How to Define Your Ideal Customer Profile (ICP) for Precision Targeting

January 16, 2024
Contributor: Amita Jain

An ideal customer profile (ICP) aligns sales and marketing to the highest-value accounts and focuses on converting them into customers.

The B2B software buying and renewal committee involves an average of five decision makers who work together to build consensus. Yet, many marketing leaders focus more on individual customer personas, applying B2C tactics to a vastly different B2B environment.

The most essential prospects in B2B marketing are represented by an ideal customer profile (ICP). ICP provides a realistic picture of the enterprises that individual B2B buyers represent, paving the way for more streamlined sales and marketing plays.

Creating an ICP can be challenging, as it draws from a mix of information sources — some that can be easily discovered and others that require deeper research and customer interactions. In this article, we cover what an ICP is and guide how to create and use it to better inform your sales and marketing strategy.

What is an ideal customer profile?

Ideal customer profile (ICP) describes the characteristics or attributes (e.g., industry, location) of a prospective company that is most likely to buy what you’re selling and become a loyal and profitable customer.

An ICP should not be confused with a buyer persona or target market:

  • An ICP gives a broad picture of an enterprise your sales teams should target, while buyer personas zoom in on all individuals involved in the purchase process.
  • An ICP points out the characteristics of enterprises that produce the largest share of your wallet, while the term “target customer” or “total addressable market” considers every possible company or account that might buy your product or service.

Steps to create an ideal customer profile
Step 1. Build a database for your ICP

Start by gathering and examining hard facts (quantitative data), personal insights (qualitative data), and future predictions (predictive data) for your ICP. 

  • Quantitative data: Look at historical prospect and customer data to identify your most profitable and loyal accounts. Scrutinize data from your CRM or ERP system to find information on company size, industry, purchased products and services, etc., and link it to key performance indicators (KPIs) such as annual contract value (ACV) and customer lifetime value (CLTV).
  • Qualitative data: Surface insights from people within your company who are in regular touch with clients or prospects (e.g., sales and customer success departments). You can also run customer feedback surveys to collect qualitative data.
  • Predictive analysis: Use predictive analytics to discover patterns and observe trends based on historical data. Use information on prospects’ behavior to anticipate future demands. Analytics can also help you uncover new attributes of high-value accounts you may not have been tracking.
Key questions to ask during data collection

Data collection helps understand “good” vs. “bad” accounts to target for marketing and sales activities. Consider asking these questions when collecting data from relevant internal stakeholders or systems:

  • How would you describe an ideal account? This is an open-ended question to see how your business views an ideal prospective company. An example could be “accounts with an annual contract value of $90,000.”
  • What are the main attributes that make for an ideal account? This question explores the characteristics you view as most important in prospective businesses. An example could be “U.S.-based marketing companies with more than 500 employees and over $20 million revenue.”
  • What are the key goals of an ideal account? This question captures the basic motivations of your targeted companies. An example could be “businesses that want to have a global customer base.”
  • What is the operating environment (or available infrastructure) of an ideal account? This question captures the technology and processes typically used at your target companies. An example could be “businesses operating from multiple remote locations.”
  • Which buying triggers drive an ideal account to purchase? This question explores key events leading your target companies to make a change. An example could be “expanding overseas.”
  • What forms an account we can’t sell to? This question defines characteristics that would disqualify a company from ICP consideration. An example could be “businesses that recently purchased accounting technology are unlikely to buy.”
Step 2. Categorize data into attributes of your choice

Classifying the data you’ve collected into different categories will give it context and make it easier for sales and marketing teams to implement the ICP.

Include as much detail as possible on the attributes of your ideal target customer. The exact mix of details varies based on your market segmentation needs, but here are some common areas to consider:
  • Firmographics: Includes the most basic level of information, such as business size, location, industry, or organization structure. You may decide to target, for instance, public companies headquartered in the U.S.
  • Technographics: Refers to the mix of technologies used by your target organizations, including software, hardware, and other digital platforms. For example, your ideal organization might use martech, sales intelligence, storage server, and mail tools.
  • Psychographics: Concerns your ideal organization’s mindset toward software purchases, such as their attitudes toward technology (e.g., innovative vs. traditional), values (e.g., sustainability), interests (e.g., improving operations), and personality traits (e.g., risk takers).
  • Business situation: Includes factors such as the number of years in business, profitability, growth rate, new initiatives or acquisitions, competitive intensity, regulatory changes, and industry events driving change. For example, your ideal customer might be an organization liable to respond to tightening data regulations.
  • Business and operating model: Explores how your ideal organization operates. It may include considerations for transaction volumes or pricing models. For example, your ideal customer might be an organization that provides customized products built to order.
  • Resources: Indicates the resources at your ideal organization’s disposal. For example, your ideal customer might be a midsize organization with a few developers.

Activity: Make a list of your ten best customers and collect data about them in a table similar to the one below. Fill out each section of the customer profile template with actionable data for your sales and marketing teams.

How to use an ideal customer profile

Many organizations that create an ICP struggle to put it to work. Often, the ICP is relegated to marketing briefs or new hire orientation sessions. By contrast, high-growth companies make ICP integral to their marketing and sales strategy, reaping efficient demand generation and lead qualification. Once you’ve crafted your ideal client profile, use it:

To define your positioning

Use the ICP to frame the impact of your solution on a prospective organization’s strategic objectives rather than a single stakeholder’s goals. This focus is important in positioning your software as a “must have” rather than a “nice to have” offering.

For example, if your ICP suggests your ideal customer is a large healthcare firm prioritizing data security, then position your software as a highly secure solution specifically designed for the healthcare industry. You could, for instance, showcase security features such as HIPAA compliance, audit trails, and encryption for patient data.

To document buyer personas 

The information your ICP contains can support the creation of in-depth buyer personas. Buyer personas represent individuals who may become leads or advocates for your offering within their organizations. Creating buyer personas based on ICP-derived information provides valuable insights into target companies’ professional motivations and challenges. For instance, if your ICP indicates your ideal client is tech-savvy and values scalability, ensure these attributes are included in your buyer persona as well.

To prioritize leads

The ICP is a valuable benchmark to evaluate potential leads. Use objective measures such as ACV and CLTV in your ICP attributes, and prioritize similar accounts in your go-to-market strategies.

To improve performance marketing

The ICP can help refine performance marketing targeting efforts. If your ICP suggests your ideal clients are most active on LinkedIn, for example, then prioritizing this platform in your paid campaigns could yield higher returns.

To inform product development

The insights gleaned from your ICP can also inform your product development processes. If your ICP indicates a preference for cloud-based software with artificial intelligence (AI) features, this information should guide your product development efforts. 

Accelerate sales and marketing cycles with ICP

Companies that invest in a well-defined ICP tend to see faster sales cycles and higher deal value. But developing your ICP is just the beginning. Use it extensively in sales enablement and marketing activities. Map every current customer to your ideal organization persona, and prioritize target accounts based on ICP to get high-quality leads.

Create your ideal customer profile in partnership with Gartner Digital Markets’ Sales Qualified Lead Generation and generate ICP-focused leads that become your most valuable customers.

 

 

Amita Jain

Amita Jain covers B2B content creation and strategy to help businesses reach their marketing goals. She received her master’s degree from King’s College London, U.K. Exploring the world of art and reading fiction are some of her usual happy distractions outside of work. Connect with Amita on LinkedIn.
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