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March 8, 2019

What is An Ideal Customer Profile (ICP)?


All too often, marketers and salespeople think: “A customer is a customer is a customer. Any sale is a good sale.”

It’s time to break free from that mindset. In reality, there is a stark difference between ideal customers and less-than-ideal customers. As your business grows, you need to make sure that the deals you’re closing are worth the resources you’re expending in order to close and retain those deals.

You do this by defining and selling to your ideal customer profile.

Ideal Customer Profile vs. Buyer Persona vs. Target Market

The lines between ideal customer profiles, buyer personas and target markets are sometimes blurred, so let’s make sure you understand the differences before moving forward.

An ideal customer profile is a hypothetical description of the type of company that would realize the most value from your product or solution. These companies tend to have the quickest, most successful sales cycle, the greatest customer retention rates and the highest number of evangelists for your brand.

You define the ideal customer profile using firmographics, including:

  • The average size of the company

  • The average company revenue

  • The ideal industry or industries

  • The ideal location of the company

… and so on. Depending on your product, service or brand, you may want to include other data points to help you identify the right market segments for you.

Buyer personas are hypothetical descriptions of the type of people at those companies who need to be involved in the purchasing decision. The firmographics of your ideal customer profile will likely inform your buyer personas, but the personas themselves should be defined by demographics such as role, job title, function, seniority and income. Most importantly, you should understand the pain points and challenges of each individual and how your product or service solves for those challenges.

At New Breed, we sometimes use the terms “ideal customer profile” and “buyer persona” interchangeably, because we use the core concepts of ideal customer profiles to build out our personas. More often than not, a buyer persona is just one piece of the puzzle, so you need to understand who all of those puzzle pieces are and how to reach them individually in order to sell to the company as a whole.

Finally, a target market is also similar to an ideal customer profile, but a target market is more commonly used in a B2C consumer setting. Rather than describing a company, a target market defines a core group of consumers who would benefit from the product or service.

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Why Are Ideal Customer Profiles So Valuable?

You may have the ability to sell to a wide range of companies and appeal to a wide range of personas within those companies, but you need to know where you win. If you sold to every single company that was interested in your product or service, you’d likely experience high rates of churned and unhappy customers — and unhappy employees, too.

For example, when New Breed first defined our ideal customer profiles, we included one profile whom we called Startup Sam. This type of customer was (and is) highly interested in working with us, but their lack of budget made them difficult to sell to. With a high cost of acquisition, we hoped to recoup that by renewing with them over a long period of time, but the average deal was small, short and provided little value to our company.

Once we started noticing this pattern, we disincentivized our sales reps from working with Startup Sams and instead referred them to other resources that might help them solve their challenges until they reached our target profile. This helped us increase our win rates, average deal size and lifetime customer value.

Here’s the data to prove it:

  • In 2016, we were selling to Startup Sams

  • We stopped selling to Startup Sams during 2017 and, over the course of that year, experienced an 83 percent increase in our average deal size

  • The first full year of not selling to Startup Sams (2018), we experienced another 30 percent increase in our average deal size from the previous year

  • In just the first few months of 2019, our average deal size has been 152 percent higher than in 2016

By identifying and solving this issue by honing in on our ideal customer profiles, we’ve increased our revenue significantly — and we’re not the only company to have done so.

Along with the obvious revenue benefits, ideal customer profiles also help align your marketing and sales teams on the core value proposition and messaging of your product or service. When marketers and salespeople know exactly who they’re talking to and how to talk to them, their efforts are that much more successful.

In fact, studies have shown that aligning sales and marketing teams can increase customer retention rates by 36 percent and sales win rates by 38 percent.

Likewise, your product and service teams can use the ideal customer profile to consider how to build and improve the product or service to better meet the needs of those customers over time. When customers provide feedback about what is and isn’t working for them, you can more easily and effectively address those issues in your company.

Whether or not you currently have ideal customer profiles built out, take the time to dig a little deeper into your company data. You might be surprised by what you find.

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Guido Bartolacci

Guido is Head of Product and Growth Strategy for New Breed. He specializes in running in-depth demand generation programs internally while assisting account managers in running them for our clients.


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