Crafting an Ideal b2b Customer Profile 

 

Years ago, I set out to decrease the mortality rate among innovative companies. I’ve since changed the language from decreasing the mortality rate to increasing the thrive rate. To that end, I want to start making the tools I’ve used to help businesses thrive over the years in hopes that more companies will thrive and do amazing things.

 

In the dynamic world of business-to-business (B2B) selling, change seems to be the only constant. Among all the change, I keep coming back to this tool to drive efficient growth in the companies I work with: a well-crafted Ideal Customer Profile (ICP). This invaluable tool is a repeat game-changer for marketing, sales, and customer success, as well product teams. I want you to come along with me as we dive into the 1) importance of creating an ICP for your product and go-to-market (GTM) teams at the company level, 2) what an ICP is (and is not), and 3) get down to how you can create an actionable ICP that empowers your team and drives the results you’re after.

 

Pro-tip: Use the product-market fit score to identify the customers who are the best fit for your product.

 

 

Defining the Ideal Customer Profile (ICP)

 

So if an Ideal Customer Profile is so important, WHAT is it? Maybe we should start with what it isn’t.

 

 

Your ICP isn't a static document. In fact, the document isn’t the ICP at all, it’s just a document.

 

 

Your ICP isn’t a description of every single company that could use your product.

 

 

Your ICP isn’t a detailed view of the people at the company who use or buy your product.

 

 

So what is it then? As a B2B company, your ICP goes beyond personas and zooms in on the characteristics, behaviors, and priorities of companies that perfectly align with your product or service. It's the key to understanding the ideal fit at an organizational level, ensuring that your efforts are focused where they matter most. It's the North Star guiding your B2B journey, and should inform the vast majority of decisions in your GTM and product organizations.

 

 

*Note that as your business grows you may have multiple ICPs, as well as different segments within the same basic profile.

 

 

Benefits of Profiling Ideal Customers

 

Too often the concept of an ICP becomes little more than a buzzword. A "table stakes" document investors or partners expect you to create, only for it to figuratively collect dust sitting in some Drive folder everyone has forgotten about. Next thing you know you have marketers and sales reps and product managers who each have their own idea of who the target is for the product. And often each of them could be right. Less often are they aligned, which means your marketers are marketing to one audience, while your sales reps are selling to another one, and your product team is building for someone else. You start hearing "this isn't what I thought I was getting into!" from your customers with increasing frequency.

 

So what are the benefits of taking a proactive approach to profiling your ideal customer? Here are the ones I've seen over and over again in my time as an investor, consultant, and operator.

 

 

1. Enhanced Product Stickiness: The ICP empowers you to construct your product or service with surgical precision, addressing the specific pain points and needs of your ideal customers. It fosters an emotional connection that keeps them coming back, increasing customer loyalty and retention.

 

 

2. Sharper Targeting for Marketing and Sales: A well-defined ICP serves as the guiding light for your marketing and outbound sales strategies. It helps you pinpoint the right audience, reducing the noise and wasted resources, and leading to more productive sales conversations.

 

 

3. Increased Conversion Rates: When your messaging aligns seamlessly with your ideal customers' needs, conversion rates soar. The clarity that an ICP brings ensures that your marketing and sales efforts resonate with your target audience, driving higher conversions throughout your sales funnel.

 

 

4. Accelerated Sales Cycles: Bid farewell to prolonged sales cycles and welcome efficiency. An ICP streamlines the process by enabling you to focus on prospects who are an ideal fit. The result? Faster deal closures and revenue generation.

 

 

5. Improved Unit Economics: Concentrating your resources on customers who fit your ICP lowers acquisition and retention costs. This means higher profitability as your customer lifetime value increases and the cost of servicing decreases.

 

 

6. Larger Contract Values: Ideal customers often come with larger budgets and a greater willingness to invest in your solutions. As a result, your business can secure larger contract values and tap into more significant revenue opportunities, further improving unit economics.

 

 

7. Strategic GTM Hiring: An ICP doesn't just guide your customer-facing teams; it influences your hiring strategy too. Armed with knowledge about your ideal customers, you can hire individuals who are best suited to engage, sell, and support them effectively.

 

 

Crafting Your Ideal Customer Profile: A Primer

 

 

Cool story Ethan. But how do I get to an actionable ICP? Thanks for asking, that’s the $100,000 question! While a thorough description of how to profile your ICP is beyond the scope of this post (maybe later!), I’ve included the high-level points I ask clients to answer below, that will help you start filling out your own ICP.

 

 

1. Identify Your Top 3-5 Customers: Start by examining your existing customer base. Who are the top 3-5 clients that have proven to be the most profitable and satisfied with your offerings?

 

 

2. Size Matters: What size dimension is most relevant to your business’ relationship with your customer? Is it based on revenue, employee count, how many locations they operate, or some other size-related figure? What are the bands within those figures that your best customers fit into, e.g. is 100-250 employees ideal, or is it 1,000+? Two otherwise similar companies will likely have very different situations.

 

 

3. Unveil Their Business Priorities or Metrics: What are the critical business priorities or metrics of your ideal customers? Do they prioritize revenue growth, cost containment, or other strategic goals?

 

 

4. Explore Complementary Products and Services: What complementary products or services are they using alongside your offering?

 

 

5. Recognize Incumbent Products: What existing solutions does your product or service typically replace within your ideal customers' workflows? (Yes, Excel counts as an incumbent product.)

 

 

6. Analyze the Buying Committee: Who are the key decision-makers, influencers, and stakeholders involved in the purchasing process?

 

 

7. Engage with Key Leadership: Who are the key leadership figures with whom you typically collaborate to close deals and nurture successful customer relationships? Do these change after the first contract is signed?

 

 

8. Summarize the company: Finally, in 35 words or less, describe your ideal customer based on the insights gathered from these steps. Being an ops guy, I also recommend tabulating the profiles above. Because tables are awesome.

 

9. Bonus points for getting objective data from your product-market fit score to identify which customers are truly the best ones for you to pursue.

 

 

Until Next Time

 

 

Crafting an Ideal Customer Profile is one of the most indispensable and pivotal tools for driving growth and efficiency in the B2B world that I’ve found over the years. It improves product stickiness, enhances targeting, boosts conversion rates, accelerates sales cycles, improves unit economics, increases contract values, and ensures strategic hiring alignment. By understanding and serving your ideal customers better, your business can thrive more than ever.

 

If you want a more detailed guide on how to define or refine your ICP, reach out using the form below and we'll send over our comprehensive list of factors to consider in defining an ICP.