A Customer-Centric Approach to Building an Ideal Customer Profile (ICP)
Do you know ‘who’ your ideal customer are, ‘what’ triggers their search for solutions like yours, and ‘why’, ‘how’ and ‘when’ they go about selecting them?
Customer-centric B2B businesses know that understanding and solving for client needs is the key to building long-lasting relationships with the individuals they serve. They know their first job should be to deliver solutions that help their ideal customers succeed.
The problem is, defining and focusing your business efforts on ideal customers is important and hard at the same.
It’s important because ideal customers are more likely to buy, more valuable in the long-run, and are more likely to refer your business.
Unfortunately, determining and focusing on ideal customers tends to be really hard for some service businesses because they want to do everything they can to grow the business.
It’s understandable to want to grow anyway you can. But, can you really afford to spend on go-to-market efforts that don’t match your best customers for growth? Do you have unlimited budget?
This lack of focus on the best customers for your business translates to dull value propositions and vaguely targeted, ineffective demand generation. In short, you end up burning cash and team effort in areas that don’t benefit the business or customers.
Read more:
Is Your Value Proposition a Brilliant Diamond—or a Dull Rock?
So how do you find out who your ideal customers are, and how to target and convert them? Various methodologies have been well documented before.
In this guide, we will use the tried-and-true approaches in B2B, updated with a more customer-centric take to defining and using an ideal customer profile (ICP).
What is an Ideal Customer Profile (ICP) and Why You Should Use It
At Bevelroom Consulting, we define an ICP as a tool businesses use to deeply understand the customer types that already are, and have potential to, drive future growth. These are your most valuable customers who are most likely to convert.
Developing an ICP includes examination and definition of your current and prospective customers that have a quantifiable match to your business goals. They are your most valuable type of customer because of the ideal match between their needs and your offering.
An ICP should be used in combination with other business strategy tools to more smartly allocate limited resources. It serves as a key input to develop highly differentiated go-to-market and customer service programs.
ICPs are particularly effective for small, scrappy firms because their focusing power and the superior understanding of right-fit customers gives growing businesses the advantage to ‘punch above their weight’ in the market.
This is especially true when your competitors don’t have a functional ICP that guide their strategy. For them, it’s an unfortunate mistake. For you, it’s a terrific competitive opportunity.
Demand Generation Checklist
10 steps to growing your service business using a customer-centric approach to demand generation.
ICPs vs Personas
You may have already invested effort to develop personas, and that’s fine. At Bevelroom Consulting, we use personas to bring life to the descriptions of those archetypes or individuals most important in the go-to-market and selling process.
Personas are useful to communicate your customer’s context in both functional and emotional ways to drive key decisions.
That said, we have found that ICPs that incorporate elements of personas are even better for our clients for a few reasons.
First, ICPs tend to be more actionable, and thus more adopted. This is a big deal because any customer or market research effort that isn’t incorporated into how the business is managed, won’t offer much value.
Second, ICPs are better suited to B2B sales processes because they include aspects of target deals and sales intelligence that sales and client success team can readily use.
Third, ICPs serve as a starting point to account-based marketing (ABM) and consultative selling strategies. Your target account list and tiers should be informed with ICP inputs such as firmographics, technographics and buyer intent signals. And, a customer-focused ICP serves as a guidepost for discovering just the right buying team insights and deal triggers that savvy sales professionals can use to start conversations and propel deals.
Benefits of Using an ICP In Your Business
Having a well-defined ICP is definitely helpful in focusing your marketing and sales resources on the highest potential market segments. With a clear picture of your ideal customer, you can improve your conversion rates, shorten your sales cycle, and increase your return on investment.
By honing in on specific target segments, you can tailor marketing and sales strategies to address specific pain points and unique requirements, resulting in higher response rates and better returns.
Here are 4 ways a customer-centric ICP can benefit your business.
#1: Efficient Resource Allocation
ICPs help direct your efforts, and the associated resources, towards reaching and engaging with specifically targeted segments and accounts. This targeted approach allows you to allocate your resources more efficiently, saving time and money that would otherwise be wasted on reaching out to irrelevant or uninterested prospects.
For instance, a consulting firm looking to expand into the healthcare vertical will know how to more efficiently reach and engage the right decision makers in that complicated ecosystem with messaging that speaks to their specific challenges and pain points such as consolidation, EHR digitization, patient centricity or price transparency.
