Accelerating company growth is a many-layered challenge. Too often, I see companies missing a foundational element: understanding your key buyer. Without a clear definition of your ideal customer, including how they buy and when they buy, your team is operating opportunistically instead of strategically. This leads to revenue unpredictability.
Here’s a story that may help illustrate the challenges of operating without an ideal customer profile.
One day this summer, I went paddleboarding with a friend. It was during our wicked summer heat dome, so we were excited to get into the water. As a result, we did zero planning. Big mistake. There was a strong ebb current, which we gratefully rode straight out to the middle of the harbor. We paddled some distance before a wind came up. At that point, we decided to head back in. The wind was offshore, so we had double the challenge of paddling against both the current and wind. I have never before had to work so hard to return to the beach. By the time we got back, I was completely exhausted and my arms were dead weights at my side. I had to cancel my evening plans.
Had we taken the time to plan the best path out and back, I wouldn’t have ruined the evening by expending precious resources, placing myself and my friend at risk.
Having an Ideal Customer Profile (ICP) clearly defined is a foundational element of the scale challenge. Too often, I see sales teams making the mistake of not clearly identifying their ideal customer. Your ideal customer is your best path to revenue. Here’s how to recognize your best customers to work with:
- The sales cycle is shorter
- The acquisition cost is lower
- They tend to have a low churn rate
- They have higher levels of satisfaction
- They are easier to upsell or expand
If you can identify this class of customer, and focus your efforts on them, you’ll be able to grow and scale faster.
The Benefits of Selling to your Ideal Customer
Besides an easier transit to revenue, there are multiple benefits from targeting your ICP.
- Improved Lead Quality – Your marketing team will be better able to target their demand generation efforts on a segment of the market and make the messaging more directed and compelling. Your marketing dollars become more effective.
- Lower Selling Costs – Keep your CAC low. Your sales team will be working on a set of targets with the highest chance for success. Casting a wide net and spending time on non-ICP opportunities is riskier and more resource-intensive.
- Better Product: Market Fit – When you adopt an ICP-Centric strategy, you are better able to improve your Product: Market fit by investing R&D on your anchor customer type, rather than trying to be all things to everyone.
- Upgraded Revenue Predictability – With an ICP-Centric go-to-market strategy, your sales processes become easier to standardize and deals are easier to forecast.
But Won’t We Miss Potential Opportunities?
You could, which is why you need a process in place to make intelligent decisions about giving the go-ahead to certain opportunities outside your defined ICP, wherein each step of the sales process is monitored and OK’d by leadership.
One company I worked with had a clear ICP in place when a Global 500 company called, asking for us to complete their RFP for a new product. I pushed back hard. They begged. They revealed they had been evaluating the product for some time and thought it was an ideal solution for them. The executive team met and decided we would respond to the RFP but in a very direct way. We addressed the areas we could and were direct about other solutions that might work as well for them. Each step through the process, the leadership team decided whether or not to move forward with the deal. Ultimately, we won the business, landed a large customer and captured the knowledge to move into a new market.
How to identify Your Ideal Customer
To identify your ICP, you’ll need to do some data mining, some research, and some customer validation.
Take a look at your sales history and identify industries, total company revenue, sales cycle time, the roles you engaged with (users, buyers, recommenders by title). Additionally, look at churn and upsell data. Identify the LTV for each one. I also recommend you score the customer on how engaged they are, even if it is as simple as: Red (dissatisfied customer), Yellow (seemingly neutral or happy and not engaged), Green (engaged, positive). You should start seeing some trends develop quickly.
Use that information to narrow down your ideal customer candidates. In this massively over-simplified example, larger multinational companies are the clear candidates for ICP, despite the differences in their industry focus.
|Company Name||Industry||Revenues||Geography||Days to Close||LTV ($K)|
|Dunder Mifflin||Pulp and Paper||148M||US||299||75|
|Stark Industries||Tech, Infosec, Defense||120B||Multinational||37||2000|
Once you have this honed down, it’s time to do some discovery interviews with each company. The goal is to identify the similarities and differences between the customers. I strongly recommend you have someone who is not in sales conduct these interviews. In the call, you’re going to ask for information on their buying process. How did they find you? How did they make their decision? Do they have expansion plans? What was the problem they were trying to solve? Did you solution solve it completely?
Once you have this data from a set of customers, you can go back and add it to your evaluation. In this case, each multinational company identified challenges with centralized operations being unable to serve every country and your product solved that. So now we know your ideal customer is:
- Multinational corporation
- With centralized operations functions
- Challenged with supporting operations in-country.
Your sales and marketing efforts just got a whole lot easier. You’ll be selling with the wind at your back.
We are pleased to work with our clients to help facilitate ICP discovery and identification. Feel free to contact us for support.
Lindsey Anderson brings our clients more than 30 years of experience in revenue leadership roles, primarily in technology, including software, SaaS, and hardware. In both CRO and VP Sales (and Marketing) experience with Seed, Series A and B startups, mid-size companies and global public companies.