Before starting any B2B marketing campaigns, you need to do some foundational work. In almost all cases, that work involves developing an ideal customer profile (ICP) that pinpoints what types of companies you’re targeting. Without that knowledge, it’s all too easy to waste time and money going after customers who won’t yield the highest lifetime value (LTV) for your business.
In this post, we’ll cover what you need to know to make the case for creating an ICP at your company, as well as how to develop one.
What is an ideal customer profile?
An ideal customer profile refers to the characteristics of a company that make up your ideal target account. (It’s different from a buyer persona, which is a specific type of person who works at your ICP.) These characteristics include:
- Firmographic data, or information about the company like industry, size, vertical, revenue, and the number of employees.
- Environmental data like information about the tools and technologies the company uses and any other relevant work activities and conditions.
- Behavioral data, or how a prospect has interacted with your company (i.e. downloaded a guide, requested information, conducted research about solutions, etc.). This data helps determine where an account (and the people working there) are in the buyer’s journey and their propensity to purchase.
So what makes a customer ideal? They present the most potential value for your business. You want to balance the LTV of a customer with the cost it takes to acquire them.
It’s worth keeping in mind throughout the process of developing your ICP that “ideal” isn’t a gut instinct. The fastest accounts to close, for example, don’t always make the best customers. That’s why real data is so critical to this process.
Why you need an ICP
Before we jump into how you can start creating your own ICP, let’s consider why it’s so important. If you asked around your company, people might say they already know who your ICP is. But do they really? And does everyone agree?
You need everyone in your organization to be on the same page because if you’re not, you’re leaving money on the table (and likely spending your marketing and sales dollars in the wrong places). In addition to aligning your marketing and sales teams about who you’re targeting, an ICP is the first step for some core marketing efforts.
If you’re interested in pursuing account-based marketing (ABM), developing an ICP is the first step. ABM, a subset of outbound marketing, operates on the premise that if you market specifically to the accounts most likely to be valuable to you, you’ll close more deals and see a higher average deal size. But before you can start planning how to reach those accounts, you obviously need to know who they are. That requires ICP development, which usually makes up the first few months of any new ABM campaign.
Additionally, having a solid ICP helps you quickly qualify inbound leads, allowing you to more easily send better leads to your sales team. Both marketing and sales will be on board with that.
Turning your data into an ICP
Okay, you need an ICP, and you need key stakeholders at your organization to see the importance of creating one. Where do you start?
Most often you’ll begin with an analysis of your current customers. Go to your database and see which customers have proven most valuable to your business in the past. Which customers brought in the most revenue and stayed customers the longest?
This analysis will likely take time, as you’ll need to identify patterns that show what these good customers have in common. Some questions to consider:
- Which industries do your best customers come from?
- How big are these companies in terms of revenue and number of employees?
- Where are these companies located?
- What technologies do they use?
- How many decision-makers and stakeholders are involved in their buying process?
- How quickly did they purchase?
These patterns will help you come up with a list of firmographic, environmental, and behavioral data that paint a picture of what your best customers look like.
While an analysis of your current customer database is usually the first step to creating an ICP, there are alternatives if you don’t want to go that route.
For example, if you’re a startup, you might not have a customer database, so you could consult industry experts to gain knowledge about who they would consider good customers. If you’re unhappy with your current customers and want to expand into new markets, that type of research could also be useful. You might also consult your own sales team to gather anecdotal evidence about which customers they consider ideal and less than ideal.
Once you’ve gathered all this data, you should have a pretty good idea of what your ideal customer looks like.
How to use an ideal customer profile
With an ICP established, you can turn your efforts to finding those ideal customers out in the world. This involves the process of defining your total available market (TAM) and then identifying target accounts within that market.
After that, you’ll want to establish buyer personas—the key decision-making roles at each account—that you need to target with your marketing efforts. (This will likely involve interviewing people at current customer accounts that fit your ICP.) For you to close a sale with a target account, your messaging and content will need to address the needs, pain points, and aspirations of these individuals.
But remember, before you can do any of that, you need an ICP. Your ideal customer profile serves as the basis for all of your B2B marketing efforts, so make sure you don’t skip or shortcut the process. The time and research that goes into an ICP will be well worth it.
“Your ideal customer profile serves as the basis for all of your B2B marketing efforts, so make sure you don’t skip or shortcut the process.”
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If you’d like to talk more about creating your own ICP or need help with the process, reach out to us and get the firm foundation your campaigns need.