#2: Improved Messaging and Value Proposition
When you deeply understand customer needs, challenges, and motivations, you can create more compelling marketing materials and sales pitches that speak directly to them. This approach establishes a stronger connection with your target audience, as they feel understood and see the value in your services.
For example, if you offer IT consulting services to financial institutions, your ICP might consist of banks and credit unions looking to enhance their cybersecurity measures. With this knowledge, you can develop messaging that highlights your expertise in financial industry regulations and specific security solutions, positioning your services as the ideal choice for addressing their concerns.
#3: Increased Customer Satisfaction and Retention
By aligning your services with the needs and preferences of your ideal customers, you enhance their overall experience and satisfaction. When customers feel that your service is specifically designed for them, they are more likely to stay engaged and continue using your services, leading to improved customer loyalty and higher retention rates.
#4: Huge Source of Competitive Advantage
Businesses that embrace a more customer-centric approach to everything they do have a significant competitive advantage that is hard to replicate.
The more you know about your customers, the better you can deliver awesome experiences and build lasting, profitable relationships. No competitor can truly replicate your unique brand experience. And if the experience is outstanding, customers will reward you with more business.
Here’s why:
- Your competitors can never know as much about your customers as you do.
- Your clients value relationships, not transactions. And, building profitable long-term relationships requires customer intelligence.
- Modern B2B buyers expect outstanding experiences from their service providers, just as they do from consumer brands.
The more you know about your customers, the better you can deliver awesome experiences and build lasting, profitable relationships. No competitor can truly replicate your unique brand experience. And if the experience is outstanding, customers will reward you with more business.
How to Build Your B2B Ideal Client Profile (ICP)
A customer-centric approach requires a re-thinking of how you run the business to focus on the most valuable customer relationships, then matching your offering and business processes to that.
We suggest starting by answering these fundamental questions to begin visualizing your ideal customers:
- Which customer types are most important for future growth?
- Which one or two types of deals have generated the most business value?
- What do we need to know more about to get more of these customers and deals?
Where to Source Insights for an ICP
Chances are that you already have some of the data you need to begin forming an ICP. Here are some of the most under-utilized sources of customer insight inside the business:
- Sales interaction notes
- Customer service interaction notes
- CRM and sales transaction information
- Website analytics
- Customer and prospect conversations
- Questions from customers
Diving into existing customer intelligence is a good place to start. Examine your customer roster, CRM and sales history for average deal values, renewal rates, account growth and expansion rates. Look for patterns that can inform your new ICP.
For instance, do accounts in certain industries and locations or that have had specific marketing or sales activities outperform others, and why?
Read more:
How to Boost Your Customer IQ
The Non-Sales Customer Conversation
Notes and data from previous interactions are helpful, but aren’t enough to build an actionable ICP. The reason is that all of these sources weren’t designed for this purpose and are missing the golden nuggets you need to fully appreciate the challenges of your buyer’s journey, what drives their decisions, and what success looks like for them.
Data stored in a CRM or web analytics provides the ‘what’ and ‘how’, but not the ‘why.’ It’s the ‘why’ you’re after. You want to get into the minds of your customers to understand what drives them and holds them back.
The best way to build an ICP and to get to know your customers is to speak with them directly, beyond day-to-day meetings and transactions. In other words, in a non-sales conversation.
Talk with existing customers to better understand how they define value and perceive your brand. Get to know ‘what’ their core problems to solve are, and ‘why’, ‘how’ and ‘when’ they go about discovering solutions to those problems (their journey).
Listen for the language customers use to describe their specific needs and challenges. This will help you design better messaging that reflects their core motivations for choosing your service over others.
Note: we’re not talking about a focus group here.
These are simple, one-on-one conversations with customers and prospects where you are adding in questions to get at the insights you need. One-on-one, open-ended feedback tends to provide more useful insights than focus groups or surveys.
These non-sales conversations can be very informal or more structured using an interview questionnaire. Customer feedback is an invaluable (and cost-effective) source of insights to inform future strategy. And customers will appreciate you more for listening and valuing their input.
We suggest the following steps to get the most out of non-sales customer conversations.
