How to build the ideal customer profile for your business
A step-by-step guide
Hi! In this week’s post I walk through the steps to build an Ideal Customer Profile (ICP) for your business. Whether you are building an ICP for the first time, or refining your existing ICP, you will find this post valuable.
What is an ideal customer profile and why is it important?
Your ICP is the definition of who your target customer is and why they need to buy your product — and is a critical component of your company’s strategy for two reasons:
In a go-to-market context, your ICP provides the inputs for building your target account list, building your prospecting process and qualifying prospects in the discovery stage of your sales process.
In a product development context, your ICP provides the inputs for deciding what to build (and what not to build).
The guiding principle for building an ICP is to be as specific as possible.
The more specific you are with your ICP, the smaller it makes your target market and the more it simplifies your GTM strategy.
While this may initially seem counter-intuitive, in practice it works because the smaller your target market is, the faster you can prospect, the higher your conversion will be and the faster you will learn what works. You can always expand later.
The key sections of an ICP are:
Company profile. This section describes the attributes that describe the companies that are likely to need your product. You’ll generally find these attributes in your customer data.
Buyer personas. This section describes the people who buy your product, who they are, the pain points they have, the impact they are looking for and the critical events that drive them to seek out solutions.
Discovery questions. This section outlines example questions that your salespeople can ask your prospects to surface their pain points, impact and critical events. It also gives your marketing team direction for content creation and your customer success direction for what to focus on in a QBR.
A step-by-step guide to building an example ICP
For illustrative purposes we’ll use a hypothetical company called “BillPal” that sells a software solution for managing payments to vendors and suppliers. We break down the ICP building process into 3 steps:
Building your ideal company profile
Building your ideal buyer persona profile
Creating your discovery questions
1. Building your ideal company profile
The goal of the company profile is to describe the common threads between your existing customers in a way that makes it easy to identify potential customers without having to talk to them i.e. attributes that are visible from the outside.
The data points you need to assemble for each of your current customers are:
Current and previous year (or period) spend. This should be easy to get at from your accounting system.
Size: the most common metrics for this are the total number of employees, the number of employees in a given team (e.g. number of engineers) or the annual revenue (if available) of a company. If you haven’t already captured this data for each of your customers, you’ll need to do it manually or use a tool like PhantomBuster to scrape the info off LinkedIn.
Industry: the industry and sub-industry a company operates in. Industry taxonomies can be hit and miss, for example is a company like SoFi a tech startup, a fintech or a financial services company? It’s worth using the chatGPT plugin for Google Sheets to do this for you.
Company age: the number of years since your company was founded. This is very important if you are an early-stage startup as mature, older companies are more set in their ways and less likely to take a risk on you. If you don’t have this data already captured, it’s another good use for PhantomBuster.
Geography: either of the primary market they serve or the location of their headquarters (these are usually the same). You’ll most likely have this information in your CRM or accounting system as you would have collected it for billing purposes.
Technographics: the systems or tools that your customers either current use and you integrate with in order to provide your solution, or that they were using and you displaced.
Once you have this data assembled, the first analysis you need to do is to look at the revenue growth rate of your current customers by each of the attributes and identify the fastest and slowest growing slices of your business:
The second analysis you need to do is to look at the historical new customer win rate against each of the attributes. This helps you validate that your customer growth rate isn’t being skewed by non-repeatable outliers and helps you identify types of customers that you’re able to win easily - in our BillPal example its ad networks.
Bring this information together into a summary of your target company profile:
2. Building your ideal buyer persona profiles
The goal of the buyer persona is to describe who makes the buying decisions for your product and what drives them to do so.
The 5 attributes of a buyer persona are:
Role: the name you use to describe the persona. The best practice is to keep this consistent internally. The two most common examples are the executive sponsor, who funds the purchase and cares about the impact on business goals and the day-to-day champion who uses the product and cares about the impact on their workload.
Job titles: the possible job titles that the stakeholder in each role has. These can vary widely, even in traditional functions like finance. An easy way to find these is to look for the most popular job titles in your CRM. If you don’t have them in your CRM, you can get them during the deal review stage (see below).
