Your Ideal Customer Profile (ICP) is a description of your best potential customer. By creating your ICP based on real business data and advanced analytics you make sure that it matches the DNA of your best customers.
Define your market before doing anything else
The shotgun approach to sales and marketing no longer works. There’s too much noise in the market and too many messages in prospects’ inboxes. The only way to stand out is to know your customers from the inside out, and there you need the input from both, sales and marketing.
Developing an Ideal Customer Profile (ICP) and using it to determine your Total Addressable Market (TAM) will help sales and marketing know exactly whom to target, why they need your products, and when they need them.
Why does Ideal Customer Profile matter?
The quick answer is simple; revenue from current customers is easier to win. It’s also faster and less expensive to approach an existing customer that you already know.
Thinking a bit further, your ideal customer is also a happy customer. When you know how to serve that customer exactly what they want everyone is happy. On top of this, the ideal customer renews at a higher rate, buys more, and takes less effort to maintain a good relationship with, and this way generates the kind of revenue that any company is happy to achieve.
Understanding your Ideal Customer Profile at an early stage makes your path to growth much less painful. First of all, it helps you to identify your market. Your Total Addressable Market (TAM) is basically all the companies that match your ICP.
Secondly, it makes a real difference to your sales and marketing tactics. Forget the shotgun approach and use targeted messages to approach the customers that have the highest potential customer lifetime value.
Forrester Consulting revealed that 64 percent of marketers believe that they need better data for prospecting.
So how do you know what your best customers are made of?
The first step in creating an Ideal Customer Profile is to analyze and compare the existing customers in your CRM system. Pay attention to the defining attributes of your best customers, such as company size, budget, industry, and geographical locations.
To understand your current best customer even better, aim to gather more detailed information about the buying journey and pain points of your customers. For example, compare your closed-won accounts to see what happened just before a customer made the decision to buy from you. How did this customer end up on your website? Were they contacted by a sales rep?
After collecting data about your Ideal Customer Profile, look for common threads among your most successful customers to identify characteristics. An example list of your Ideal Customer Profile is presented below.
Defining your ICP can also be automated, as all necessary data is already in your CRM system. With access to your CRM sales data, our Account Scoring model looks at your historical sales data and cracks open the “DNA” of your best customers. This information is then used for enriching and pulling out prospect customers with matching “DNA” from your company data provider. And now you have the keys to identify the most potential customers and focus your marketing and sales efforts where the return is highest.
According to Gartner, organizations that have adopted account-based strategies and developed a strong ICP average a 68% higher account win rate.