#gxmxp Series

Ideal Customer Profiles: Part One

The concept of the Ideal Customer Profile (ICP) has been around for a long time. It has been heavily researched, written and talked about. Yet we still see the majority of startups get their ICP wrong or worse, fail to create an ICP at all.

This is a relatively long post because the ICP exercise is critical. It will take time to complete the exercise and it will pay-off in the long-run. Rush through the ICP at your own peril!

Completing your pipeline and account review was the first step to identifying who your ideal customers are. After that last post, you should be able to identify clear behavioral patterns and common characteristics that when put together begin to bring the makings of a specific ideal customer profile into focus. 

Now it’s time to apply those patterns to create, validate and codify your ICPs. We recommend doing this exercise right after Current Account and Pipeline Review so that the learnings are still fresh.

This forces you to codify your learnings from the last phase. As we work through this exercise, we’ll also be validating your hypothesis about your ICP in order to weed out weak ICPs while fortifying arguments for strong ones.

Trying to sell without knowing your ICP is like trying to drive with your eyes closed.

Click to Tweet

First, scroll over (or down on mobile) to the Resources / Downloads area and grab the Ideal Customer Profile spreadsheet. Fill it out as you read this post. To help, we’ve also included an ICP Prioritization Definitions download.

Setting the foundation for finding your ICP

Before we jump into the exercise, let’s first make sure that we have a common understanding of what an ideal customer profile is and your specific ideal customers. You’ll remember from previous posts in the #gxmxp Series, this isn’t about finding Mr. or Mrs. Right. You’re looking for Mr. or Mrs. Right Now.

These are the people who you could you actually serve with your product today who also have a pressing need to have it resolved soon.

An ideal customer profile exercise isn’t about finding Mr. or Mrs. Right; it’s about Mr. or Mrs. Right…

Click to Tweet

Why Businesses Buy

There are four reasons people buy products in B2B environments and the four pain points that lead to those reasons:

  1. Make Money: A company will buy your product or service if you can demonstrate that it will either directly or indirectly help them make more money. Today, the company or business unit wants, needs or is obligated to continue to drive revenue for the company. To do so, they need to find products, services or new markets that help them attract, retain or upsell more customers.
    • Example : Ecommerce company wants to increase revenue. New technology solution automatically recommends products frequently bought together based on individuals previous purchase behavior. By bundling products together through a recommendation engine, cart sizes increase and in turn so does revenue.
  2. Save Money: A company will buy your product or service if you can demonstrate that it will help them save time and/or money. In these situations, customers are typically stuck performing job functions in time consuming and inefficient ways. Keep in mind that the single biggest cost for any company is labor.
    • Example: Freight trucking firm wants to reduce maintenance costs across a 100 truck fleet. New technology company identifies the critical part failures before they happen which in turn reduces the incidence rate of costly critical part failures as well as the amount of time per truck the maintenance team has to spend replacing parts.
  3. Gain a Competitive Advantage: A company will buy your product or service if you can demonstrate that you can help them continue revenue and market share growth by establishing or reestablishing a competitive advantage. Right now, these customers either don’t have a way or are looking for the next way to set themselves apart from other companies in their industry.
    • Example: A leading baby monitor company needs to create market differentiation. A new technology enables newborn heart and respiration rate monitoring without the need to attach dangerous wires to the baby. Improved data and safety capabilities creates market differentiation and in turn enables a company to make more money.
  4. Improve Compliance / Minimize Risk: A company will buy your product or service if you can demonstrate that you can help them comply with laws or regulations.
    • Example: A sales organization that runs outbound customer acquisition campaigns needs to keep their lead engine running without breaking new privacy regulations or face a fine. A new technology enables outbound customer acquisition campaigns that fit within the privacy regulation framework and provides reporting documentation to prove compliance.

As you think about each ICP, you’ll want to keep an eye out for companies that check more than one of the four boxes above. However, more importantly than the number of boxes checked is the relative size of the pain that you solve. 

Market Needs

With a resource-strapped sales organization, it’s critical to dive deep into the needs of your customers.

The larger the pain point for the customer, the more motivation they’ll have to solve that pain. It’s better if you do not need to convince customers that they have a problem you can solve. If they don’t already know, you also have a marketing challenge and you need to budget time, money and expertise to solve that marketing challenge.

The key question to answer is: who has the biggest needs that you can solve right now? The size of need is irrelevant if you can’t solve it now (i.e., your product, not your product roadmap).

If you fail to narrowly define your business offerings in terms of the problem you can solve for customers, your sales pipeline will suffer.

While going through the ICP exercise, it’s important to keep your assumptions about your customers logical, practical and grounded. When thinking about who has the biggest need, it’s very easy for founders to say the answer is “big companies.” But you need to determine if that’s true.

Is the need generally known at a big company so that decision makers with budget will move quickly to have that resolved with your product or service? Or is your product or service actually better suited for small businesses? 

If you don’t have the ability to solve problems for the big companies with the resources you have right now, then they aren’t a part of your ICP for now.

Don’t make the giant leaps to the biggest amount of cash you can grab.

It’s all about who you can help the most right now with the product or service you currently offer.

Who Shares Your Worldview? 

The purpose of creating an ICP is to enable you to know where to focus your limited market development budget. Even if you are able to identify ICPs with clear business needs that you can solve for, often the total addressable market is still too large to capture in a capital efficient way.

Along with identifying need, you also need to keep in mind that you should only be looking for companies who share your worldview and demonstrate the behavior of an early adopter. These are companies who want to see the same future that you see. 

You want to avoid going after industries or companies that don’t value spending money to solve the problem that your product solves. For example, if you had a premium WiFi technology for the airline industry, who would you go after first? Emirates or Spirit Airlines?

