Ideal Customer Profile

Ideal Customer Profile

Most companies, especially startups, practice “blind archery.” They randomly fire arrows into the market hoping that one will hit. The problem is that unlike people, customers are not equal. Some are better than others for your offering. When you “spray and pray” your message, salespeople often waste both time and resources pursuing prospects that cannot afford, do not need or will not purchase their product or service. If these prospects do end up buying, they often become liabilities to the organization due to bad fit; i.e., churn, dissatisfaction, etc.

According to Miller Heiman, every salesperson has 35% “bad” prospects in their pipeline. Bad prospects are often the result of being unfocused. Working with bad prospects (minimal or no potential) comes with a significant opportunity cost in lost sales. What is the answer? Create an ideal customer profile (ICP). ICPs help companies target and work on the best, most profitable prospects and opportunities that have the highest and fastest probability of closing. There is always a smaller number of ideal customers than all customers. ICPs help narrow the universe and create focus.

Below are nine areas to consider when creating an ICP. The nine areas include:

  • Attribute – What are the key attributes of the prospect? EX: Already embrace cloud computing.
  • Challenges – What are the core challenges of the prospect? EX: Cost reduction; time to market; etc.
  • Culture – What is the corporate culture of the prospect? EX: Innovation.
  • Geography – Where are prospects located? EX: United States and Canada.
  • Industry – What industries do prospects operate? EX: All industries except financial services and healthcare.
  • Profitability – What customers are most profitable? EX: Companies that buy Product A and B combinations.
  • Similarities – What prospects are most similar to your top 10% of customers? EX: SaaS providers.
  • Size – What size is the prospect? EX: Enterprise; Fortune 500.
  • Triggers – What triggers caused your current top customers to purchase? EX: Hardware refresh cycle.

When creating an ICP, it is as important to decide what prospects not to focus on as it is to decide what prospects to focus on. Great companies are not seduced by the “any sale is a good sale” or “quantity or quality” philosophies. In contrast, great companies create an ICP to increase the effectiveness and efficiency of their outbound sales and marketing activities, as well as to better qualify their inbound leads and existing opportunities. Make it a practice of testing every lead and opportunity against an ICP to consistently and predictable maximize your revenue growth.

All contents copyright © 2013, Josh Lowry. All rights reserved.

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