B2B ideal customer profile

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 ideal customer profiles (ICPs) come into play. If this is your first time hearing about the concept, don’t worry. We at SPP have put together this guide to explain what ICPs are, why they’re important, and how you can create them.

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.

Let’s get started!

What is an ideal customer profile (ICP)?

An ideal customer profile (ICP) is 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, ICPs are tools 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 ICPs.

GuestHook ICP

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

Why are ideal customer profiles (ICPs) important?

There are tons of reasons why creating an ICP is incredibly important for any business. We won’t cover all of them here, but we will hit you with some highlights:

  • ICPs 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.

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

  • ICPs 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.

  • ICPs allow businesses to prioritize. When you have a clear idea of who your ideal customers are, 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, we’ll walk you through everything you need to know about ICPs, including how to create one for your business.

What are the components of an ideal customer profile?

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 in ICPs.

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 products or services. 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 ideal 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 customer 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 ideal customer has bought in the past, as well as how much they typically spend.

  • Online Behavior: This refers to the way your ideal customer 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 who your ideal customer is and what they’re looking for.

How to create an ideal customer profile

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 creating an ideal customer profile. However, we’ve generalized the process into four key steps:

  1. Define target market

  2. Research target market

  3. Create customer profile

  4. Target messaging

Let’s go over these steps in a bit more detail so that you can start making ICPs for yourself.

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 product or service 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 solid customer base, it makes sense to start by looking for characteristics they share. There’s a good chance that your ideal customers 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 your ideal customer might be.

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 product or service. In the next column, write up the main benefit of each feature. In the next column, repeat the last step, this time listing the benefits of the benefit—don’t worry, I’ll give an example.

One of SPP’s features is a 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. One secondary benefit is that it leads to less customer churn.

Read: Top Reasons for Losing Customers as an Agency (+ How to Prevent)

Once you have this secondary benefit, you can start looking for markets that are in need of it.

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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.

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

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 your ideal customer profile

Now that you’ve done your research, it’s time to start creating your ideal customer profile. This profile 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.

B2B ideal customer profile template

Template B2B ideal customer profile

Download the B2B ideal customer profile template here.

After you’ve filled out this basic information, take some time to think about your ideal 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 ideal customer, you can start thinking about how to reach them. In the next step, we’ll take a look at some of the best ways to market to your ideal customer.

Step four: developing a marketing strategy

Now that you know who your ideal customer is, it’s time to start thinking about how to reach them 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:

1) Channels

ICPs are incredibly useful for determining which channels will be most effective for reaching your ideal customer. 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 customer 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.

2) Messaging

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 one of the primary objections your ideal customer has is that they’re 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.

3) Pricing

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 your ideal customer is willing to pay and what will allow you to generate a profit.

To determine what your ideal customer is willing to pay, consider their income, the perceived value of your product or service, and any competing products or services they may be considering.

Once you have a good understanding of what your ideal customer is willing and able to pay, 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.

Step five: implementing your strategy

Now that you have some ideas about how to market to your ideal customer, 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 for reaching your ideal customer. 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 businesses of all sizes. By understanding who their ideal customer 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.

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