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Ultimate Guide To Creating Your Ideal Customer Profile (ICP)

19 min read
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“Everyone is not your customer.” — Seth Godin

Most businesses spend a considerable amount of resources on acquiring and converting customers hoping they remain profitable for years to come. 

Generating revenue requires building a successful marketing and sales strategy while keeping customers at the forefront. Whether you’re a small or big business, customers will always be omnipresent elements. 

But not everyone in the market is your customer. “A customer is a customer. Any sale is a good sale.” is a common misconception amongst many salespeople and marketers believing they should serve everyone. 

Every product or service has ideal and less-than-ideal customers. If you are selling to the wrong individuals, then your sales team will most likely struggle to connect with them and their pain points. 

Your customers won’t connect with your products, services, and content if you continue to operate under the assumption that everyone needs what you have to offer. Inevitably, you will find yourself attracting the wrong audience and generating no lucrative results. 

The magic ingredient to a successful sales and marketing strategy is a well-defined Ideal Customer Profile (commonly abbreviated as ICP). 

The ICP framework ensures your new customers feel valued and supported. It also determines if existing customers are a good long-term fit for your business (reducing your churn rate). 

If you spend enough time researching and creating your ICP, then you will be able to solve prospective customers’ problems now and in the future. Providing you with a win-win situation. 

This guide will help you understand the importance of having an ICP, and how you can create your own ICP to lead your sales and marketing team to well-deserved success. 

What Is An Ideal Customer Profile

An Ideal Customer Profile (ICP) defines valuable prospects and customers who are likely to purchase your product or service. It includes individuals within a company seeking maximum benefits.

An ICP makes use of a fictitious company that has all of the characteristics that would make them the right fit for the solutions your organization provides. It focuses on selling to customers that align with your products/services’ capabilities.

It is based on quantitative and qualitative analyses based on data from several organizational sources to create one strategic document, creating a laser-focused ideal customer(s). 

Through an ICP framework, you are able to identify, source, and prioritize the right prospects helping your own employees reach a common understanding of the strategies they must implement toward the product. Moreover, product teams are also able to test if they are including and developing the appropriate features with an ICP to refer to. 

Importance of an Ideal Customer Profile

Running a business without having an ideal customer profile is not going to fetch you any fruitful results. A successful business entails having long-lasting relationships with customers and that is only possible through targeting the right ones. 

If you don’t have an ideal customer profile, you will end up focusing your efforts on different areas of the market. In turn, your sales and marketing reps will be running after leads who were never going to buy from you. That’s wasted time, money, and effort. 

ICPs aren’t just valuable tools to marketing and sales teams, they are also beneficial for: 

  1. Using available resources effectively: Let’s face it, most businesses out there don’t have money to waste and have scarce resources. Finding and attracting new customers is a costly process from the start to the end. Each time you go after a prospect that is a poor fit, you lose out on customers that would have better suited your offerings. With an ICP framework, you know that you are going after the correct individuals that have a greater chance of becoming long-term revenue-generating accounts. 
  1. Increasing win rates: Win rates represent the percentage of closed deals. Having an ICP can help you improve your win rates. How? By helping you identify high-value target customers. Beyond this, having an ICP framework in place ensures that your ideal customer profile is integrated with your sales and marketing activities. All of this leads to unified positioning and messaging at a multi-organizational level and increases your chances of winning high-value customers. It is said that organizations with an ICP framework have a win rate of at least 68%. 
  1. Increasing Customer Lifetime Value (CLV): When you have a go-to-market strategy that is targeting the right customers, by default, your customer lifetime value (CLV) will experience a gradual increase. Low CLV and high churn rates indicate that you are selling to the wrong people. 
  1. Speeding up your sales process: With a well-defined ICP in place, there will be very less trial and error when it comes to reaching out to prospects. With your ICP framework in your hand, closing a deal will be a lot easier as you already have a well-thought-out strategy providing you with direction. This in turn will result in speeding up your sales process. 
  1. Creating high-value customers: When you have an ICP you are automatically targeting high-value customers for your organization. Targeting the right customer subsequently improves customer satisfaction ultimately leading to customer loyalty. A high-value customer can significantly impact a company as they can influence how other people perceive your brand. They can provide additional value for your business by acting as brand advocates. 

