Ideal Customer Profiles: What They Are and Why They’re Important

Businesses of all sizes are always trying to find new and better ways to reach their target markets. But what exactly is a target market? And how do you engage with one?

That’s where B2B ideal customer profiles (ICPs) come into play. If this is your first time hearing about the concept, don’t worry. I’ve put together this guide together to explain what they are, why they’re important, and how you can create them when focusing on B2B customers.

By the end, you’ll have the knowledge and skills you need to make sure your business is reaching the people and companies it was designed to reach.

What is an ideal customer profile (ICP)?

The term refers to a fictitious customer that your business has designed to represent the characteristics of your perfect customer—one that absolutely loves your product(s) or service(s).

You can think of ICPs like character sheets a screenwriter might create for characters in a movie or TV show. They’re guidelines that help the writer (or business owner, in our case) to understand everything about the character, so they can stay true to them throughout the story.

In other words, an ICP is a concept a business can use to target their messaging, pricing, and product towards a narrow group of high-value prospects. By having a detailed and fleshed-out ICP, businesses can make sure they’re attracting the right leads and customers, rather than wasting time and resources going after ones that will never convert.

Note: For B2B businesses, it’s important to remember that while your clients are technically entities, you’re selling to human beings. A B2B ICP should include information about the companies which benefit most from your offering (e.g., content marketing teams in SaaS enterprises) and the people you typically deal with at these companies (e.g., CEOs). In some cases, that might mean making multiple profiles to ensure you can build a solid B2B customer relationship.

For example, Guest Hook uses SPP’s customizable order forms to target messaging at three levels of ideal clients: single property owners, multi-property owners, and vacation rental companies. Their positioning is also extremely clear: they cater to vacation rental businesses.

Why are ICPs important?

There are tons of reasons why creating an ICP is incredibly important for any business. I won’t cover all of them here, but will summarize the highlights:

• They save businesses time and money: If you’re not targeting your marketing efforts, you’re wasting time and money. By having an ICP, businesses can make sure they’re laser-focused in their marketing, so they’re not spinning their wheels trying to attract leads that will never convert.

• They improve customer retention rates: When you have a good understanding of who your desired customers are, it becomes much easier to keep them happy. This leads to improved customer retention rates and fewer customers churning.

• They help businesses create better services: By understanding the needs and wants of your target market, you can create services that are better suited to them. This leads to improved customer satisfaction and increased sales.

• They allow businesses to prioritize: When you have a clear idea of who you’re targeting, it becomes much easier to prioritize your time and resources. You can focus on the things that are most important to your target market, and de-emphasize the things that aren’t.

• They help with customer segmentation: An ideal customer profile (ICP) enables businesses to categorize their customer base into distinct segments, allowing them to tailor and optimize their marketing campaigns more effectively to meet the specific needs and preferences of each group.

• They increase customer lifetime value: By successfully attracting customers who are well-suited to your business, you will observe an increase in customer lifetime value (CLV), which represents the total revenue a business can expect from a single customer account. Additionally, it will become more straightforward to ensure their satisfaction and maintain a positive relationship with them over time.

Creating an ideal customer profile can seem like a daunting task, but it’s actually not that difficult—and it’s well worth the effort.

What are the components of an ICP?

As with most aspects of business strategy, there isn’t one, single set of components an ICP needs to include. However, there are certain elements that are commonly included .

Here are a few of the most important ones:

• Company information: This is basic information about the types of companies that are most likely to benefit from your services or products. For example, it might include the number of employees, industry, or annual revenue.

• Demographic information: This includes things like age, gender, location, job title, and so on.

• Psychographic information: This encompasses things like interests, values, and lifestyle choices.

• Pain points: This is what motivates your customer to make a purchase. It could be something like needing to solve a problem or wanting to improve their quality of life.

• Objections to overcome: This is anything that could potentially prevent your ideal client from making a purchase, such as perceived risks or concerns about your product.

• Purchase history: This refers to the types of products or services your customer has bought in the past, as well as how much they typically spend.

• Online behavior: This refers to the way your potential client uses the internet, including which websites they visit and what type of content they consume.

