Think about your best customers. (Or the ones you envision having one day.) The ones that respond to your marketing. The ones that are easy to sell to. The ones that stick with your company for a long time.
These are the customers that drive success for your company—and make you love your job.
Wouldn’t it be nice if you had more customers like that?
Everyone says “yes”—but few people know how to make it happen. They expand their marketing, or try a new sales tactic, or build out a new product. But none of those tactics will work unless you’ve addressed the basics first.
Today we’re going to walk through one of the most important factors of building a successful company: creating an ideal customer profile (ICP). A good ICP defines your best customers and helps you find more of them.
But beyond marketing and sales an ICP also helps align the activities of your multiple teams and groups throughout your business so everyone can best serve those customers. It’s a win all around.
We’re going to look at what you need to create a valuable ideal customer profile. But first, we have to agree on what we’re talking about.
Ideal Customer Profile vs. Buyer Persona
Some people talk about ideal customer profiles and buyer personas interchangeably. But they’re different in important ways. Here are three things to keep in mind when you’re thinking about ICPs:
1. ICPs aren’t fictional. They’re based on data that you’ve collected from your customers. In contrast, buyer personas are “semi-fictional.”
2. ICPs are based on data. Buyer personas help sales and marketing teams make a personal connection to your prospects, while ideal customer profiles are more quantitative. Because of that, they’re useful to a wider range of people on your team.
3. ICPs focus on the customer company, not just the buyer (for B2B sellers). You might be selling to “Procurement Patrick,” but that’s a single person. Your ideal customer profile is a description of the entire company that Patrick works for.
Taking all of that into account, here’s a definition of the ideal customer profile:
A description, based on real-world data, of a company that’s a perfect fit for the product or service you’re selling.
That sounds simple, but putting it together can be a challenge. We’ll look at an example ideal customer profile that will put these points into action a bit later.
Before we do, let’s talk about why ICPs are so valuable.
Benefits of Understanding Your Ideal Customer Profile
If you spend the time to create an accurate, detailed customer profile, you’ll see many compelling benefits:
- Your marketing team will get better leads.
- Your sales team will have higher conversion rates.
- Customers will be more loyal.
- Your product or service will be a better fit for your market.
- Executives will know where to take the company.
You might wonder how the simple act of creating an ICP gives you all those benefits. The answer is simple: the ideal customer profile helps you work with the right customers. Those customers are easier to sell to, more likely to buy, and more loyal than customers who aren’t a good fit for your company. That makes all the difference.
Let’s take a look at a simple example that starts with marketing. Let’s say you’re selling a cybersecurity solution. Without an ideal customer profile, the process might look like this:
- Market to as many people as possible (including SMBs, enterprises, and maybe even individuals)
- Push as many leads as possible through to sales, resulting in low conversion rates and marketing ROI
- See high churn because your customers aren’t actually a great fit for the product
- Change your marketing plan to include an even wider range of people
. . . and so on. Many companies fall into the trap of thinking that everyone is their ideal customer. If you think that everyone in the world could use your product or service, I have a harsh reality check for you. They’re not. Almost no product is applicable to every person in the market.
Now, let’s take a look at that same company after they’ve developed an ideal customer profile. The ICP for this company is an international enterprise that has to deal with multiple countries’ cybersecurity laws.
Here’s what happens when the company stays focused on this ideal customer:
- Market only to enterprises who need the product
- Push only high-quality leads to sales, resulting in high conversion rates and marketing ROI
- Keep churn low because every customer is getting maximum benefit from the product
- Continue to innovate and better meet customer needs because their requests and feedback aren’t lost in an ocean of noise
When everybody at your company knows exactly who they’re serving, you’ll get results. From the newest front-line customer service rep to the CEO, everyone should focus on the ideal customer.
Now that you’ve seen the power of an ideal customer profile in action, let’s talk about how to build one.
Build Ideal Customer Profiles Based on Data
Ideal customer profiles are built on real data. They reflect your actual customers.
They’re not semi-fictional like buyer personas, and they don’t include personal information on the specific buyer you work with. You won’t have “Janitorial Janice” as an ideal customer profile (though you may use your ICP to create a buyer persona).
Here are some of the elements that you might include in an ideal customer profile:
- Number of employees
- Typical customer
- Technology in use
- Pain points
These are quantifiable measures that help you paint an accurate picture of your ideal customers. Let’s look at an ideal customer profile example for a company that sells HR software. It might look something like this:
Our ideal customer has 20 or more employees, $5 million in revenue, and currently has no HR software. They’re looking to grow quickly and need a platform that will help them onboard employees with minimal hassle.
That’s a succinct description of the company’s ideal customer. This particular company isn’t concerned about the industry that their customers are in or their specific age. Just that they’re growing, have enough revenue to afford the software, and don’t have an onboarding tool.
How Do You Find These Characteristics?
“That’s great,” you might be thinking, “but how do I decide on the ideal industry, revenue, or typical customer?”
The short answer is to use information from customers you already have.*
When you first create your ideal customer profile, do some exploring. Make a list of your 10 best customers and see what they have in common. This can guide further data exploration.
For example, you might find that some of your best customers have around 100 employees. You can look for more customers that are around the same size and see if they’ve also been good customers.
If they have, you can confidently say that customers of that size are ideal. If not, though, you’ll need to do some more exploring to figure out what they have in common. Maybe it’s not the number of people they have, but the particular type of employees they have. Or their revenue or growth.
Collecting and sorting this data can take a while; some people recommend taking up to six months to put your ICP together. If you don’t have the data you need, you may have to collect it from your customers, and that takes time.
*If you don’t have any customers yet, you’re in luck. You can build your ideal customer profile from the ground up. Start with your product, and make sure that it appeals to a very specific group. Then use that group to create your ICP.
Use ICPs Across Your Company
If you’re familiar with buyer personas, you know how an ideal customer profile can help your marketing and sales. It’s much easier to market and sell to someone if you know their priorities, pain points, and the resources they have available to deal with them.
But ideal customer profiles can help employees across your entire company.
Executives, for example, need a clear idea of who your ideal customers are. Expanding the company, making a market pivot, and setting organizational priorities should be guided by the ideal customer profile. If an activity doesn’t serve your ideal customer, it’s probably not worth doing.
The same is true of your product team. When developing new products, making changes to existing ones, or refining ideas, they’ll save a lot of time if they focus on the company’s ideal customer.
Implementation, leadership, communication, and other teams all benefit. But only if they know your ICP and are encouraged to use it.
Building Your ICP Into the DNA of Your Company
That’s why it’s so important to build your ideal customer into the very fabric of your organization.
From the start of their employment, every team member should be able to recite the factors that define your ideal customer. Bring up your ICP in meetings. Make it part of your mission statement. Make use of it whenever and wherever you can.
This is how great companies keep a laser focus on their ideal customer. It’s not just something that they wrote down and then ignored. It’s a part of their decision-making process at every step.
If something isn’t going to help the company better serve the ideal customer, it’s probably a waste of time or resources.
Take the Time to Do It Right
Whether you already have the data you need or you’re looking for more information, it takes time to create an ideal customer profile. If the process drags on, it can feel like you’re investing too much time in it.
But the time and effort you spend clarifying your ideal customer profile will pay big dividends. Your marketing and sales efforts will be more successful. Your product team will design products to better suit the needs of your customers. Executives will be able to make decisions based on what will make the company more appealing to its target market.
All of these give big returns on your ideal customer profile. So don’t wait. If you don’t have an ICP, prepare to gather data today.
Start with one step: figuring out who your best customers are. Once you’ve done that, you’re ready to build on it and start creating one of the most valuable resources your company has.