Defining an Ideal Customer Profile (ICP) for your business now matters more than ever before. With economic unrest and marketing budgets continuing to be squeezed, focusing on generating and nurturing leads from those that will actually deliver revenue is a cost-efficient, smart strategy.
You can’t possibly target everyone, so clearly defining who falls inside your ICP can ensure everyone from marketing to sales is aligned on your target audience and how to talk to them.
An Ideal Customer Profile or ICP is usually used for B2B businesses as a depiction of the ideal ‘company’ you would like to sell to. The ICP provides a set of characteristics for organisations that would most benefit from your products or services. Deciding your ICP can be based on data and which of your current customers deliver the highest revenue and value for your business.
For example, your company may target both restaurants and manufacturing facilities, however you find that customers that come from the restaurant industry spend less with you and churn faster. Whereas your customers from the manufacturing sector have a higher lifetime customer value (LTV) and stay with you for longer – making them a better match for your products and services.
Many marketing and sales teams can often confuse Ideal Customer Profiles and buyer personas. While they have their similarities in terms of understanding who your customers are and why people buy from you, they are slightly different.
An Ideal Customer Profile is a depiction of the company that will best match or benefit from your products or services. It focuses more on firmographic data (i.e., turnover, number of employees, etc) whereas a buyer persona focuses on the individual within that company.
Let’s look in more detail at the components of each to explain the differences:
Learn more about how to build buyer personas for your business
If budgets are tight, you want to avoid spreading yourself too thin with your marketing and sales efforts. Focusing your efforts on capturing leads that the sales team have a higher chance of converting is a far more effective use of your budget.
By defining your Ideal Customer Profile, you can focus your marketing and sales campaigns on generating leads that matter most to your business.
In our experience with clients, there can sometimes be a misalignment between sales and marketing teams. Marketing may be sending out messages that are for a totally different ICP to the ICP that sales is saying delivers the revenue and value for the business.
By clearly identifying your ICP, you can ensure alignment between both teams and remove friction. With an ICP, your marketing team can create the right collaterals that will support the conversion process, while sales people can easily check whether the leads marketing are sending are well qualified. This leads to both teams working in harmony and towards the same objectives.
Revenue and profitability are critical to every company and having an ICP helps you achieve your objectives and growth in this area.
We’ve already mentioned that generating quality leads from your ICP will deliver higher conversion rates and increase the likelihood of deals closing, but it can also deliver higher customer lifetime value and sustained revenue. By targeting companies that fit your ICP, you’re more likely to keep your customers for longer, which over time, will provide your sales and customer success teams with upsell opportunities too.
And, the more customers you acquire from organisations that fit your ICP, the more you'll attract similar customers. How does this work? By leveraging social proof and case studies, you can demonstrate your expertise and success with your ICP, making your business more appealing to similar prospects.
If you’re not hitting your revenue targets, it may be time to revisit your ICP or develop one in the first place.
We’ve already discussed the key components of an Ideal Customer Profile but how do you go about developing this for your organisation?
To define your ICP, you can use both qualitative and quantitative data available to you. By using data, you’ll avoid making assumptions based on what you think you know, rather than what is true.
The goal of developing your ICP is to paint a picture of which customers are most likely to deliver the highest revenue opportunities and value for you as a business. However, don’t forget it’s also about identifying the organisations that will benefit the most from your products and services. Many B2B businesses like to target big enterprise companies as they tend to have deeper pockets, but if your product cannot serve them well, you won’t get any business so be realistic!
Speak to stakeholders and internal teams about their experience and who their best customers have been. This may include which customers close faster, which customers have the lowest churn rates and which customers you’ve upsold to most. To get this data, talk to your customer facing teams, and sales and marketing.
You can also look at customer feedback and reviews – are there patterns or trends to which customers give you the best reviews? You may even want to consider talking directly to customers that have a high lifetime customer value to understand their reasons for choosing and staying with you.
You can back up qualitative data with quantitative data to build your case.
As you’re collecting your qualitative data, you can mine your sales and marketing platforms for quantitative data on who your best customers are.
This could include churn and retention rates, which customers have the highest lifetime value, which accounts had the shortest time to close, and the geography where the highest proportion of your revenue comes from. Measuring engagement within accounts can also help you identify your most loyal accounts.
Once you’ve collected all the relevant data, you can analyse it to create your ICP.
Once you’ve developed your ICP, don’t forget to communicate this with relevant teams to ensure alignment and buy in. This may be done at a whole team level or by speaking to stakeholders and departments separately. This way, you can collect feedback on the profile you’ve created and iterate as needed.
Following this, it’s time to start targeting your new ICP. This is a good time to review or refresh your current marketing and sales strategies by:
Whether you’re using a CRM system, data analytics platform or an all-in-one marketing and sales solution such as HubSpot, there are several ways you can use technology to engage and target your Ideal Customer Profile more effectively.
Ensure the system you use is packed with features that can help you activate the use of your ICP including:
Lead scoring creates a framework that marketing and sales teams can use to assess leads against your ICP criteria. Leads that closely match your ICP will be given a higher score and can be handed-off to sales faster as they will have a higher chance of conversion. You can also use scores to segment your database and personalise your marketing messages. A lower scoring lead may need a slower cadence of messages before they are ready to buy compared to higher scoring leads.
You may want to consider using lead scoring in combination with engagement scoring which is possible in HubSpot as not all leads will exactly fit your ICP. By using engagement scoring, you can identify accounts that have higher engagement and therefore, are more likely to convert into sales opportunities and revenue without discounting them completely.
Watch our DMA: The Power of Lead Scoring
Platforms like HubSpot offer powerful automation tools including the ability to nurture your prospects and customers to perform a desired action.
Nurture flows can be set up for numerous reasons such as engaging with target accounts that fit your ICP, setting up lost leads workflows to re-engage lost opportunities, or engaging with customers in your ICP to generate more revenue from them via cross-selling or upselling.
Smart content can be used to tailor your content to your ICP, increasing engagement and providing a higher chance of conversion. By knowing which contacts in your database fit your ICP, you can choose to show them different content that will resonate with them more effectively.
Chatbots are an effective way of engaging with your ICP and personalising your interactions with them further. Not only can chatbots be used to generate new leads but they can be used to engage with existing contacts that fit your ICP. Depending on where the contact is in their journey, the chatbot can be personalised so they get the right message at the right time, pushing them through the funnel more efficiently.
We’ve helped many clients craft their Ideal Customer Profiles and ensure they’re being used to guide their marketing and sales efforts and reach their objectives. We’ve found that having a well-defined ICP helps our clients (and their suppliers including us) focus their efforts on revenue-generating tasks. Therefore, we’ve seen improvements in conversion rate, engagement and increased revenue throughout the marketing and sales functions.
No matter what industry you operate in, building an Ideal Customer Profile is an important element of your marketing, sales, and customer service strategy. Defining your ICP should be an iterative process where you can learn and improve based on what is and isn’t working, and adapt based on changing market conditions.
Maximise success from your marketing efforts and increase revenue opportunities by getting in touch with Innovation Visual to find out how we can help you build a strong ICP and grow your business.