How to build your Ideal Customer Profile
How to build your Ideal Customer Profile
It's time to get precise
“What is your Ideal Customer Profile?” is one of the first questions I like to ask whenever someone asks me for GTM advice. I usually get responses along these lines:
“CROs at Mid Market companies with 50-2000 employees”
“Development teams at Fortune 500s”
“Marketing teams at tech startups”
“Anyone who builds apps”. (No joke, a founder actually told me this in a job interview a few years ago).
The common thread here is a lack of precision, aka sloppiness. While you could paper over a sloppy ICP in the past with free-flowing venture capital, today’s more sober economic climate forces you to make clear decisions about where to invest.
To make these decisions you need to start by answering the questions that inform your GTM strategy:
What is your strategy for generating demand?
What is your strategy for closing new business?
What is your strategy for expanding existing business?
What product do you build next?
As we shall see in this post, answering these questions with clarity is very hard if you have a sloppy ICP, whereas with a precise ICP the answers are obvious, making your ICP a critical driver of your GTM strategy.
How your ICP drives your demand gen strategy
What is the messaging that will separate you from the noise?
Sloppy ICP: If you target a broad range of company sizes, industries and growth stages, you will struggle to appear relevant to everyone with a single message because each segment cares about different things. You’ll fall back into having very product-centric messaging because your product is the only common denominator across your target market and in doing so, you will be unable to show buyers what’s in it for them.
Precise ICP: By focusing on companies and buyers with very specific attributes, you will develop a deep understanding of the problem you solve and for whom you solve it. This depth of understanding will enable you to create customer-centric messaging that hooks your prospects, demonstrates instant credibility in their eyes and positions you favorably against your competitors. From your prospect’s perspective, it’s like finding a new friend that just gets you.
Do you focus more on inbound marketing or outbound prospecting?
Sloppy ICP: If you are trying to land new logos across a wide range of ACV, you will have to do inbound marketing to reach the smaller ACV group and outbound prospecting to reach the larger ACV group because their buying behaviors are different. You can’t rely on one motion to reach everyone because the economics of doing so aren’t viable, so you have to do both, which sounds easy on paper until you get into the day-to-day of it and realize you need to coordinate and optimize two completely different marketing funnels.
Precise ICP: When you focus on a specific target market, your ACV will be more predictable, making it clear whether to focus on inbound or outbound and enabling you to go deep into the tactics to attract highly qualified leads that are likely to become customers.
What is the mix of organic and paid marketing that enables you to meet your CAC goal?
Sloppy ICP: Your customer acquisition cost (CAC) is directly related to your ACV. The lower your ACV, the more you will need to focus on organic marketing and affiliate partnerships because you are limited in how much you can pay per lead and how much volume you can get from paid channels. The higher your ACV, the more selective your buyers will be and the more you will need to lean on highly targeted paid marketing to filter out unqualified leads. If your ACV is all over the place you will have to pursue both these approaches and will find that measurement is near impossible.
Precise ICP: When your ICP leads to a clear and predictable CAC, you will be able to select the right mix of paid and organic marketing tactics, go deep on them to find a competitive edge and dial them in to acquire new customers profitably.
How your ICP drives your new logo strategy
Do you build a self-serve channel or hire a sales team?
Sloppy ICP: The lower your new logo ACV, the more likely you’ll need a self-serve channel because the economics of having a sales team aren’t sustainable. As your ACV climbs, your buyers will have more questions around features, ROI, security, billing, privacy and liability that necessitate having a salesperson to coordinate the buying process and get all the buying stakeholders aligned. If you attempt both, you will need to decide out which leads go into self-serve vs to your sales team (always a fun topic!) and allocate your product and support resources across optimizing two very different buying processes.
Precise ICP: When you have a predictable new logo ACV, choosing between a self-serve channel and hiring sales team becomes obvious, as does defining the details of the sales process, as the more you charge the more exhaustive the process needs to be in order to make a sale. This applies to both the self-serve and sales team channels.
If you hire a sales team, what questions will they ask to predictably surface your buyer’s pain, impact, critical events and decision making process?