Difference Between Ideal Customer Profile and Buyer Persona

Isn’t an ideal customer profile the same as a buyer persona? Oftentimes, the lines between ICPs and buyer personas are blurred. This section will help you understand the difference between the two. 

An ideal customer profile is a fictional description of an organization that would benefit from your product or solutions. ICPs are defined using firmographics such as the revenue of the company, the size of the company, the ideal industry, the ideal location of the company, etc. 

Buyer personas are semi-fictional descriptions of the type of people at those companies mentioned in your ICP. Buyer personas provide demographic information such as job title, function, seniority, income, location, etc. A buyer persona also details the pain points and challenges of each individual and how your product or service aims to solve their problems. 

The image below shares an example of an ICP and a buyer persona side by side carefully illustrating the differences between the two concepts. 

How Do You Identify Your Ideal Customer Profile? 

In order to acquire lifelong customers, ones that will achieve long-term benefits from your product or services, you must truly understand the way they operate. How well an organization knows its customers plays a huge role in the success of the product and brand. 

To gain information about existing or prospective customers you need to refer to existing data (this is where your CRM software will come in handy). To identify an ideal customer start with what you already have. Take your current customers and discover their common characteristics. 

It is entirely up to you whether you want to create a detailed or general ICP. However be sure to add in a few basic characteristics such as company revenue, number of employees, location, job titles, industry, budget, etc. 

Here is a step-by-step process of how you can identify your ideal customers:

Step 1: Brainstorm

Step 2: Survey existing customers

Step 3: Gain data-backed insights

Step 4: Prepare behavioral profile

Step 5: See whom your competitors are serving

Step 6: Prepare a value matrix

Now, let’s explore every step in detail.

Step 1: Brainstorm 

Brainstorming is one of the most essential starting points for any strategy. For a product or service to be successful it needs to solve a problem customers are facing. 

Before you do anything else, ask yourself this simple and important question: 

What specific problem is my product or service hoping to solve? 

For example, if you are selling a recruiting software solution to help organize and speed up the hiring process. The main problems your potential clients could be facing would be, the disorganization of their hiring activities, no proper record keeping, and wasting a lot of time doing extra paperwork. 

Once you’ve defined the problem you aim to solve through your service, then you can move on to key demographic characteristics of the people you seek to help. Their demographics can include their, age, gender, hobbies, income, level of education, location, etc.

This essential first step will lay down a strong foundation giving you a rough blueprint for the next few steps. 

Step 2: Survey Existing Customers 

Surveying existing customers is a prime opportunity to learn about what customers think about your product or service based on facts. You can reach out to current customers via email, a Zoom call, sending out a survey, social media, etc. By understanding your customers, you will be able to target accounts that share the same pain points they did.

Ask customers insightful and probing questions that will reveal information about why they specifically chose your product to resolve their pain points from the rest. Subjective questions in particular can be helpful in understanding your customers at a deeper level. 

Below is a list of a few valuable sample questions you can include in your survey to unveil more information about their purchasing decision: 

  • How and where did you hear about our product or service?
  • Why did you choose our solution?
  • What pain points were you looking to resolve when you first purchased our solution? How was our solution able to resolve those particular issues?
  • What has led you to continue to use our solution?
  • What is one feature or functionality that has helped you the most?
  • How do you use our solution/product in your daily life? 

Step 3: Gain Data-backed Insights From Google Analytics (GA) (Optional)

If you have an active Google Analytics account running in the background tracking data, then you can use this gold mine to acquire valuable insights. With GA you will be able to see an ‘audience overview report’ that shows the number of users, page views, bounce rates, sessions, percentage of new sessions, etc. Under this report, you can see the number of new and returning users. You can further categorize your audience into different demographics.

Other data you can acquire from GA includes ‘customer acquisition’ (find out where the users are coming from), ‘site content report’ (shows how users interact with your content), and location report (find out where users are looking up your business from).

GA is the best place for you to gain access to information to data to identify the behaviors of your existing customers. 

Step 4: List Down Important Customer Characteristics (Behavioral Profile) 

At this stage, you probably have a rough idea about your existing customers. After your research and analysis, now it is time to collate your findings. Based on what you have gathered, list down a few notable important customer characteristics that you would like in your ideal customer. This can be regarded as a behavioral profile of sorts. 