- Explore more than wish lists. Go beyond just asking about wants and needs to understand their sources of satisfaction and frustration and what motivates their choices and decisions. Inquire about compromises they are forced to make, and mistakes they have made.
- Talk to the right people. Get to know the key players in buying decisions and who play important roles in the overall experience. At minimum, these usually include a buyer (making the buying decision) and a user (using your offering). You may also want to include suppliers and partners involved in your deals.
- Remember, it’s about them, not you. These are not satisfaction surveys or sales calls. Listen actively and resist the urge to problem-solve or defend issues that customers bring up. Keep the focus about better serving customer needs, not selling.
Ask questions that help fill in these important elements of the ICP:
- Their goals and pain points, related to a solution like yours.
- What triggers their discovery for the solution and what do they search for (keywords).
- What influences their decision to choose a solution like yours (key moments).
- What are their common objections, fears in making this decision
- Where do they go for information about this (online search, friends, events, etc.)
- Which content do they find most useful?
- What alternatives have they tried – what did they like and dislike?
Online Research
You can also learn a lot from doing your own online search, since most of your customers will use it on their journey to finding you. To do this, search as your customers would – for the most helpful information to discover a solution to their needs.
Note, they aren’t actually searching for ‘your brand’ by name. Rather, they are seeking to learn and understand their problems using certain keywords and industry channels.
Combine direct customer feedback with touchpoint data from CRM, website usage, sales calls, events and service inquiries to validate the key moments that are most important to driving outcomes. Keep in mind that much of your customers’ journey happens before initial contact with your company, so your CRM or transaction data doesn’t provide the complete picture.
After spending some quality time with customers and doing some guided research online, the next step is to examine and summarize the following inputs for your ICP.
Find Your 80/20 Customers
Not all customers are equal. If the 80/20 rule is playing out in your business, 20% of your customers produce 80% of your value. Your goal should be to zero in on these 20% of customers who are essential for your business’ prosperity.
Look for patterns that indicate why some customers represent a disproportionate share of your business results. Examine your current customers and identify the common characteristics that they share. This includes factors such as company size, industry, location, and revenue.
Ideal customers that represent the biggest chunk of business value usually share some common ‘fit’ characteristics, some of which are more important than others, depending on your business model.
Start with evaluating current engagements to define common characteristics of high-value clients. Value = the cumulative direct (engagements) and indirect (referrals) profit that each customer can generate over their lifetime as a client. This can be hard to calculate, so use your best estimate.
Use the following company attributes to focus your analysis of good ICP fit.
- Industry fit. The company is in your target industries.
- Size fit. The company (or unit / division) fits your target size for your offering.
- Financial fit. The company (or unit / division) shows potential to have sufficient buying power and budget allocation.
- Readiness. Company and/or individual actions demonstrate sufficient need and future intent to buy. You’ll want to monitor target companies in context of their industries for these readiness triggers.
- Location fit. Company and/or buyer is in a geographical location you sell to. In the post-pandemic world of remove work, this characteristic may have a different priority than before.
- Networking / competitive intelligence. Knowledge sharing with people in your professional network or at industry events can be a great source of intel to build your ICP. The key is to have a system to document and use it.
- Offering fit. A target company may not be a good fit now but could be as your offering is developed more. Perhaps you’ve identified a great potential customer, but they indicate that you’re missing a key feature that is a deal breaker for them. Work with your commercial team to identify ways to better match up your offering to un-met needs your research has uncovered.
Firmographics and Technographics
This includes the basic demographic information about your target customer types and specific companies, such as company size, industry, location, and revenue. With firmographics, you can more precisely target marketing and sales efforts to specific segments and create messaging that resonates with their unique needs.
Do some online research to learn more about your target industries. This can include looking at industry reports, reading online forums and communities, and attending industry events. Identify trends and patterns that can help you refine your ICP.
Technographics refers to the technology stack used by your ideal customer, such as software, hardware, and tools. Technographics become important for ensuring that your services integrate seamlessly with a customer’s systems and workflows.
There are a lot of free and paid software tools available to research companies and buyer teams. Here are a few to get started.
- LinkedIn. LinkedIn is a great starting point for company and customer research. With advanced search features, you can find specific companies and buyers by location, industry, role and professional details. Review companies and individual profiles to discover new segments to consider pursuing, as well as what they are talking about related to your offerings.
