XM Knowledge Base
What is an Ideal Customer Profile?
In B2B, account-based marketing (ABM), an Ideal Customer Profile (ICP) is a description of a company that you believe to be a perfect fit for the products or services you sell. You might also see this called an Ideal Buyer Profile, but the idea is the same: you’re looking to define the best possible customer for your business.
Your ICP usually takes the shape of a fictitious company that would be your dream lead – the kind of lead that would be the most receptive to your sales team, with the ideal budget, scale, location, and needs.
Other factors that might help determine your Ideal Customer Profile are things like legal conflicts of interest (for example, if you already work with one company that wouldn’t want you working with a competitor), location-based restrictions, and your ability to meet their time requirements.
We’ll explore the benefits in more detail later in this article, but in general, the purpose of building out a robust ICP is to help your business – and your sales teams – focus their efforts on leads that are most likely to result in successful acquisitions.
After all, if a potential customer is a bad fit, or you know that they won’t be receptive, why would you waste time and resources chasing their business?
What’s the difference between Ideal Customer Profiles and Buyer Personas?
It’s not uncommon for there to be some confusion around the difference between an ICP and the concept of a Buyer Persona. They’re not, in fact, the same thing, but they can influence and help inform one another.
What is a buyer persona?
A buyer persona is a semi-fictional character that represents your perfect customer, based on customer insights and market research. Every business has a target audience, and in most businesses, these are separated into customer segments.
In fact, it’s usual to have several buyer personas for each target customer; not every customer is the same or has identical needs, so it helps to separate different types of buyers.
Creating a buyer persona brings a customer segment “to life” and turns a particular customer segment into a person you can imagine actually existing, with the belief that it is then easier to create a successful marketing strategy targeted with that persona in mind.
The simplest way to think about this is that your Ideal Customer Profile describes the company that your buyer persona works for. So, let’s imagine that you sell vehicle fleets to hospitality businesses. If your ICP is a chain of hotels, one of your buyer personas might be the operational manager for that chain.
With that in mind, it should become clear how an Ideal Customer Profile and buyer personas affect and inform different parts of your strategy for marketing, sales, and support. An Ideal Customer Profile can help your business focus on only the kinds of leads and accounts that are likely to prove fruitful. Building out buyer personas, meanwhile, can help your teams to be able to tailor their efforts to specific demographics and idiosyncrasies.
eBook: How to Use Segmentation to Build Buyer Personas
Why is an Ideal Customer Profile important?
Building an Ideal Customer Profile is a crucial part of Account Based Marketing (ABM). ABM takes a strategic approach to marketing that limits the focus to only those potential customers that will be receptive to your business, and that you can actually service well.
ICPs are useful for qualifying leads, which is how you’ll reduce inefficiencies. Having a rock-solid template for an ideal customer to compare any new leads against is a simple but hugely effective way to ask a simple question: Is this customer likely to purchase from us?
If the answer to that question is no, then you’ll save your teams’ time, effort, and resources – for both sales and marketing efforts.
Customer support teams will also feel the benefit. Part of building out an Ideal Customer Profile is admitting what you can and can’t provide. I.e. If a potential client has needs that outstrip your current abilities – but you don’t identify that early on – winning business with them can actually be something of a poisoned chalice that will ultimately become a drain on time for your customer support or customer success team.
Simply put? Putting in the time to create an Ideal Customer Profile will pay off in the long run, because it provides your organisation with a strong idea of who is and isn’t worth marketing to, pitching for, and following up with.
How to build an ideal customer profile
There are a few things to consider when building out your Ideal Customer Profile – and you’ll want to dig into your existing operational data – but it doesn’t need to be a daunting process. Firstly, gather key stakeholders together from your customer success team, sales team, and marketing teams to collaboratively think about the following questions:
What do you do best?
Think about what solution your organisation provides. What problems does it solve? This, naturally, will help you finetune an idea of who your target audience is and how you can help them. Try and be as specific as possible with this. For example, if you sell accountancy software, think about whether that software – at your current operational level – is best suited to multinational megacorps with thousands of employees, or independent startups.
Who are your best customers?
It sounds incredibly simple, but the most direct route to pinpointing your Ideal Customer Profile is, funnily enough, to think of your most ideal existing customers. Which are your most successful accounts? Who are your best customers? Which ones have the greatest customer lifetime value, or have gladly been repeat customers? If more than one example springs to mind, they’ll probably have similarities across some of the following characteristics:
● Geography and restrictions
● Industry
● Number of employees
● Customer base size
● Revenue and budget
● Their existing technology stack
Those similarities – or at the least those characteristics that fit your most successful customer – provide the basis for your Ideal Customer Profile.
What does your customer feedback say?
Lastly, dig into metrics like NPS, CSAT, and qualitative customer data to confirm your instincts. In other words, you need to be sure that the customer(s) you think are among your most successful accounts actually feel the same way you do.
Brand tracking and experience management tools can help with this. For instance, Qualtrics’ Experience Management Platform™ can track feedback across every touchpoint and, when aggregated and analysed, can help discover key segments with similar attributes. Knowing if certain segments feel more strongly about your brand than others can help you find the ideal customer profile.
Hopefully, this customer data matches up with your operational and sales data, and you’ll have strong historic examples of customers that are close to an ideal that you can use as a foundation for creating your written ICP.
What if you’re a brand new business?
It’s impossible to think about your best customers if you’re brand new on the scene. If that’s the case, then more informed answers can come from running competitor research to learn what you can about the customers your nearest rivals work best with.
Ideal Customer Profile template
There’s no ironclad, exact way to format an ICP. The main priority is to focus on the questions and answers you think will most help your teams make smarter decisions. Specificity is encouraged, but you don’t have to be exhaustive for the sake of it.
What’s most important is to revisit the process fairly regularly, and to use the same template each time you do. As you grow as a business, the kinds of customers you’ll want to (and be able to) attract will shift in kind, so regular updates are important.
With all that said, we’ve provided a list of questions below that you can use as the basis for an Ideal Customer Profile template or worksheet:
Ideal Customer Profile questions
● What industry do they operate in?
● Where are they based, and where do they operate?
● Do they stipulate any legal or contractual limitations?
● How many employees do they have?
● How big is their customer base?
● What is their annual revenue?
● What is their annual budget for your type of solution?
● What is their existing technology usage?
● What are their biggest pain points?
● How can your solution help?
● How fast do they need solutions?
● What are their brand goals?
● Do they need one-off solutions or ongoing support?
● Describe them in 30 words
You can use our free worksheet template to answer the above questions and determine your ICP:
The result should be a one-pager that describes your ideal customer as a semi-fictitious entity, their pain points, and their scale and sensibilities.
Crucially, by showing what your ideal customer should be like, you’ll be able to see what customers that aren’t worth pursuing are like – making this an incredibly useful jumping-off point when assessing new business
How to Use Segmentation to Build Buyer Personas