What is an Ideal Customer Profile?
If your business is like most of the B2B organisations we speak to, you’ve probably got ambitious sales targets.
Whether it’s through increasing MQLs, SQLs, sales or MRR, you want to see strong yearly growth, and to achieve it you only need one thing — more customers.
You might not be too worried about what those customers look like either. After all, sales are sales, right?
That may be true, but for growth to be sustainable it needs to be with the right kinds of customer.
This is where an ideal customer profile comes in, and getting this element of your strategy right might be the difference between enjoying long term success and suffering from high customer churn, as well as poor online reviews.
So what is an ideal customer profile, why is it important, and how can you go about creating one?
Definition of ideal customer profile
An ideal customer profile (ICP), sometimes known as an ideal buyer profile, defines what your perfect customer looks like.
Think of it as a fictitious company that boasts all of the qualities you’d want from a customer that’s the best possible fit for your products or services.. This might include their annual revenue, the industry they operate in, their marketing budget, the number of employees in a certain department, where they’re located and company size.
Note that, in this context, ICPs are only relevant for B2B organisations.
How are ideal customer profiles different from buyer personas?
“Hey Aira, you’ve told me before about buyer personas and I spent a load of time creating them. Now you’re changing the name and the definition. What gives?”
Well, they’re not actually the same thing.
Although a B2C organisation could use the terms ‘ideal customer profile’ and ‘buyer persona’ interchangeably to describe their perfect customer, for B2B markets the difference can be defined like this:
Buyer personas are a semi-fictional representation of the people that buy from you. An Ideal Customer Profile is similar, but at the organisational level.
The ICP identifies whether or not the organisation is the right fit for your products/services. If so, it’s the different buyer personas you’re going to have to convince by explaining how you solve their unique challenges and help them to achieve their goals.
Why create an ideal customer profile?
Does every lead you generate get sent straight to sales for qualification?
If so, they’re probably wasting a lot of time prospecting leads that are never going to become—or are unlikely to become—customers.
You might sell to a wide range of different companies, but the most successful companies know where they win the most business and focus their efforts there.
A great sales rep might be able to sell to every lead, but when you take on new businesses that aren't a good fit you end up with high rates of churn and unhappy customers.
Defining your ideal customer profile is particularly valuable if your organisation utilises account-based marketing (ABM).
An ICP will allow you to focus on selling to the accounts you know fit with your organisation by:
- defining the problems you solve
- aligning your services with customer needs
- plotting a roadmap for product/service development
The stats back this up too.
Research has found that organisations with a strong ICP achieve 68% higher account win rates.
How to create your ideal customer profile
If you know your customers pretty well, you might be tempted to put your ideal customer profile together quickly, but don’t rush this. Your ICP is one of the most important elements of a successful sales and marketing strategy.
1. Make a list of your best customers
A great place to start for identifying your ideal customers is to think about who your best existing customers are.
Compile a list of the customers that were responsible for the largest deals, highest MRR, or whatever success looks like for your business.
It’s also worth taking the time to think about what your least ideal customers look like. This will ensure your sales team spends less time working leads for companies that are unlikely to be profitable.
2. Speak to some of those customers
Existing customer demographics will show you who’s buying your solution, but not why.
Taking the time to actually talk to your existing customers is the best way to understand exactly why they purchased your product/service, with subjective questions providing a deeper level of understanding than data alone.
This might be in the form of a Zoom call or survey, and it’ll help you determine how you can target accounts that might have the same pain points they did.
Other example ideal customer profile questions might include:
- “Why did you choose us over our competitors?”
- “Why do you think our organisation is a good fit for yours?
- “Which key decision makers were involved in the sales process?”
- “What were you looking to solve when you purchased our solution?”
- “How is our solution used day-to-day within the organisation?”
- “Why have you continued to use our solution/services?”
3. Identify common attributes and prioritise
Now you’ve got your list of your best existing customers and secured some real world feedback, what trends are emerging?
Ideal customer profile example metrics might include:
- Annual revenue — this will be a major signifier of the budget they’ll be working with. If their annual revenue is too low will they be able to afford your solution? If it’s too high are they going to be looking for a level of service you’re not yet set up to deliver?
- Industry — while some businesses are set up to work with any industry, the vast majority excel at a select few. You might have already specifically niched your offering, or you might’ve never considered it before, but after compiling your existing customer list you’ll probably start to see a pattern of which verticals you’re most successful in.
- Organisational structure — what stakeholders are involved, and how does this influence how you work with the business? It might be that the presence of a single buying persona makes the difference between a good and bad fit organisation.
Locality — are your best customers located in your home market, or do you excel abroad too? For example, the majority of our clients are UK based, but around 40% of our clients are in other countries.
4. Document your ideal customer profile
Once you’ve identified your ideal customers you need to document it and share it widely within the organisation. This includes sales and marketing, but also customer success teams and senior stakeholders.
Your ICP, alongside your buyer personas, should inform your organisation’s long term objectives, as well as sales and marketing strategy.
Ready to create your first ICP? Download our ideal customer profile template.