Who is Your Ideal Customer?

Who is Your Ideal Customer?

Most companies, especially startups, practice “blind archery.” That is, they randomly fire arrows at prospects hoping that one will hit. The problem is that unlike people, prospects are not created equal. Some are better than others for your offering. When salespeople “spray and pray” their activities, they waste both time and resources pursuing prospects that cannot afford, do not need or will not purchase their product or service. If, however, these prospects do end up buying, they often become liabilities 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 the result of being unfocused. Working with bad prospects (minimal or no potential) comes with a significant opportunity cost. 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 characteristics to consider when creating an ICP. The nine characteristics are:

  • Attribute – What are the key attributes of the prospect? EX: Is open to using cloud and SaaS products.
  • 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 both Product A and Product B.
  • Similarities – What prospects are most similar to your top 10% of customers? EX: B2B software companies.
  • Size – What size is the prospect? EX: Enterprise defined as $1 billion or more in revenue.
  • Triggers – What triggers caused your top customers to purchase? EX: Server 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 over 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 your ICP to consistently and predictable maximize your revenue growth.

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

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