December 2, 2022

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 for 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 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.

Download our Go-to-Market Strategy Checklist to make sure you don't miss a step  as you bring your product to market.

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 in 2017 and, over the course of that year, experienced an 83 percent increase in our average deal size

  • During 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.

How to Create an Ideal Customer Profile

Now that you understand the differences between these concepts let’s discuss how to create an ideal customer profile. The process is relatively simple: research your current and past customers, analyze their profiles, determine their common characteristics and use those characteristics to identify future prospects.

Start by looking at the data from existing customers and categorizing them by industry, company size, and other factors. From there, you can start to make assumptions about the attributes of your ideal customers based on what your existing customer base has in common. Collecting feedback from customers can be extra valuable here. 

Once you have a good handle on the data from current and past customers, it’s time to look for patterns that could help you identify future prospects. Ask questions like:

  • What makes these customers successful?
  • What challenges do they face in their industry or role that might make them more receptive to our product or service?

Once you have a good understanding of the commonalities among your existing customer base and prospects, you can start to create an ideal customer profile. This should include firmographics such as company size, industry, and location, as well as buyers’ interests and challenges. Here are the general steps you should follow: 

Define Your Core Customer Attributes

Before you start creating your ideal customer profile, it helps to define the core customer attributes that will help shape the profile. Customer attributes encompass demographic (e.g., age, location) and psychographics (e.g., lifestyle, interests) variables that you can use to build a custom buyer persona for your target audience. These characteristics provide useful insights into the behavior and preferences of the people in your target market, which allows you to create personalized messaging that resonates with them more effectively.

Identify Their Pain Points and Goals

One of the most important aspects of building a buyer persona is understanding your customers' pain points and goals. Knowing these will help you create messaging that speaks directly to their needs, making them more likely to engage with your product or service. Some pain points might include financial struggles, time or energy constraints, or emotional issues. Your goal should be to understand what they’re looking for in a solution and how you can provide it to them in an effective and efficient way.

Conduct Market Research and Analyze the Data

After identifying your ideal customer, it is important to conduct market research to understand their wants and needs better. This research can take the form of surveys, interviews, or focus groups. Analyzing the data from these activities will help you identify common patterns in your customers’ behavior and preferences, which can then be used to create an effective messaging strategy for marketing your product or service.

Establish the Few Most Relevant Customer Segments

After analyzing customer responses from the research activities you conducted, you should be able to establish a few key customer segments that represent your target market. These segments might include customers by age, industry, location, or other characteristics relevant to your product or service. Knowing your most likely buyers will help you craft a more personalized and effective message that resonates with them.

Create a Shopping Persona for Each Segment

To create an ideal customer profile, consider each segment as a shopping persona or avatar. You should create a detailed description for this persona, including demographic information like age, gender, and location. Further insights might include what motivation drives them to shop with you and what language they use when discussing products or services in your market. The more detail you can gather on your ideal customer, the easier it’s supposed to be to reach them with personalized messages and offers that are specific to their needs.

By understanding your ideal customer profile, you can focus your marketing efforts on these segments to increase the chances of converting prospects into customers. You can also use this data to inform your sales process to help you close deals faster and more efficiently. If you identify a segment that isn’t performing as well, you can quickly adjust your strategy to focus on a more profitable customer base.

To succeed in sales and marketing, you need to know your ideal customers and how to reach them. By creating an ideal customer profile, you can better understand which segments are most likely to purchase your product or service and craft a strategy for targeting them. This will give you the insight to make informed decisions about where, how, and when to market your products and services. With this knowledge in hand, you can be sure that your efforts are focused on those prospects who are most likely to become customers.

How to Use ICPs in Your Marketing Process

Making sure that your marketing efforts are directed towards a target audience of ideal customers is essential for the success of any business. With an ideal customer profile, you can create content and campaigns tailored to those customers.

Content marketing is one way to engage with customers at each stage of the buyer’s journey. By creating content tailored to your ideal customer profile, you can provide information about the relevant product or service to the customer. This lets them know that you understand their needs and challenges and can meet them.

You can also use social media advertising to reach those ideal customers. Social media platforms such as Facebook, Instagram, and Twitter allow you to target ads to specific audiences based on interests, demographics, and job titles. This will ensure that your ads reach those customers in the best position to become long-term customers.

Finally, you can use email marketing campaigns to reach out to leads who have already expressed an interest in your product or service. By creating automated email sequences, you can ensure that customers receive relevant information and offers tailored to their interests.

By creating an ideal customer profile and using it to inform your marketing efforts, you can ensure that your resources are used effectively. This will help you drive more sales and increase customer loyalty over the long term.

How to Use ICPs in Your Sales Process

Once you’ve identified your ideal customer profile, it’s time to use this information to grow and optimize your sales pipeline. With a clear understanding of who your customers are and what they need, you can ensure that every interaction with them is as helpful and effective as possible.

One way to do this is by creating personalized pitches for your prospects. By tailoring the pitch to their specific needs and challenges, you can demonstrate that you understand them and have a solution to help solve their problems.

You can also use customer data in the sales process to build relationships with customers before, during, and after the sale. For example, you can use past purchase history to suggest other products or services that may interest them. Or, you can use data about their demographic to provide data-driven insights into improving your product or service.

Finally, you can use customer profiles to prioritize leads and focus your efforts on those customers who are most likely to convert. With this knowledge and automation tools to streamline the process, you can ensure that your sales team focuses on the leads who are most likely to make a purchase.

Using an ideal customer profile in your sales process can create more targeted and effective customer interactions that will lead to increased sales and customer loyalty.

The Takeaway

In conclusion, creating an ideal customer profile is essential for any business looking to increase sales and maximize customer loyalty. By understanding your ideal customers, you can create content, campaigns, and sales pitches tailored to their needs. This will help you ensure that your resources are being used in the most effective way possible.

Start building an ideal customer profile today to set your business up for success!


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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