By including all of this information in your ICP, you’ll have a much better understanding of your targeted group, what they’re looking for, and how to make your value proposition clear to them.

ICP vs buyer persona

Understanding the difference between an ICP and a buyer persona is crucial. Both concepts describe your target audience but have distinct purposes.

• ICPs are generally based on data analysis and offer a broad outline of characteristics that define an ideal customer. They are often used in segmentation and targeting strategies.

• Conversely, buyer personas are more detailed, fictional profiles of individual customers with specific needs, goals, and behaviors. They help you create targeted messaging and content that align with each group’s unique motivations.

How to create an ICP

Now that we’ve covered what an ICP is and why it’s important, it’s time to learn how to create one for your business.

There’s no single formula for this process. However, I’ve generalized it into four key steps:

1. Define target market: The first step in creating an ICP is to define your target market. Will your offering really appeal to all 31 million small businesses in the US alone? Or will you end up wasting resources chasing after prospects that were never going to close in the first place? It’s much better to define your target market in terms of specific characteristics. For example, you might say that your target market is “small businesses in the healthcare industry that are looking to improve their online presence”.

2. Research target market: There are a few methods you can use while researching your target market. You can survey your customers, check out industry reports, or you can look through government data if you can‘t find reprots that fit your need. If you choose the first strategy, creating the right questionnaire can make all the difference in getting genuine feedback.

3. Create the B2B customer profile: Now that you’ve done your research, it’s time to start creating the profile. It should be based on the information you gathered in steps one and two. When you’re getting started, it can be helpful to work from a template to make sure you’ve included all of the most important information. I will share a template that I’ve put together for this purpose later.

4. Develop a marketing strategy: Now that you know who you want to target, it’s time to start thinking about how to reach those customers and how to win them over. Unfortunately, there isn’t a tried and true framework for turning your ICP into an effective marketing campaign plan. Every ICP is different, and that means every strategy is different. What an ICP does help you with is selecting the right marketing channels, how to adjust your messaging, and coming up with a good pricing strategy.

ICP template to get started

When you’re getting started, it can be helpful to work from a template to make sure you’ve included all of the most important information. Below, you’ll find a template that SPP has put together to make things easier:

Note: Some of the points may not apply to your business, and that’s okay! Fill in as many as apply—the more detailed, the better.

After you’ve filled out this basic information, take some time to think about your customer’s journey. What are the steps they would take from becoming aware of your product or service to making a purchase? By understanding this journey, you can create a profile that is realistic and actionable.

Measuring & refining ICPs

You’ve come a long way, overcoming numerous challenges and obstacles, but your journey doesn’t end here. At this point, you’ve successfully created your Ideal Customer Profile (ICP) and are beginning to see promising results from your efforts. The next step in this process is to measure the accuracy and effectiveness of your ICPs by utilizing key performance indicators (KPIs) as a benchmark for success.

It is essential to establish strategies that continuously monitor these metrics, allowing you to track performance and suggest necessary improvements to enhance the precision and effectiveness of your profiles. One effective approach to refining them is to conduct interviews with your ideal customers after you have identified them, gaining valuable insights into their needs and preferences.

Next step: implementing your strategy

Now that you have some ideas about how to market to your desired customer group, it’s time to start putting them into action. The best way to do this is to start small and test different approaches to see what works best.

A/B testing is a great way to determine which marketing strategies are most effective. By testing two different approaches and measuring the results, you can get a better understanding of what works and what doesn’t.

This information can then be used to optimize your marketing strategy so that you’re spending your time and money on the approaches that are most likely to result in conversions.

Ideal customer profile for B2B FAQ

ICPs are necessary for success

Ideal customer profiles are incredibly powerful tools for any company focusing on B2B transactions. By understanding who their ideal client is, businesses can target their marketing efforts, generate more sales, and increase customer satisfaction. That’s a win-win for businesses and consumers.

At SPP, we understand how important it is to create positive experiences for clients and customers. Our client portal and recurring billing tools make it easy for customers to make payments, update information, track the status of their orders, and receive the help they need.