Pain points: the common challenges that each role has in solving the use case or problem either with their current solution (which could be a manual process or a competitor product). Buyers in different roles will often have different pain points.
Desired impact: the results that each role is expecting from using your solution. Executive sponsors generally care more about quantifiable impact to business goals, such as reducing costs, increasing sales or reducing corporate risk. Day-to-day champions usually care more about emotional impact to their day-to-day, such as saving time, reducing repetitive work or reducing stress.
Critical events: upcoming projects or tasks inside the company that drive urgency to make a change. Some critical events are identifiable from the outside, such as hiring, fund raising, press releases etc whereas others like specific internal initiatives to improve productivity require asking questions.
The best way to identify these attributes is through doing deal reviews with your sales reps; ask each rep the same set of questions about a dozen of their recent closed won deals and then look for patterns. Here’s an example of a deal review with a BillPal sales rep for 3 deals.
After you’ve completed your deal reviews, bring the information together in a summary of your buyer personas. In our BillPal example, we have two clear personas with their own pain points, desired impact and critical events. There is some overlap between the two personas as they work in the same function.
3. Creating your discovery questions
The goal of discovery questions is to validate that the company is a match for your company profile and that the buyer is a match for your buyer persona.
You should be able to validate the company profile attributes before the call, from Googling the company, visiting their website and LinkedIn page and reviewing their job descriptions (job descriptions are an excellent source of information on internal tools).
Validating the buyer persona usually requires talking to the buyer. To make the best use of time on your first call, you want to prepare questions that quickly establish your buyer’s pain, impact and critical events, as without these you are unlikely to make a sale.
The fastest way to create discovery questions is to listen to recordings of sales calls and crowdsource ideas from your salespeople. Then organize them by pain point so that as soon as you identify a matching pain point you can ask follow up questions to establish impact and critical event.
4. (BONUS) Making your ideal customer profile actionable for your entire team
With your company profile, buyer personas and discovery questions complete you can now start making it actionable for your marketing, sales and customer success teams:
How to make your ICP actionable for marketing
Use the pain points, desired impact and critical event descriptions to create customer-centric messaging that shows your buyer what’s in it for them and helps you stand out.
Use the size and industry to determine the right mix of channels to focus on. If your ICP is smaller businesses you likely have to rely on organic search, organic social and partnerships, whereas if its larger businesses you’ll need to lean more on targeted paid marketing.
How to make your ICP actionable for sales
Enhance your discovery questions by adding context to them. This helps your salespeople quickly establish credibility with your buyer and makes your first call feel like less of a one-way interrogation.
Combine discovery questions into cue cards. This helps your salespeople improve their active listening skills, which leads to better problem solving, higher trust and fewer lost opportunities.
How to make your ICP actionable for customer success
Use the impact and critical event descriptions to ensure your onboarding process is designed around delivering first impact.
Use your discovery questions to train your CS team on how to improve retention and identify more expansion opportunities.
Need help building your ideal customer profile? Take my live course on Maven.
Every couple of months I teach a live cohort course on building your ideal customer profile and using it to inform build the rest of your GTM.
The course is for early-stage founders and VPs of sales (think pre-seed/seed/series A) who are struggling to break through the noise and build a consistent pipeline.
It’s a 2-week course on Maven where you’ll learn:
How to focus your ICP on high value targets likely to buy
How to write messaging that cuts through the noise
How to find warm leads in your extended network
Here’s what students are saying about the course:
"This class is a must-take for anyone trying to understand effective pipeline generation in 2024 and beyond."
"The course included tactically useful lessons that helped me build infrastructure for our GTM team. Will use this stuff for many quarters to come."
"The game has changed and this class shows you how to adapt."
"The content is hands-on and immediately actionable."
"Terrific course. Arnie has a wealth of knowledge that even the most experienced sales leaders could benefit from."
"Really enjoyed it! Very practical and Arnie is great."
If you are a founder or sales leader at a pre-seed, seed or series A startup and interested in learning more, email me at email@example.com or join the waitlist for the next cohort here.
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