Ideal Customer Profile (ICP): Boost Your Sales and Conversion Rates
November 25, 2021
Businesses usually start on an informed assumption that there is a demand for something that they can provide. In other words, you will only start making and selling something if you believe that there is someone who needs and wants it. The main goal is then to find that someone and show them what you have to offer. Many strategies and approaches have been developed for this purpose. Creating an ideal customer profile (ICP) is one technique that helps marketing and sales do their job better. Let’s take a look at how creating a well-prepared ICP can ensure higher conversion rates and advance business goals.
What is an ICP?
For starters, an ideal customer profile can be defined as a description of a hypothetical organization that has all the features and attributes that make it an ideal customer for your firm. Many in the industry have heard it mentioned, worked on creating, or updated one themselves. But there are some common misconceptions about how a good ICP should look like, which we’ll cover later on.
In other words, the products, services, and solutions that you have to offer are exactly what this imaginary firm needs; this business is specifically the type of client you are looking for. Equipped with such an outline of ideal customers, sales and marketing teams know what to look for and target high-value accounts that resemble the ICP best.
Ideal customer profile (ICP) vs. buyer persona
One of the common incorrect preconceptions is that an ICP and a buyer persona mean the same thing. However, they are very different analytical tools, even though based on the same approach of outlining theoretical customers. So, what exactly is the difference?
Buyer personas are specifically imagined decision-makers within an organization that you believe would buy from you. The definitions of buyer personas include their fictional names, job titles, pain points, and sometimes additional personal features that would help paint a better picture. On a side note, pain points are tasks or problems these fictitious characters have in their jobs that your solutions could help with.
A buyer persona might be someone you would call John. John works as a data analyst and constantly suffers in his job due to the slow processing of data. Your business has a product that makes data processing easier and more efficient; hence, you can alleviate his pain and resolve his problem.
An ideal customer profile is an organization within which John, our buyer persona, works. Of course, you could develop an ICP without theorizing a specific buyer persona, but you can also use these theoretical models in combination for better results. Your ICP would describe the main features of the company that makes it an ideal customer for you. Importantly, it’s crucial that an ICP also takes into account the reasons why your solution is exactly what this hypothetical organization needs.
The importance of creating and updating an ICP
There are many ways to attract customers and more than one method that sales reps can use to increase sales rates. So, what makes an ideal customer profile so special? ICP is the description of the goal you are aiming to achieve as far as your relationship with the customers goes. The more clearly the standard is defined, the better are the chances to get as close to it as possible.
Without understanding what your ideal customer looks like, you risk failing to know why you even exist as a company and what are your conditions for success. One the contrary, having a well-defined goal for sales and marketing teams to aim at, you make sure that everyone is on the same page. This sales and marketing alignment boosts cooperation and increases mutual understanding of what the teams need from each other to ensure success.
Key data points to consider
The first thing to consider when creating an ICP is what sort of customer data should be used to describe the key features of an ideal customer. The crucial information that needs to be in the ideal customer profile, or at least considered for ICP development, is of two major types: firmographic data and technographic data. Of course, there might be some additional data points you would want to look at when outlining your perfect customer.
Firmographic data is all sorts of statistical information that pertains to a company in the same way the demographics pertain to individuals. When creating an ideal customer profile, the following main firmographics provide a good starting point:
- The industry they’re in;
- Size of the company;
- Employee size;
- Location of headquarters and major departments;
- Type of customer base (B2C, B2B, B2G);
- Scale and distribution of customer base;
- Annual revenue.
Naturally, there are many other important firmographics that may or may not apply in particular cases. Firmographic, as well as all other data points, may vary from case to case. But the aforementioned major firmographics are likely to figure in most, if not all, useful ICPs.
The other major category of data that features heavily in all sorts of analyses of B2B markets is technographic data. This set of information describes the company’s technological stack. It’s likely to include data related to the following qualities of the firm:
- Their hardware technology;
- Their software solutions;
- Their platforms and technology-based services;
- Data describing their innovation and technological updating habits;
- How they measure in their industry and market in general in automation and technology usage.