Some of these characteristics can include: 

  • Location 
  • Organization size 
  • Age range 
  • Annual revenue 
  • Industry 
  • Technologies/software used 
  • Department 
  • Budget 

Think of this collation as a rough Ideal Customer Profile, which you will then further refine at a later stage. You can also consider including more personal attributes, especially if you notice a pattern in your current customer database, for example, gender, age, hobbies, interests, lifestyle, qualifications, family life, etc. 

Negative traits can also be taken into account or traits of customers have proven to be a wrong fit for your services. This will help you in eliminating less than ideal customers rather than wasting your efforts on poorly targeted prospects. 

The idea behind this step is to identify patterns from various data collection mechanisms. The common traits, pain points, and behaviors will help you build a blueprint for your ideal customers.

Pro Tip: An ideal customer should have these seven traits that highlight their readiness to purchase your product. These traits are, readiness to buy your product, ability to buy your product through their resources, skilled enough to use your product to its full potential, generating a profit, their organization is growing so there is a greater chance of upselling, and they have a proper network to act as a brand advocate for other potential buyers. 

Step 5: See Whom Your Competitors Are Serving 

One of the best ways to identify your own ideal customers is to see whom your competitors are serving. You obviously won’t be able to access their analytics or send their customers surveys. 

Instead, you can partake in ‘social listening’ or ‘social monitoring’. This will give you a general idea of the customers they currently have, how customers perceive their products, and who is talking about them online in general. 

Browsing through their social media and website will give you an insight into their target audience. One of the best ways to do this is by looking at their ‘lead magnet’ content such as CTAs, exit pop-ups, landing pages, etc. 

Step 6: Prepare a Value Matrix 

A value matrix allows you to map out and break down each persona, their business problems, and how your product will resolve their pain points. The value matrix will also include the appropriate marketing message that ties into their problem and solution together. 

The image below illustrates this: 

Source: HubSpot

How Do You Create An Ideal Customer Profile? (Free Template)

At this stage, you have already identified who your potential ideal customers could be. Now it is time to create an actual Ideal Customer Profile. Creating and implementing your ideal customer profile framework requires a series of steps.

All the steps to create an ideal customer profile are listed here:

Step 1: Refer existing customer database

Step 2: Make a list of your best customers

Step 3: Prepare a list of questions for your best customers

Step 4: Prepare a common persona list

Step 5: Formalize your data in tabular form

Step 6: Filter the list

Step 7: Review and revise

1. Refer to your existing customer database: 

The data you gathered from the previous stage can be used here. There are 3 data subsets you need to be focusing on, namely, internal data qualitative data, and predictive data. 

Quantitative data (internal data) requires looking at historical customer data from CRM software or sales automation software

Quantitative data is derived from collecting information through Sales Development Representatives (SDRs), internal stakeholders, and account managers. This customer data goes beyond numbers. 

Predictive Data is derived by analyzing various types of datasets usually by a third party. 

2. Make a list of your best customers: 

If you already have a business that is up and running, you can make a list of your reliable returning customers and use that as a blueprint. Just like you have best-selling items, you should also have your best customers. Refer to your ad engagement metrics, website traffic, sales reports, and demographic data to look for similar noteworthy patterns.

If for example most of your best customers are located in Europe then this is an indication you should focus your efforts on customers located in this region. Understanding and analyzing your best customer demographics will give you a clear picture of your ICP. In some cases, your original idea of your ICP may not be correct after you collect this data. 

Here are a few criteria you can use to identify your best customers: 

  • Most loyal customers (ones that have stayed with you the longest)
  • Most profitable deals 
  • Customers that have brought in the most amount of referrals 
  • Customers with the most upsells/cross-sells 
  • Most satisfied customers 
  • Customers with the most number of contract renewals 

Read our guide on How to build a quality lead list for cold emailing

3. Prepare a list of questions for your best customers: 

You might be thinking “isn’t this the same as surveying existing customers?”. In a sense yes it is, however, this survey would be more focused on the best customers. The purpose of this exercise is to understand your best customers’ motivations behind selecting your product as their desired choice. The answers to these questions will help you comprehend their challenges, goals, preferences, and pain points. 

