your organization.
Difference between Ideal Customer Profile and Buyer Personas
ICP is the fictional profile of an organization you want to sell to.
It the best fit for the products or services your organization provides or solves for.
However, buyer personas are semi-fictional, or generalized representations of your customers and whom you would potentially like to sell.
Buyer personas take into account demographic data, goals of these individuals, pain points, and more. Using buyer personas, marketers can work towards developing the right kind of content for these sets of individuals.
Sales and customer success teams can focus on allocating time and other resources accordingly.
And product teams can focus on addressing the feature requirements and more for these personas.
To understand these differences better let us consider a fictitious company which specializes in solar panels installations called Solar Loom.
Why Do You Need Both, an Ideal Customer Profile and Buyer Persona?
Based on what an ICP and buyer persona are, one can see that the two are linked to each other.
Having one present without the other is quite impossible. With your ICP, your focus should be the type of accounts your organization services.
While buyer personas should advise teams on what kind of content they should create, who to speak to, what personas to prospect, and more.
Putting your ICP to use at the beginning of your sales cycle is advisable. This helps to qualify the leads that come into the funnel by weeding out the “not-so-ideal” leads.
Once the ideal leads are identified, then buyer personas can help determine how to sell to the decision makers.
The best way to visualize the need for ICPs and buyer personas is this — ICPs help identify target organizations while buyer personas can help in communicating with the individual.
How to Identify Your Ideal Customer Profile?
ICP is not a complex construct and can be easily broken down into the following components.
It involves three distinct components:
- Data collection and analysis
- ICP creation and definition and
- Go-to-market alignment.
It not only impacts sales and marketing efforts, but helps align different teams to chase after highest-value accounts.
It also focuses on implementing scalable and repeatable processes to close top accounts, and drives other key activities.
Therefore, developing an ICP for your organization is imperative. There are many different methods one can use to identify and set up an ideal customer profile.
Below is how we identified our ICP at Slintel. Let’s take a look at how we set it up.
The goal of our exercise was to identify who our ICP is. Here’s what we attempted to analyze and answer:
- Which organizations fit our mold?
- What kind of products or services have they previously bought from us?
- How does our product or service solve their problem?
- What are they spending when acquiring new solutions?
- Who are the decision-makers at their respective organizations?
- What type of organizations are our ideal customers?
The methodology we implemented is not set in stone. However, we concluded that this was the best way for us to define our ICP. Here are the steps that we used:
Step 1: Define ICP Persona
We started off by defining the reasons why a customer would use Slintel’s product. While the reasons are limitless, we narrowed it down to the following based on why our customers have used us in the past.
Step 2: Define Your ICP Sales Numbers
Next, we needed to narrow down who our best customers were. To arrive at the success criteria listed below, tons of sales calls from our call repositories were screened. Finally, we were able to list the criteria for who our best customers are:
- Our highest annual contract values (ACV) accounts
- Accounts with high product activity levels
- Accounts that have renewed or upgraded
Step 3: Create an ICP Template
We made sure to capture all the information regarding our ICP in a single sheet and shop it around the company. This allows relevant teams to understand and implement it. We used a canvas defined by April Dunford, in her book Obviously Awesome. Check out our free ICP template to find it.
Step 4: Evaluate B2B Ideal Customer Profile Variables
After listening to tons of sales calls from our repository, digging deep through other retrospective data, and a whole lot of pivot tables later, to identify our customers by industry, by revenue generated, by size of customers, and more we were able to establish our ICP.
Step 5: Review
Once we defined our ICP, we got a team of individuals from different departments (marketing, sales etc.,) to review it. This is because each of these teams interact with customers at different timepoints in the buyer’s journey. They will have different perspectives on who the best-fit customer is for the organization.
To create your ICP, based on our methodology, here is a free Ideal Customer Profile Template B2B you can use.
3. Our Takeaways
- ICP is a critical document: It allows you to streamline your efforts to chase after the right high-value accounts.
- ICP is a dynamic snapshot: It needs regular updates to keep up with the changes our organization undergoes.
- Shop your ICP around: Get as many eyes as possible on it, change our messaging effectively, ensure that our sales teams are chasing the right target accounts and more.
ICP is not just an experiment but rather a plan of action. Whether it is prospecting strategies or helping you with your sales pitch, having a defined ICP is crucial. However, after defining it most companies forget about it.
Developing an ICP for your organization is time consuming and a never ending task. Therefore, take steps to ensure that your ICP reflects into your sales and customer success story as well.