Technology is leaving an ever-bigger mark on contemporary businesses and shows no signs of stopping. As a result, it’s easy to see why technographic data is a must in an ideal customer profile for most B2B firms.
Other relevant information
Nevertheless, there is information that cannot be grouped into a singular major category. All kinds of criteria may be productively used to assess and define ideal customers; therefore, diverse data can be added to ICPs depending on the situation.
The key examples of such relevant features would be the goals and objectives of the company as well as the aforementioned pain points. In the end, every firm creating an ideal customer profile must figure out for themselves the qualities and criteria that matter the most. After all, no one knows your ideal customer better than you.
Benefiting different departments
An ideal customer profile is a tool to boost the sales process. ICP primarily benefits sales and marketing teams. However, the utility of ICP goes well beyond that. As it helps with the results of various departments, these departments should all be involved in the ICP development to ensure its versatile effectiveness.
A high-quality ICP provides the sales team with the main talking points when pitching the product to the customer. Additionally, an ideal customer profile helps with qualifying leads, which can be done by either marketing, sales, or both teams in cooperation. The sales team may also prioritize certain new prospects by how much value they can potentially bring to the company based on their resemblance to the ICP. As a result, potential high-value accounts would not be lost while directing too much attention towards low-value leads.
The marketing team knows what they need to target when they have a well-defined ideal customer profile as their guiding standard. This leads to better online marketing campaigns, creating relevant Google ads or Facebook ads to attract the attention of the right potential customers. Knowing what to aim for will increase the chance of marketing teams successfully attracting better-quality leads; thus, immediately making the job of sales easier and boosting the high-quality mutual relationships between the departments.
When ICP is in place, the product team may receive and recognize the relevant feedback from the type of customers that the firm aims to satisfy most completely. This allows for more timely and welcome updates on the product, as well as kickstarts new brainstorming sessions, giving the basis for development ideas. When developing products in the right direction, firms are much more likely to attract the kind of customers that fit the description outlined in the ICP.
Attracting new customers is one thing, but keeping them and making sure that the existing customers get the most from the products and services provided, is another. The good news is that the ideal customer profile can help here as well. With a great ICP in place, the customer success team is capable of developing repeatable strategies for onboarding high-value customers. This drastically increases customer satisfaction and retention rates among the top accounts, also enhancing customer long-term value for the business.
To put it in perspective, let’s briefly go over some of the best practices, as well as common mistakes, when developing an ideal customer profile.
The first major mistake would be considering only your end of the bargain - the value that the customer brings to you. An ideal customer is a firm that buys from you because of the value your solutions bring to them. Thus, ICP cannot be adequately created without keeping in mind what you provide for their benefit.
A good way to start developing an ICP is considering the total addressable market (TAM) and then narrowing it down by describing key features that you want to go after. There should be some in-depth information about the ideal customers, but not so much that it would narrow down the targeted ideal audience too much. In that case, you would hardly have anyone to target.
Another basic method of creating an ICP is making a customer list of the best customers that the firm has had thus far. Once again, the list should be neither too broad nor too narrow. Then it should be easy to recognize the common attributes that the customers share, such as the same pain points.
A more advanced method of ICP development would be data-based segmentation of the customer base. For this, various tools can be used, but most importantly – a lot of customer and general market data needs to be collected. Only segmentation that is firmly grounded in data is valuable for ICP creation.
Preferably, one should never forget to keep updating the ideal customer profile. Things change rapidly, especially for high-growth companies; thus, if everything is going well and your firm is growing, your ideal customer is bound to change as well. And once again, for constant updates on the ICP, you need to constantly evaluate data collection and analysis.
One last common mistake is failing to actually use the ICP when it’s in place. ICP only brings value if it’s properly utilized. Staying focused on the ICP based strategy is key to effectively keeping track of what works, what doesn’t, and making strategic adjustments.
An ideal customer profile (ICP) is a proven and still very effective method of boosting sales and department cooperation within an organization. However, what a good ICP looks like has shifted in the data-driven world where more types of information become relevant. Thus, implementing this methodology calls for constant development and updates as much as any other methods in sales and marketing.
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