- Sales intelligence tools. Sales intelligence software offers highly detailed profiles on millions of companies and their employees, including contact information. ZoomInfo is the largest B2B database of over 100 million companies’ contacts, addresses and industry; but it can be pricey for smaller teams. Seamless.ai and LeadIQ offer similar features that better fit small business budgets.
Deal Characteristics
Here, you want to express what an ideal deal looks like, in terms of size, duration, scope or other important characteristics. These will vary by what’s important to the business. In general, you want to define customer types that are most likely to accept deals that move your business in the right direction.
For customers, these deals best match their definitions of success. It’s fine to have multiple versions of a great deal associated to different lines of business. The important thing here is that your team understands what a great deal looks like to focus efforts.
Ideal deal characteristics include:
- Great solution fit for the customer’s intended use case.
- A repeatable, long-term source of revenue and profit.
- A relatively high likelihood of closing.
- High confidence in your ability to execute the deal.
- No regrets from you or the customer.
- Ability to overcome objections and competitive threats.
- Contributes to a pipeline of future deals and referral business.
By contract, less ideal engagements will suffer from the following weaknesses:
- Gaps between your offering and customer situation that weaken the value proposition.
- Pricing issues, even after aggressive discounting.
- Strong competition with a better offer.
- Deal killing objections or a buying team ‘blocker.’
Buying Team
The buying team is the informal group of people that will directly or indirectly influence the buying decision. According to Gartner, the typical buying team for a complex B2B sale involves 6 to 10 decision makers‚ each using several pieces of information to inform their decision making.
Many of these people are in senior roles, so they have responsibility for a lot of decisions that have high stakes. Gaining their attention and trust is both hard and necessary.
The more you understand who is in your target buying team, their roles and what their decision process looks like, the higher your chances are of being the selected provider.
A well-documented ICP will include actionable information about the buying team such as:
- Demographics and firmographics (age range, role, industry, location).
- Their goals and pain points, related to a solution like yours.
- What triggers their search for the solution and what do they search for (keywords).
- What influences their decision to choose a solution like yours.
- Where do they go for information about this (online search, reviews, friends, etc.).
- What experiences are they looking for when seeking your business?
- What alternatives have they tried – what did they like and dislike?
- What are their common objections to choosing a solution like yours?
A buying team may comprise several roles. The decision maker, executive sponsor and champion are usually the most important roles you’ll want to gain intel on. For these roles, you’ll want to find
their titles, responsibilities, goals and challenges using a combination of sales intelligence tools and direct conversation.
Buyer Journey / Buying Process
Understanding the steps buyers follow to discover and choose solutions is especially important for businesses purchasing services because their buying journey is long and complex.
Most B2B purchases are complex and multi-faced. Consumers and B2B business buyers (most people are both) typically don’t buy products and services in a neat straight line assumed by the sales process. They get distracted, go down multiple paths and loops, and search using a wide variety of longtail inquiries. At the same time, your buyers are under increasing pressure to prove the ROI of their business purchases.
This includes understanding the key touchpoints along the way, such as research, evaluation, and decision-making. This also includes the decision-making criteria they use when evaluating your offering.
What triggers kick off their process? Who holds the buying and decision-making power? What are the biggest factors in their decision? What are the biggest stumbling blocks that would delay or even cancel a deal? You’ll want to get as much intel on these as you can.
Knowing where your customers are in their buyer journey helps you tailor marketing and sales efforts to their specific needs and challenges.
Read more:
Building a Customer-Centric Sales Funnel
Customer Motivations and Triggers
Understanding your customer’s true motivations for buying your services is a very useful insight that most businesses don’t fully appreciate. This includes the problems they’re trying to solve, the goals they’re trying to achieve, and the pain points they’re experiencing. This also includes what’s holding back buying decisions.
These deal blockers go deeper than just price and scope considerations. They can include status quo inertia, economic uncertainties or un-stated gaps in confidence about your solution. With these insights in hand, you can create more compelling messaging that drives action at the right moments in the deal flow.
Triggers signal an inferred need, or potential interest for your offering, and thus are an opportunity to target that company or individual. Triggers can include actions that the company or buyer(s) have taken that relate to your services. Triggers can happen at any point in the buyer journey and sales process.
