What is An Ideal Customer Profile and Why Do You Need One?
In the past, market experts have emphasized the concept of settling for realistic goals rather than idealistic ones.
This means that marketers have historically set achievable objectives and tapered their expectations in an attempt to minimize losses while maximizing their wins. Though this is undoubtedly good advice, there are times when it pays to be idealistic. One instance where idealism pays off is when developing an ideal customer profile (ICP).
If you aren’t familiar with the term, an ICP is a description of a client who will get the highest benefits from your business products while giving your company the highest value in return. If you are a B2C or B2B company struggling to stay afloat, it might be a consequence of overlooking the essence of an ICP in your marketing strategy. 70% of companies fail within a year of their opening. Having an ICP minimizes the risk of your startup being part of these dismal statistics.
Below is all the vital information on what an ICP entails and how you can use it to boost your company’s profits.
What is an ICP?
An ICP describes the ideal customer you should be targeting with your marketing and to whom you should offer your services and products. The ideal customer profile will detail everything you should know about the people to include on your customer list. When working in a B2C company, the ICP includes factors and aspects that your target clients often share, like their ages, hobbies, purchasing habits, job titles, challenges, goals, locations, and income scales, as this figure summarizes.
For a B2B company, the ICP is an imaginary description of the company or organization you wish to attract to your brand. This is usually the company with the most successful sales cycle, highest customer retention rates, quickest sales cycle, and the best ambassadors for your brand. Your ICP, in this case, includes the ideal company size, location, and revenue, among other data relevant to your marketing approach.
Ideal customer profiles focus on the client's fit for your company and will not delve deep into customers you might come across. Even so, once you identify your ICP, you should train your sales reps on how to speak with a variety of clients and equip them to address any issues they might encounter.
Is There A Difference Between Target Market, Buyer Persona, And ICP?
The description of an ideal customer profile might somewhat mirror that of a buyer persona. Nevertheless, there are stark differences between these terms common in target marketing (account-based marketing). In most cases, ICPs are used for B2B marketing.
In B2B marketing, an ICP is a set of characteristics of a fictitious company that is most likely to invest in your products or services and actualize a high return for your company. A buyer persona refers to the people involved in a purchasing decision at the company that makes up your ICP.
The details of your ideal customer profile will often inform your buyer persona, as shown in this diagram. Still, the latter is defined by demographic attributes like job title, income, seniority, function, and role. Here is an illustration differentiating customer profile vs. buyer persona. Most important, you should understand the challenges of your buyer persona and how your product will solve them.
Simply put, a buyer persona is primarily used for buyer enablement marketing and is focused on individuals in a company like a project manager or sales manager. On the other hand, an ICP zooms out of a buyer persona to focus on an entire organization. Usually, you will need both an ICP and a buyer persona to achieve the highest benefits in account-based marketing.
The definition of the term "target market" is also a bit similar to that of an ICP. Even so, while the latter is mainly used in B2B marketing, the former applies to B2C marketing. Rather than a company, a target market describes your customer base that will benefit most from your services and products.
Benefits of an ICP
Now that you appreciate what an ICP entails, you might be wondering if you need one. The short answer to this is that you do. According to Tech Validate, 99% of marketers in a survey said that the creation, storage, and leveraging of customer profiles was a crucial element in their jobs. Below are the benefits that might have led these marketers to consider ICPs essential:
Eases lead generation for companies
When coming up with your ICP, you will focus on the exact traits that your ideal clients should have. The data used at this time will be very beneficial for your sales team. The team can use the data to actively generate leads that suit your ICP.
When a lead does not match an ICP by at least 50%, sales can exclude the person from your marketing funnel. This is easier and cheaper than running ads on different platforms for potential customers who might not be your ideal buyer.
Hastens the qualification of new targets
Not all leads that make it through your sales pipeline will convert. In fact, here is a chart showing the percentage of B2B conversions in different industries according to data by MarketSherpa.
An ICP makes it easier to identify prospective customers that are most likely to convert so that you focus your marketing efforts on them. You will consider a new client's profile against your ICP, then prioritize the one that qualifies for nurturing.
Improves account-based marketing
Personalization in marketing is the new norm. A report found that 52% of clients do not mind sharing their data in exchange for discounts or personalized offers. When investing in account-based (target) marketing, your sales team personalizes communication with each of your leads. This is tough to handle on a large scale because it will mean investing too much in all leads.
With an ICP, you can focus on groups of potential customers that match your ideal client and target their challenges as laid out in the profiles. Your sales team can then focus on how your product will solve these issues to maximize the odds of converting a lead. This will increase your returns because 49% of clients, according to a 2017 study, make spot purchases because of personalized marketing experiences.
