Ideal Customer Profiles: What They Are and Why They’re Important
- Defining your ideal customer profile (ICP) is crucial for B2B companies because it helps focus marketing and sales efforts on the most promising targets.
- When defining your ICP, consider factors such as company size, industry, location, and pain points that your product or service can solve.
- By continuously refining your ICP based on data and feedback, you can improve your targeting and ultimately increase your chances of success in the B2B market.
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 products. By understanding the needs and wants of your target market, you can create products 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.
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.
In this article, I’ll walk you through everything you need to know about them, including how to create the profiles for your business.
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.
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, we’ve generalized it into four key steps:
Define target market
Research target market
Create the profile
Let’s go over these steps in a bit more detail.
Step one: define target market
The first step in creating an ICP is to define your target market. This may seem like a no-brainer, but it’s important to be as specific as possible. To illustrate why, let’s imagine that you define your target market as small businesses.
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? Probably the latter!
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”.
This narrow description is much more useful—especially for productized service businesses and agencies that are aiming to provide packaged solutions that meet specific needs. If that’s your goal, there are a couple of methods you can use while trying to define your target market:
1) Analyze your current customer base
If your business already has a wide range of existing customers, it makes sense to start by looking for characteristics they share. There’s a good chance that your preferred client will share similar traits to the ones that are already doing business with you.
2) Analyze your competition
If you’re just starting out, or you’re looking to expand into new markets, it can be helpful to look at successful competitors. While they might not be doing everything perfectly, their success is indicative of a marketing strategy that works. Behind that strategy, there’s a target market.
Start by taking a look at the types of customers they’re targeting. What do these customers have in common? By understanding who your competition is targeting, you can get a better sense of who to go after as well.
3) Think in terms of benefits
Another method is to take a step back and think critically about your product or service. Who is it that would benefit the most from what you have to offer?
To answer this question, start by opening up a spreadsheet and listing the features of your offering in column A; in column B, write up the main benefit of each feature. Not sure what to write? Don’t worry, I’ll give an example.
One of SPP’s core features is the client portal where customers can see their order histories, fund their accounts, make purchases, and view order statuses. The primary benefit of this feature is that it improves the customer’s experience. A secondary benefit is that it leads to less customer churn.
Once you have this secondary benefit, you can start looking for markets that are in need of it.
Step two: research target market
Now that you have a good idea of who your target market is, it’s time to start doing some research. This will help you refine your ICP and make sure that you’re on the right track.
There are a few methods you can use while researching your target market:
1) Survey your customers
One of the best ways to learn about your customers is to simply ask them. You can do this through surveys, interviews, or even just casual conversations. Creating the right questionnaire can make all the difference in getting genuine feedback. The goal is to get a better idea of who your clients are, and to define a buyer persona.
Grow your industry knowledge
Some things you might want to ask about include:
How they found out about your product or service
Why they decided to buy from you
What their biggest pain points are
How likely they are to recommend you to a friend
Who the decision-maker for purchases is
Save the collected information in your CRM so that it can be used by your marketing and sales team.
2) Look at industry reports
Another great way to learn about your target market is to read industry reports. These are usually published by research firms or trade associations, and they provide detailed information about specific markets.
For example, if you were an SEO agency for job listing platforms, you might look for an industry report that covers the job listing platform market. These reports can be extremely helpful in understanding trends and identifying potential opportunities.
3) Conduct secondary research
If you can’t find any specific industry reports that cover your target market, don’t worry! You can still conduct secondary research by using sources like Google Scholar, government data, and articles from reputable publications.
This type of research can be time-consuming, but it’s a great way to get detailed information about your target market.
Step three: 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. 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.
Once you have a complete understanding of your target group, you can start thinking about how to reach them.
Step four: developing 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. Every ICP is different, and that means every strategy is different.
With that being said, we do have some advice to help you plan the best way forward:
An ICP is incredibly useful for determining which channels will be most effective when it comes to marketing. More specifically, things like age, income, location, and job title can all be helpful in determining which channels to use.
To illustrate, imagine an accounting agency determines that the ideal client for their services consist of Series A B2B startups that need help as they scale growth to the next level. LinkedIn might then be the perfect place to engage and market their services, as this is where most venture-backed CEO’s and CFO’s hang out. Other viable channels could include networking and email.
Tip: SPP integrates with popular email marketing tools like MailChimp and ActiveCampaign, so you can easily add clients to mailing lists based on their order histories.
Your ICP can also be helpful in determining what messaging will resonate most with your target customer. Remember those pain points and objections we talked about earlier? Those can be turned into incredibly effective messaging for your marketing campaigns.
For example, imagine you run a home security company, and you’ve determined that your target client is often worried about the cost of installation. In this case, you could create an ad campaign that highlights the fact that your company offers free installation.
This type of targeted messaging is more likely to result in conversions than a generic message like “protect your home”.
Tip: Want to track how well your messaging is converting? Integrate SPP with Google Analytics.
When determining your pricing strategy, it’s important to keep your ICP in mind. In general, you’ll want to find a balance between what a customer is willing to pay and what will allow you to generate a profit.
To determine the maximum budget, consider their income, the perceived value of your product or service, and any competing products or services they may be considering.
With a clear understanding of the budget, you can start thinking about how to price your product or service in a way that meets their needs while also generating a profit for your business.
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.
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.