For instance, a company announcement of investment or a buyer moving into a new role can be an early trigger of future intent. An online search triggers ‘in-market’ intent. A content view or request represents a trigger of engagement and qualified interest. You’ll want to define the specific triggers that are most relevant to your sales process.
Customer Familiarity
Think about the last time you shopped for something you knew very little about. How did it feel? Was it hard to find trustworthy information that guided you to the right purchase decision?
Now imagine that the success of your department, or even the entire company, depended upon you making the right purchase decision. The consequences of these series of small decisions might last years and cost $ millions. The stakes can be pretty high for your buyer and the buying team.
Having access to a wider range of information while researching options is actually a double-edged sword: having lots of choices also creates a lot of noise, which slows down the buying process. Some teams may even decide to stay put vs. making a change when the choices aren’t clear and the perception of risk is high (status quo inertia).
This is the context in which B2B buying takes place. And it’s even harder with services.
Services are intangible, which makes understanding and comparing them harder for buyers. So, your customers are taking a risk from the start, even for simple services, as they may only know the true value of your service after they receive it (often with full effects taking place weeks or months later). Your new clients are essentially buying based on trust that they will receive the benefits they expect and that you have promised.
A customer-centric ICP takes this context into consideration.
Narrative
The final element is to synthesize all of these insights into a concise narrative that describes your ideal customer. A narrative makes communicating the ICP easier, which helps with adoption. Everyone in your commercial team should be familiar with this narrative and it should be revisited during key strategy meetings.
A Template for Building Your B2B Ideal Client Profile (ICP)
At Bevelroom Consulting, we like to visually depict the ICP as a dartboard, since it intuitively represents focus into the center. The smallest center circle, or ‘bullseye,’ is the ideal target, i.e. your most valuable customers who are most likely to convert.
It will be much smaller in size than your overall target market. But’s that the point of focus and goes back to the 80/20 rule; a very small set of customers end up producing a lot of value.
This framework also allows room for less ideal targets, that may develop into bullseye targets later. The bigger circles around the center can also be used to depict a sequenced go-to-market approach, once you know the primary initial target, i.e. the bullseye.
Putting Your ICP Into Practice
Move From Product-Focused to Customer-Focused Segmentation
Most businesses segment their market based on their product/service offerings, industry classification, trends or location. This may be fine for your business; however, you should consider whether this is the best fit for your customers.
Once you have a customer focused ICP, you can more precisely segment by fit, need and readiness for a value-based segmentation approach that takes customer expectations into account.
This approach allows you to prioritize your efforts to match specific needs within high-value markets that you are well positioned to serve. With a customer-focused segmentation, you’ll be able to segment your go-to-market activities in ways that better align to your customers and in ways that improve sales productivity including:
- Segment by value – evaluate current engagements to define common characteristics of high-value clients.
- Segment by readiness to convert and become a customer.
- Segment based on your positioning and business model.
Optimizing Customer Service and Commercial Strategy
So far, we’ve described an ICP for the purpose of marketing and sales. However, a customer-focused ICP can also prove useful in designing better post sale service delivery and support.
Delivering outstanding value propositions and client experiences requires strong alignment across your entire commercial team, from solution design to marketing and sales, to service and billing. In today’s competitive markets, companies can no longer afford to have silos that slow down service delivery.
Having everyone aligned around who their most valuable customers are and how to attract and serve them should go a long way to improving commercial effectiveness and may even improve culture and work-life balance.
Get Started on Your Ideal Customer Profile
Changing buyer expectations, digital innovation and new business models represent challenges for business owners who can’t keep up. The rate of change is accelerating in the post-pandemic world and uncertain economic conditions raise the stakes even higher. You need all the help you can get to ensure marketing and sales efforts on spent where they should be for the best return.
Consider these questions:
- Do you know how to acquire more of your ideal clients?
Do you know where to invest your marketing dollars for the biggest return?
A customer-focused ICP can help you answer these questions and focus your resources on the most profitable market segments and marketing efforts to better resonate with your ideal customers, and ultimately drive better sales results.
Having this focus and higher level ‘customer IQ’ gives you the advantage to punch above your weight in terms of competing more profitably.
So take the time to build out your ICP and see the benefits it can bring to your B2B service business.
If you need help, get in touch for an ICP consultation today.