Builds customer lifetime loyalty
Your company's job does not end when you convert a lead into a customer. Customer retention is among the crucial tasks of a business because customer churn can eat into your bottom line. This entails keeping clients hooked to your brand and convincing them to make more purchases or sign up for long-term contracts. This is particularly essential when you realize that it costs five times more to get a new customer than to retain a loyal customer.
With an ideal customer profile, your marketing team will know a client's interest, and how best to personalize the post-purchase adverts. Understandably, customers will be more than willing to patronize your brand when you are sending them relevant content on your products. Building customer success and loyalty maximizes your clients' lifetime value, lowers your marketing expenses, and increases referrals.
It helps to align your employees to your value propositions
An ICP will align your sales and marketing teams to your company's core value proposition. When the teams are unsure of what your product or service delivers to your clients, their marketing pitches are often jumbled and will not draw in clients. A study revealed that aligning the sales and marketing teams to your core value proposition could actualize a 38% increase in sales win rates and a 36% rise in customer retention rates.
A Step-By-Step Guide for Creating an ICP
An ICP is not a one-size-fits-all solution. It is highly customized to match the needs of your company for the highest benefits. Fortunately, getting the perfect ICP is straightforward. Here are the crucial steps you should follow when creating the most effective customer personas for your ICP:
List your best clients
When creating an ICP, your first step is to identify your best current clients then compile a list of the notable attributes they share. Remember that the "best clients" are defined differently. For instance, you might pick the ones that have stayed the longest with your company, while another company might settle for those that take the shortest time to convert.
Get as much information as possible on your existing clients to know the best ones. You should also know what elements make these the ideal customers for your brand. If you are a B2B company, consider how fast your ideal company is growing and its location since they affect your sales process. You can use a business intelligence solution or spreadsheet to layer the customer data and quickly identify the ideal clients.
Conduct customer profiling and research the common attributes of your target customer
When evaluating your data, note the common traits of the perfect customers. These may be tied to customer acquisition costs, sales cycle length, or revenue, among other elements relevant to your customer engagement. Aim for 5-10 main attributes that define your ICP.
After identifying the list of attributes, be specific so that you paint a picture of a perfect client instead of simply any client. It is best to gather the characteristics from several sources, including tool-based analysis, surveys, and software solutions like Breakthrough that gather market intelligence. Create 2-3 ICPs at this point based on your current research.
Outline the challenges and opportunities
From your data, identify opportunities and challenges among your ICPs and have a plan for addressing the challenges. Furthermore, document how your service or product will serve your ICP and how you envision your future with your prospective and current customers. Be clear about your value propositions so that you can measure the way your service or product features will help clients. Keep in mind that different members of a buying committee may have varying challenges.
Document the findings in an ICP
Once you are through with your research, combine the findings to create your customer profile examples. This profile should paint a detailed picture of the exact client for whom you are making a product. The ICP will guide your sales and digital marketing teams on where they should focus their marketing efforts.
How to Leverage Your ICP
Creating the perfect ICP for your company is not enough to generate the marketing profits you envision. Below are a few tactics for leveraging an ICP to maximize your marketing profits:
1. Lead Scoring
When creating an ICP, you will discover some common denominators among your clients. These characteristics impact your lead scoring mechanism. For instance, when targeting large companies in your B2B marketing strategy, you can choose a minimum revenue threshold or high employee number as your lead scoring parameters. This ensures your marketing team does not waste time on clients who are unlikely to benefit you.
2. Ads targeting
With the knowledge you have gleaned when creating an ICP, you now know the right people and user personas to target with your ads. Create placement-based and custom affinity audiences according to the interests in your ICP, then show your ads on the sites these audiences visit.
3. Account-based marketing
Account-based marketing and ICP seem like they are made to complement each other. The ICP describes the perfect clients for your target accounts, while account-based marketing gives you highly targeted and personalized marketing campaigns according to an account's characteristics.
Your ideal clients might be comfortable with long-term prices if they are likely to sign a long-term contract for your product or service. Small business owners, on the other hand, might be more comfortable with monthly-based pricing. An ICP reveals the revenue of your clients to help you define your pricing model.
Enhance Your Customer Journey with Breakthrough
From the aspects covered in the article above, you now understand that creating your ICP allows you to refresh your sales team's focus. In doing so, you will bring in the best prospective customers to contribute to your company's growth rather than waste time prospecting a vast ocean of potential and key customers.
Remember that developing your ICP is not a one-time step. Your ideal customer type will change as you grow and the business landscape changes. Have strategies to revisit the customer profile regularly to reflect any changes in your product, external trends, and audience.
Though the changes might seem challenging to include in your strategic plan, this will not be so with the right software. To ease the inclusion of your ICP into your company's strategic plan, get Breakthrough operating software. This step by step process allows you to easily build a smart and applicable growth strategy for your business with its step-by-step framework
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