As marketers, we love to chuck around the TLAs, and here’s another one for you; ICP. As our resident Strategy Advisor Jeff Clark shares, this isn’t just some carefully crafted RCB (Rockstar CMO Bullshit); if you want to get some sales and marketing focus – tune in to your ICP….
In defining what accounts your business should target, we throw around terms like total addressable market (TAM) and total serviceable market (TSM), which are designed to narrow the accounts from the broad universe to a set that your business can potentially serve.
These are fine for building a business plan, but when it comes to creating a go-to-market strategy, you ultimately need to hone your target definition to an Ideal Customer Profile (ICP).
The ideal customer profile (ICP) defines the firmographic data, pain points, organisation needs, environmental factors and purchasing behaviour that describe the type of organization that you expect to be your most valuable customer. It’s one level up from the personas that you define as members of the buying team at the ICP-like account.
What’s the right number of ICPs for your business?
The answer is either one, or the fewer the better. If you’re a start-up, start with one and test the results to prove you’ve got it right.
As you build a business and are creating new solutions that meet distinct needs, perhaps across very different markets, then it’s time create unique ICPs. If your solution addresses similar needs across multiple industries, like an accounting package for small business, simply list the relevant industries within your ICP. If the needs, pain points or other elements vary significantly, like an Enterprise Resource Planning (ERP) suite that serves manufacturing, retail, logistics, and beyond; then a new ICP is in order.
By the way, this may sound like we are creating an Account-Based Marketing (ABM) and Selling approach, but that’s not necessarily so. This is merely a best practice for targeting accounts in your go-to-market … and you can’t do ABM without, either.
What’s the big deal about ICPs?
This is not an academic exercise. The ICP is integral to designing account plans for sales, and developing content and campaign plans for marketing. Companies that invest in a well-defined ICP achieve compelling business results, including:
- Faster sales cycles
- Higher sales conversion rates
- Lower customer acquisition costs (CAC)
- Greater average Long-Term Value (LTV) or contract value (ACV)
- Lower customer churn
It’s also creating clarity about who NOT to go after. Do make sales and marketing waste their time. You may land big deal with a business outside your ICP, but watch to see if they deliver value or they churn over time.
Resources for Building an ICP
You can develop your ICP using both qualitative and quantitative data and analyses. Predictive analytics tools may also have a role. If you have large internal and external datasets, predictive analytics can fill in gaps in your data or reveal additional attributes that correlate to high-value accounts, which are not obvious to the average (or expert) analyst.
| Required Information | Qualitative Sources | Quantitative Sources |
|---|---|---|
| Firmographic data (e.g., size, industry, buying centre) | 3rd party databases | Customer database, CRM |
| Pain points / Org. Needs | Sales & customer interviews Analyst briefings Voice of the Customer | Win/Loss Analysis |
| Purchasing behaviour (e.g., buying team, buying cycle length) | Customer Journey maps | Customer Journey Analytics, CRM |
| Environmental factors (i.e., trends & external factors influencing decision making) | Competitive landscape, Analysts | Win/Loss Analysis Predictive analytics |
The following is an example of basic information to include in your ICP. Let’s say that you’re selling a complex Martech tool, like customer journey analytics. You may think that every marketing department needs it, but really only a subset will be ideal, high value, and repeat customers.
| Firmographic data (e.g., size, industry, buying centre) | Large enterprise E-commerce or online account management capability Combined ecommerce & retail stores Retail, telco, finance, banking, and related industries Buyer centre = ECommerce, Operations, Customer Care |
| Pain points / Org. needs | Optimise poor online/offline customer experience. Poor customer service Low sales conversion rates Disconnect between sales and marketing programs |
| Purchasing behaviour (e.g., buying team, buying cycle length) | Collaborative buying process with multiple stakeholders Long buying cycles Account heavily leverages consultants |
| Environmental factors (i.e., external factors influencing decision making) | Poor press related in customer experience. Highly competitive markets. Down business cycles, pressure on revenue growth. |
One of the advantages of having an ICP, is that you can create a scorecard that helps you evaluate accounts that come across your radar. If a sales rep brings up an account to target, you can rate it as a poor fit, workable fit, or ideal fit to your ICP.
We will come back to this topic in future posts and podcasts. For now, you can find lots of ICP resources on the interwebs, such as ICP templates from HubSpot or this great ICP video tutorial series from consultant TK Kader.
Photo by Lidya Nada on Unsplash
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