Every salesperson understands that during lead qualification they need to decide whether there is a customer-product fit or not. But not all businesses have well-defined parameters for checking whether there is a fit.
Identifying your Ideal Customer Profile (ICP) is the process of identifying who you should be selling to.
Defining your ICP is more than just the customer segmentation based on the product market fit. It requires you to understand the value proposition that your product or service is offering and the pain points your business is solving. This allows you to focus on a targeted group of customers who will respond well to your sales and marketing efforts.
Let’s look at how to nail the ICP for your business:
1. Start with what you know
Many businesses start looking out at competitors to create their own ICP. While competitor research is important, the first step should be to take a look at your existing customers and analyze the trends in their behavior.
If you are a SAAS business, you want to look at the Churn rate of the customers by industry. Take note of which customers churn the fastest vs which stays the longer. Another metrics you might want to focus on while picking up the industry verticle by looking at the current data is the Customer acquisition cost (CAC). Make sure to consider different metrics while concluding and not basing it on a sole metric.
If you are a new business starting from scratch, you will want to look at your competitors and your experience for additional insights. Don’t make unrealistic assumptions and make sure to update the data with real insights as soon as you start acquiring new customers to reach towards a more accurate ICP.
2. Don’t just assume, Verify
Do not assume why certain customers buy your products and specifically chose you. You will be amazed to hear what your customers have to say. It’s ideal that you have these talks over the phone or in-person which provides a more detailed perspective of the customers, but you can also use survey tools.
Call and interview your best customers. Ask questions related to their purchasing decisions as well as how your product solves their pain points. Some example questions include:
- Why did they decide to purchase your product?
- Did they consider any other options?
- What problem did the product solve?
- How were they solving their problems before?
- Is there something additional that they expect from the product?
Map out and really understand how your existing customers act from the awareness stage till the close of a sale and what makes them stay. This exercise will also help you to create better messaging that presents your product as a solution to the pain points these customers have.
3. Accumulate and Disintegrate
Take all the data you collected through market research and better understanding your existing customer base and disintegrate it by the relevant characteristics such as the following firmographics (data about companies):
- Industry or vertical they operate in
- Geographical location
- No. of Employees
- Annual revenue
- Age of the company
These firmographics provide you with further insight and clarity into your Ideal Customer. For example, company size and annual revenue let you decide if you want to cater to Small and Medium-sized Businesses (SMB’s) or to bigger companies. Similarly, defining the industry or vertical helps you better position your product.
You should also focus on the ICP’s pain points, long-term goals and individual goals of the decision makers as well as the person who will be using the product. This enables you to deliver a better sales pitch as you understand their pain points and how your product helps everyone reach their desired goals.
4. Validate your Findings
All the effort won’t mean anything if it’s not documented properly and not put to action. Everyone in your team from sales & marketing to C-level management should understand who the ideal customer is for your business. This clarity helps each team perform better in their respective area and cater to the needs of the target customers in the best way suited to them.
Use your Ideal customer profile to generate high-quality leads for and a more streamlined sales cycle.
Once you have laid down the ICP, the next steps include creating Buyer personas based on the above findings, marketing strategy to reach this segment, testing your messaging, including storytelling to your sales efforts and measuring the results.
Creating your ICP leads to the best use of the Sales & Marketing efforts. Download the sample template to create your very own ICP here.