Once you are able to identify a pattern from all the answers you get, you will be able to use that information in your ICP framework. 

Below are 5 questions that you must include in your list when surveying your best customers: 

  1. What were your end goals before you purchased our product? 
  2. What challenges were you facing before purchasing our product? 
  3. How were you resolving your pain points before purchasing our product? 
  4. Where do you get your information from? How did you learn about our product?
  5. What is your buying process? Who are the decision-makers involved?

4. List down the similarities (Make a common persona)

Once you have all the available data from your best customers, try to look for commonalities by comparing their profiles. Some patterns will immediately stand out to you, and others might require closer inspection. 

There are usually three types of common attributes you need to analyze at this stage.

Firmographics: are attributes related to your prospects’ organization. Some examples of firmographic attributes include revenue, number of employees, market share, growth potential, organizational structure, etc. 

Behavioral: attributes solely focus on the observed behavior of the best customers you identified. Behavioral attributes can be derived by asking questions such as: 

Which touchpoints engaged the customers the most? What challenges aligned with your product or service? What encouraged a renewal? 

Environmental: attributes related to external environmental factors that have allowed your most successful customers to function.

All of these characteristics will become the foundation of your ICP. These common characteristics will represent your future best customers as it is based on your existing best customers.

5. Formalize your data into a tabular form 

In this step, all your data and insights will come together to create an official Ideal Customer Profile (ICP)! Finally! Before you create an ICP with real data, create a template beforehand if possible to make things easier. 

You can use the template below for your ICP creation:

ideal customer profile template
Ideal Customer Profile Template

6. Filter who not to target – best fit, good fit, bad fit

Based on the results of your analysis and evaluation you will be able to develop a best-fit rating to see how well an account matches your Ideal Customer Profile. This rating system can be used to prioritize and align your resources and formulate suitable strategies. It can also be used to identify future target organizations and leads. 

For example: 

Best fit: Southeast Asian companies with 10,000 employees and an annual turnover of $2M. 

Good fit: South Asian companies with less than 5000 employees and an annual budget of $100,000. 

Bad fit: Companies outside Asia with fewer than 100 employees and a monthly turnover of $30,000.

By doing this you are able to prioritize and qualify inbound leads to determine how you follow up or if these leads should be passed onto the sales team. If an organization does not fit your ICP, then it most likely will not benefit from your product so there is no point in wasting your time prospecting them.

7. Review and revise 

Customer buying behavior is continuously changing, so your ideal customer profile will need to be revised every now and then. 

Every quarter you can review and revise your ICP and update it periodically with new information. It’s always a smart idea to add iterations based on actual data for better accuracy. 

What to do after you have created your ICP? 

Once you have your Ideal Customer Profile (ICP) use it in the prospecting stage. Now you can leverage your ICP and utilize it in valuable ways that will be advantageous for your business.

Your ICP should act as a checklist before you start pursuing prospects. By the time you have laid out your ICP framework, you should have a clear picture of the pain points of your customers, the environment they are operating in, and the goals they aim to achieve. Ultimately, your job is to convince them that your product or solution is the best possible option for them as compared to the other options available to them. 

Use your ICP to attract and convert high-quality leads with qualities that are similar to your existing successful customers. Designing your ICP framework is paramount to the success of your sales and marketing efforts. Companies that invest in a well-defined ICP achieve monumental success that encompasses, accelerated sales cycles, higher conversion rates, and improved annual contract value and lifetime value.

Take notes from the Saleshandy’s Cold Email Masterclass to scale your outreach & generate quality leads. 🚀  

Wrapping Up 

“When you try to serve everyone, you end up serving no one.” 

It is always safe to assume that not everyone is your customer. There are a unique group of people who require exactly what you are offering. With an ICP, it becomes clear to you what they need and what you can do to attract and convert them into customers. 

An account-based approach doesn’t end in creating an ideal customer profile. It can be further broken down into defining buyer personas and accordingly structuring an outreach strategy. Creating an ICP should be done well in advance before you optimize your sales process.

If you spend sufficient time and resources to create a well-defined and exhaustive ideal customer profile you are more likely to outpace your competitors. As a result, you can decrease marketing and acquisition costs and increase the sales and profit of your business.

Good luck creating your ideal customer profile! 

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