Sloppy ICP: When you target a broad set of customers, your team won’t know anything about the customer’s business, so they’ll ask a bunch of generic open-ended questions and the moment they hear something vaguely familiar they’ll start feature dumping in long monologues that dominate the conversation and turn off your buyers. They’ll also struggle to bring decision makers into the process because they’ll lack the insights that get execs’ attention.
Precise ICP: When you target a narrow set of customers, your salespeople will hear the same problems from the same types of buyers over and over again. They’ll ask specific questions that get to the heart of the customer’s problem, frame their questions with context that shows they understand the buyer’s problem, ask follow up questions to surface the impact of solving the problem, suggest likely critical events that are top of mind for the buyer and prepare clear summaries and proposals that decision makers will approve.
What enablement and training will you give your sales team?
Sloppy ICP: When you target a broad range of customers, your salespeople will have to field a broad range of product questions and buyer objections, position against a broad range of competitors, retain a diverse set of pocket stories and navigate a range of procurement processes. It’s a lot to juggle. To enable them you have to build and maintain a large library of sales materials, do frequent training sessions and pray they retain the information. Oh, and good luck ramping up that new sales rep!
Precise ICP: When your salespeople are talking to the same profile of buyer about the same type of problem day in and day out, they’ll need fewer materials and less training. This frees them to spend more time with your customers on prospecting, closing new business, expanding existing business and becoming the expert guides that customers look for in selecting vendors. Repetition is the fastest way to build reputation.
How your ICP drives your expansion strategy
How do you define your first impact milestone?
Sloppy ICP: If you have diverse segments of customers, you customer success team will run into diverse industry jargon, diverse org structures and diverse KPIs with each new customer, putting them on a constant and steep learning curve. Without deep knowledge of your customer’s business they’ll resort to the basics of account setup and end user training and place the burden of achieving business results on your customers.
Precise ICP: When you know the initial impact your customer is expecting and what success looks like, you can design your entire onboarding to deliver it as quickly as possible and demonstrate it to all the relevant stakeholders to get the relationship off to a running start. You’re also framing what to expect at the next touch point.
What does recurring impact look like?
Sloppy ICP: When you have a diverse customer base, you will face the same challenges demonstrating recurring impact as you do with first impact. You’ll struggle to keep all your stakeholders engaged, fall back to providing reactive support to power users and scramble to re-engage the decision makers when it comes to renewal.
Precise ICP: When you have a homogenous group of customers, you can’t help but become an expert in their business and develop insights on trends across the category. Having these insights keeps all the stakeholders engaged as everyone wants to stay ahead of their competition, making multi threading easy and renewals a formality.
What is the predictable expansion path with your customer?
Sloppy ICP: When you have a broad range of customers, you’ll have a broad range of land use cases and an even broader range of expansion use cases, some of which you will be able to solve and many of which you won’t. You’ll also have a range of org structures to navigate as companies will be set up in different ways. As a result every customer will require a unique expansion strategy making it hard to build a predictable expansion process and a team to execute it.
Precise ICP: When you have a homogenous group of customers, most of them will have landed with the same use case and the list of expansion use cases will be finite, clear and predictable, as will the list of new stakeholders. Together this makes your expansion process simpler, faster and more repeatable.
How your ICP drives what product you build next
Sloppy ICP: When your customer base and prospect pipeline are a diverse group of companies and buyers you will get a lot of one-off deal-specific data points that pull your product team in multiple directions. While it feels manageable at first, your product will start to fall behind the competition as you find you can’t compete on multiple fronts and then your product quality will decline as maintenance becomes an issue.
Precise ICP: With a cohesive customer base, you’ll hear the same problems multiple times, making it easy to identify patterns and prioritize what to build. Your product team will also build a deeper understanding of your buyer, enabling them to develop and ship faster and see quicker adoption.
OK, so what does a precise ICP look like?
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.
I clearly need to update my ICP. Where do I start?
If you got this far you are clearly serious about updating your ICP! Here are 3 options:
Follow my step-by-step guide to update your ICP.
Join the next cohort of my live course on early-stage prospecting, which includes a workshop on improving your ICP.
Hire me as your GTM coach to guide you through building your ICP and putting it into action in your GTM.