How to Build a Better Profile of Your Ideal Customer

Most readers of this blog are probably familiar with ideal customer profiles. An ideal customer profile is a description of the kinds of companies that would make the best customers for your business. The goal of creating and using an ICP is to focus your marketing and sales efforts on those prospects with the greatest likelihood of becoming good customers and to avoid wasting valuable resources on prospects that aren't a good fit.

Most companies base their ideal customer profile(s) on the characteristics of their existing customers. They first identify their "best" customers (which usually means their largest and/or most profitable customers), and then they identify what those "best" customers have in common. Most ideal customer profiles use "firmographic" attributes such as:

• Annual revenues
• Number of employees
• Industry vertical
• Location

Some companies will also include other attributes when possible, such as:

• The "footprint" of the organization (local, regional, national, global)
• The most relevant organizational unit or department
• The business situation (for example, is the company in growth or decline)

While this process for creating an ideal customer profile is used by many companies, it doesn't go quite far enough. When I work with clients to develop ICP's, I ask them to consider three additional questions as we go through the process just described. Answering these questions will add depth and context to your ICP and ultimately make your ICP more insightful and useful.

Here are the three questions I add to the conventional process:

• What kinds of companies have derived significant (i.e. above-average) value from using our product or service, and why have these companies obtained greater value?
• What kinds of companies will be receptive to our marketing and sales efforts and thus be more likely to buy from us?
• What kinds of companies can we acquire as customers at an acceptable cost?

Of these three questions, the first is the most important. Companies that have derived exceptional value from using your product or service are likely to be among your largest and most profitable customers. Common sense says that similar types of companies will make your best prospects.

Understanding what is driving the exceptional value may enable you to expand the definition of your ideal customer. For example, you may find that the companies deriving exceptional value are primarily found in one industry. However, when you identify why those companies are obtaining greater value, you may find that the same issue or challenge also exists in other types of organizations that you do not currently serve. So, by answering the why question, you may well uncover an entirely new group of "ideal" prospects.