Hi folks!
Every week, I’m sharing a practical, hands-on guide on how to run your small business better.
Today’s topic: How to create your ideal customer profile (ICP)... so you know who to keep happy!
Before we start:
These emails are adapted from the Scalepath resource library.
Each playbook breaks down a common business challenge into straightforward, actionable steps so you can get it right the first time.
There are over 50 playbooks in the library, plus dozens of templates, and expert call recordings.
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The Playbook: How to create your ideal customer profile (ICP)
Why do you need to know your ICP?
In short, having an ICP gives your company focus.
If you don’t know who your perfect customer is, then how are you supposed to find them? You’ll hemorrhage money trying to reach the whole world and still probably never get in front of the right eyeballs.
You need to reach the right person with the right problem at the right time with the right solution.
Finding that person means answering a bunch of questions about them:
- Who needs your services?
- What sort of client are you capable of serving?
- What sort of problem are they facing?
- Why can’t they resolve it themselves?
- What sort of solutions are they likely to pay for?
- What makes you the obvious solution?
And when you know who your perfect customer is, it will drive everything about your marketing and sales.
Once you hone your messaging to speak directly to that person, you’ll either see a huge increase in sales conversions, or you’ll realize you need to change what you’re offering.
Let’s walk through the steps to defining your ideal customer.
The steps
- Collect and sort all your existing customer data.
Use whatever customer management system you have (e.g. spreadsheets or CRM software) to gather data on your existing customer base.
Once you have it all in one place, sort your data for your best customers. Don’t just look at dollars spent. Consider:
- Who are your repeat/longest-standing customers?
- Who are your most satisfied customers?
- Who are your most excited customers?
- Which customers can your company serve best/most easily?
Identifying these people will help you find your most valuable customers.
- Identify common characteristics, qualities, and patterns.
Once you’ve identified your valuable customers, look at their characteristics. Go from broad to specific.
- What industry are they in?
- If you’re B2B, what size company are they from?
- What sort of revenue does their company make?
- What role or job title at your target company chooses to buy from you?
- What are their demographics (age, location, gender, education level)?
- Pinpoint their needs and pain points.
Now figure out why your customers need you. This is a great point to collect external feedback via short email surveys with key clients and past clients.
What was the problem they needed to solve? How did your services solve that for them? What would they have done if they hadn’t found you?
You can also get internal feedback from your team members who interact directly with clients. They have the on-the-ground perspective you need. What makes them light up on a call? What are they frustrated with?
- Understand the purchasing behavior of your customers.
Once you’ve identified the why, it’s time to look at the how. Consider:
How do your clients find you? Is it from Googling you? Calling directly? Walking into the business?
What does the sales cycle look like? Is it a long, complicated deliberation, or a quick handshake deal?
What stops them from buying? Are they limited by price, bandwidth, or time?
- Group your customers into segments of similar characteristics and needs.
Each segment represents a different buyer profile.
Theoretically you could then develop a tailored marketing approach for each one — but in the real world, you should pick the one segment that you think has the most potential for success.
Which client profile can you hit a home run for every time?
- Now drill down into that one segment and define it completely.
Don’t be afraid of getting specific. When I do this exercise for my companies, we mock up a fake LinkedIn profile of a single person who is our perfect customer.
- What is their job title?
- Where do they work? (How big is that company?)
- How old are they? What gender are they?
- What challenges do they face?
- How do they make buying decisions?
- How does your solution impact their day to day?
Giving your ICP a fake name is a good way to avoid getting wishy-washy with your profile. “John Doe” can’t work for both a mid-sized company and a start-up.
And remember: it’s almost guaranteed that your ICP won’t exactly fit most of your customers. But if you don’t have a bullseye to aim for, you’ll never hit the dartboard.
(Can you tell I’m bad at darts?)
- Finally, test your ICP in the real world.
Use real data to make sure you’re on the right track.
You could define two ICPs and run A/B test campaigns to see who is more responsive. Keep your experiments small, and make sure you’re collecting data on everything — at the very least, track engagement metrics, leads generated, and conversion rates.
(For a walkthrough on marketing experiments, check out my post on the Bullseye Method.)
Get feedback from your sales team on how well prospects are resonating with your messaging.
Post about it online, and ask people in your industry as well as your potential customers.
Go into full data collection mode.
What to do once you’ve defined your ICP
Defining your ICP makes decisions about your business easier. Just ask: “What would better serve my ICP?”
Here are a few valuable activities to do once you’ve defined your ICP:
- Give your business a head-to-toe exam
Consider each customer touchpoint from your ICP’s perspective, and look for ways to improve the experience for them specifically.
Look at your marketing — is your Hero clearly defined? (See my post about the Hero’s Journey framework.)
How about your product, pricing, even your hiring practices? Look at your business head to toe.
- Bring everybody up to speed
Organize a training session to walk through the ICP with all your team members. Focus on practical applications such as how to use the ICP in sales conversations, creation of marketing materials, service delivery and customer service.
- Keep refining your ICP
Your ICP is not set in stone. It will change as your business evolves, as your industry shifts or grows, and as social trends and the economy fluctuate.
Continuously collect customer feedback. Watch for changes in buying behavior. Talk to your customer-facing staff.
Keep listening, keep changing, and keep selling!
That’s it for this week!
What do you think? Hit reply and let me know.
Michael
P.S. In case you missed it on Saturday, I polled my readers on what management behaviors matter the most. I’d love your input!
Survey for managers — Survey for employees (you can do both!)