Just because both companies are in the same industry does not mean they behave the same way or more importantly value the same things. In this instance you would go with Emirates and other airlines in their class because they value premium features in their customer experience relatively more than a budget airline like Spirit.

As for early adopters, you need to focus your efforts on them because they’re the only ones with the right mindset and willingness to work with incomplete and unproven products. These companies understand that with risk comes reward.

The biggest and best companies in the world did not get there by accident. They understood that investing to constantly improve their own business would lead to market leadership and continued profitability.

Early adopters are typically companies that have good innovation teams, that invest in other startups, that describe them themselves as innovative as technologically advanced and that have a website that demonstrates that they care about technology.

They’ve dealt with startups before and know that your product may not be fully built out, but it’s okay because they are capable of envisioning a partnership of mutual success rather than just a transaction.

Focus on customer profile, not company profile

One of the main blockers that we see with founders today is they mistake an Ideal Company Profile for an Ideal Customer Profile. An ideal company profile is a logo-approach to market development. It focuses on what founders know about a company at large and assumes that a brands marketing positioning is enough information to validate need. This is simply not true.

The most important part of an Ideal Customer Profile is the Customer. The individual who feels the burden of their current problems, has a need that must be solved and will feel the impact of having that issue resolved. 

When building your ICP, you must push yourself to go beyond company generalizations and focus down to one, single individual buyer. Once you focus on an individual, his or her worries, wants and needs come into clear focus and you are able to accurately identify if they are a fit or not.

If you’re Ideal Customer Profile is not focused on a specific individual then your messaging, go-to-market strategy, learning and ultimately revenue will suffer.

With all of that in mind, let’s dive into the ICP exercise!

Dive into Data 

For the first part, we’re going to brainstorm and identify as many ICPs as possible based upon your findings from your account review. Go through each of the columns in the first tab of the ICP spreadsheet and fill in the following information:

  • ICP name: This can be anything that you want to call this potential ICP. It can be vague, like “exhibitors,” or very specific, like “top 100 high school football programs in the southeast.
  • Industry: List the industry they’re in. For certain products or services a single ICP can have multiple industries but try to avoid doing so.
  • Ideal Companies: Once you have an industry, start identifying the ideal companies. The key word here is ideal. As discussed above, you want to focus on companies that are early adopters and that will likely share your worldview.
  • Functional Group: Within your ideal company, which department would have the budget and sign the check for your product or service? Likewise, which department will use your product? Typically those answers are the same, but sometimes they aren’t. It’s important to clarify because we’re moving away from a company profile and more toward an individual buyer profile at this stage. 
  • Influencer Title/Roles: Who has the power to write the check for this product? This person is the economic buyer and will be the focus of all your go-to-market efforts. You also need to ask who the users are. And be as specific as possible with titles. By specifically identifying our economic and user buyers, we will be able to effectively craft your messaging that resonates to their specific needs as an individual rather than as a company.
  • What jobs are they performing: In order to understand what business issues our ICPs are facing, we need to understand what jobs the individual economic buyer is performing and what they are responsible for. The economic buyer is usually responsible for managing a team to accomplish specific goals. Think about what those goals may be and what are the most important specific actions they do to achieve them? Best practice here is to get into the minutia of their daily workflow.
  • What pains are they experiencing in performing this job: Think about what makes your ICP’s job difficult. What part of their workflow, processes, technology or other circumstances are getting in the way of job performance? Most importantly, what is the business impact that these problems create? Only focus in on pains that you and your product can solve instead of every possible problem this customer has.
  • What worries them: What keeps your economic buyer up at night? Consider this question from both a macro and a micro point of view. What industry trends or forces are starting to impact their business? Are there resources they never have enough of? Is there a target that they regularly need to meet?
  • What metrics are they responsible for: At the end of the day, there are always metrics to evaluate either the health of a business or a business unit. Your economic buyer has to justify these metrics either to their boss, investors, shareholders or themselves on a regular basis. What metrics is your economic buyer directly responsible for? What are the most important KPIs that their boss would look at to evaluate whether or not they are leading the department in the right direction? How are they measured?
  • Which of these metrics does your product/service impact and how: Now that you know what metrics matter to your ICP, identify which ones your product or service can impact. Don’t stretch the truth or force fit. The goal is to validate ICPs, not make every single idea work. If you can’t clearly identify how your product or service can impact the most important metrics directly, then that might indicate a bad fit.
  • What are the reasons for the economic buyer to buy: You know how your ICP does their job, what makes their job difficult, the business impact of that difficulty and the metrics that drive job performance. With this information, the pain of continuing to do business via the status quo should be very obvious. Now translate that pain into gain and identify one or more of the four reasons we mentioned above that would make your ICP buy.
  • Revenue potential per customer in the first year: Using what you know now, describe first year revenue potential. We like to keep it simple and just use terms like “high,” “medium,” and “low.”

When you’re finished going through this, you should have a hypothesis about your ICP that sounds something like “We enable {title/role} at {industry} companies to {reason(s) to buy} by helping them improve {key metrics} and solve {problems}.

You’ll do this for every ICP that you come up with.

Attention startups: ICP = Ideal Customer Profile, not Ideal Company Profile!

Click to Tweet

If you go all the way through this exercise and really look at each individual, you should be able to tell which ICP is the strongest. 

Next week we’ll continue our ICP exercise. In Part Two, we’ll go deeper on each profile. Instead of listing brand names, we’ll capture every company that has the behaviors and characteristics of our ICP.  To do that, we need to come up with the characteristics that we should be on the lookout for.

That’s up next in our #gxmxp Series!

Highlighter Stats
6 total highlights

Leave a Reply

Your email address will not be published. Required fields are marked *

Add Comment

Viewing Highlight

Forgot password?
New to site? Create an Account

Already have an account? Login
Forgot Password