According to a 2022 study from HubSpot, companies that have a clear ICP (Ideal Customer Profile) generate 50% more leads than those who don’t. Companies that have an ICP also have a 33% higher closing rate and a 20% higher customer satisfaction rate. These are just some of the reasons why it’s important for your company to create and maintain a clear definition of who your ideal customer is. Let’s discuss in more detail what it is and how to create one for your company to ensure you’re not wasting time with the wrong clients.
Understanding Your ICP
What’s an ICP?
The Ideal Customer Profile is all about knowing who your best customer is. Imagine you have a magic magnifying glass that shows you the perfect customer. That’s your ICP. It helps you focus so you’re not trying to please everyone, just the ones who will really love and buy your product. The ideal customer profile could be made up of things like company turnover, number of employees, location, etc. But, it could also be made up of the specific decision makers values, goals, and concerns. At Salesonomics for example, we target brave business leaders because you need to be brave to drive actual changes in a company.
Why Some People Get it Wrong
It’s a common pitfall to believe that casting the widest net will capture the most fish. However, when it comes to defining your Ideal Customer Profile, this approach can lead you astray. Many businesses, driven by the enthusiasm of sales teams who see potential in every handshake, fall into the trap of universal appeal. This overextension, however appealing in theory, dilutes the effectiveness of targeted strategies and can leave businesses chasing leads that are misaligned with their core offerings and values. Recognizing and focusing on your ICP is about embracing quality over quantity, ensuring that every effort is directed towards the most fruitful engagements.
Why It’s Better to Focus
The company Bunes & Ferenczi are experts at identifying ideal customers. They can with 95% certainty say that 50% of your total market is not a good fit for your company. Also, 30% of the companies that your revenue team is selling towards never are going to buy from you. They also say that 30% of your sales efforts are going down the drain while 25% of your current companies still aren’t a good match and 25% of your pipeline isn’t a good match for your company. Just imagine how much resources are going to waste by not focusing your efforts of a clear ICP.
How to Find Your ICP
The answer to finding your ICP is usually right in front of you. It’s hidden among your customers. Because there’s going to be some customers that are extra satisfied with your solutions, that have gotten a greater return on investment, and that have been great to work with.
5 Steps to Find Your ICP
- The first step in finding your ICP is to begin categorizing your customers. And we’re not talking about the boring A, B, C categories that are based on your last year’s turnover. What you must do is categorize your customers in one of the following four categories: Low potential & low profitability, low potential & high profitability, high potential & low profitability, and high potential & high profitability. You should ideally find your ICP in the last category with companies you have a high potential to grow with and where you can have a high profitability.
- The second step is finding out how these ICP companies became customers in the first place. What value does your customers say they get from working with you? What caught their attention? Why did they choose your company? For you to find out all of these things you also need to have structured customer follow ups in place.
- The third step is to begin identifying what concrete similarities your ICP has. Are they located somewhere special? Do they have a certain number of employees? Do they have a certain systems infrastructure?
- The fourth step is to begin defining what soft values that your ICP has. Maybe the company has to be innovative, brave, decisive, flexible, or something else that is important for you to work together.
- The fifth step is to begin diving deeper into the specific decision makers, or what some people like to call personas. What does your typical decision maker look like? Are they a certain age? Do they typically have similar responsibilities, etc?
Need help finding out how to tailor your revenue strategy to serve your ideal customers? Contact us, or read more about our Growth Audit that helps you take the first step towards an optimized B2B strategy.
Why It’s Important to Sort Your Customers
Now when defining your ICP you might find that there are a few different ICP’s. Maybe a certain ICP are more prone to buying one of you solutions, while another ICP is more prone to buying something else from you. That’s totally fine and we would even say that’s very common. Now why it’s important to sort your customers into different
Discussing Historical vs. Future Potential in Defining ICP
While historical data is invaluable, it’s also crucial to look ahead. Market trends shift, and what worked yesterday might not work tomorrow. Your ICP should be a living, breathing concept, one that evolves with your business and the market.
ICP’s Impact on Sales and Marketing
Understanding and defining your Ideal Customer Profile (ICP) is not just a theoretical exercise; it’s a strategic maneuver that can significantly amplify the effectiveness of your sales and marketing efforts. By targeting the segment of the market that is most likely to benefit from and appreciate your product, you not only streamline your resources but also increase your chances of closing deals and fostering loyalty.
How a Well-Defined ICP Leads to Increased Leads and Higher Conversion Rates
A sharp, well-defined ICP acts like a beacon, guiding your sales and marketing strategies towards the prospects that are most likely to convert. It’s about quality over quantity. Instead of chasing every possible lead, you focus on leads that align with your ICP, resulting in higher conversion rates and a more efficient sales process. This strategic focus ensures that your marketing messages resonate more deeply, your sales pitches are more compelling, and your product development is more aligned with customer needs.
The Role of ICP in Aligning Sales and Marketing Efforts
One of the perennial challenges in any organization is aligning the sales and marketing teams. A clearly defined ICP acts as a common ground, a shared understanding that guides both sales and marketing. It ensures that both teams are working towards the same goal – attracting and converting the ideal customers. When sales and marketing share the same ICP, their strategies and messages are coherent and mutually reinforcing, leading to a more cohesive customer journey and a stronger brand image.
Real-life Examples or Case Studies
Throughout our podcast, we discussed several success stories of businesses that transformed their sales and marketing strategies by adopting a focused ICP approach. These case studies highlighted not just the increased efficiency and higher conversion rates, but also the deeper customer insights and stronger brand-customer relationships that a well-crafted ICP can facilitate.
Strategies for Implementing ICP in Your Business
Understanding the value of an ICP is one thing; implementing it effectively is another. To truly reap the benefits of an ICP-focused strategy, businesses need to adopt a systematic approach, integrating ICP into every aspect of their sales and marketing operations.
Practical Steps for Businesses to Adopt and Implement ICP Strategies
- Data Collection and Analysis: Gather and analyze data on your current customers, market trends, and competitors to inform your ICP.
- Cross-Departmental Collaboration: Ensure that all departments, especially sales and marketing, are aligned on the ICP and understand how to apply it in their strategies.
- Continuous Refinement: Regularly review and update your ICP based on customer feedback, market changes, and business growth.
Aligning ICP with Business Goals and Resources
Your ICP should not be set in isolation; it needs to align with your overall business goals and the resources at your disposal. This alignment ensures that your ICP is not just ideal in theory but is also practical and actionable in the context of your business’s unique position and capabilities.
Tips for Maintaining Focus on ICP and Avoiding Distractions
In the pursuit of growth, it’s easy to get sidetracked by opportunities that seem lucrative but don’t align with your ICP. Maintaining a strict focus on your ICP requires discipline and a clear understanding of the long-term value of sticking to your core audience.
Understanding who your customers should be is as vital as knowing who they currently are. Just as we introduced the transformative power of an Ideal Customer Profile, we conclude by reinforcing its pivotal role in steering your company towards success. The journey from recognizing to implementing a well-crafted ICP is both an art and a science – one that promises a future of focused strategies, satisfied customers, and sustainable growth. Embrace the clarity that it brings, and watch as your business evolves, ready to meet the demands of an ever-changing market landscape.
Ready to transform your understanding of Ideal Customer Profiles into actionable strategies? Our podcast offers a treasure trove of insights, real-life success stories, and expert tips to guide your journey. Don’t miss out on the opportunity to redefine your sales and marketing approach – tune in now and start charting a course towards unprecedented growth. Listen, learn, and lead your business to new heights with the power of a well-defined ICP. Link to the podcast.