How to define your company’s ideal customer profile (ICP)

First of all, why do you need to define your Ideal Customer Profile? It’s critical for any business because getting a crystal clear picture of your ICPs will help you answer the question: who exactly are you selling to? This is so important so you know what kinds of leads you should be targeting in your sales & marketing outreach and keeping everyone aligned. 

This exercise will also help you identify the pain points and challenges that your ICPs are experiencing and this allows you to craft highly targeted messaging that speaks directly to them. Connect with them through empathy and understanding. Then they will be listening. Then you can properly demonstrate the benefits of your product/service. 

Do you have a current customer list?

If you answered yes, pull the entire list of your current customers. For many SaaS companies you are probably using a metrics software like Profitwell or Chartmogul. Sort your customer list from highest to lowest by MRR. Then look through your list of customers and start looking for different groups/segments that your customers fall into: For example, when I created the first sales structure at GAIN App, the first thing I did was to analyze our existing customer base and identified 3 segments that our customers fit into: solo-marketer/freelancer, mid-sized agency (11-50 employees), and large global agencies like Havas, McCann, etc. 

If you answered no, you should be thinking strategically about what customers you will be targeting and will get the most value from your product/service. For example, when I did this exercise with Vamba, they had built an enterprise SaaS solution for mortgage companies. We knew we needed to target mortgage companies, US based, and had enough loan officers in the company that they would be experiencing the pain points/inefficiencies that Vamba software solved for. Also we knew working with banking institutions (Wells Fargo, etc.) would have a lot of red tape and we wanted to avoid these. We did want to waste time/money with legal teams/contracts so we decided to go after privately owned mortgage companies first. 

You will also want to create some additional parameters to narrow down your ideal customer. 

A few qualifying parameters I use for crafting an ICP:

  • Company size & Characteristics
    This can be the number of employees or revenue. Are your ideal customers freelancers, SMBs, Mid-Market, or Enterprise? Are they have a single location or multi-location businesses?
  • Industries  
    What industries are you targeting? Example: Software companies, mortgage companies, or lawyer firms? Maybe marketing agencies? Then do you want digital marketing agencies, paid social/ad agencies, or branding/design agencies? Start to think more specifically about your ICP. 
  • Organizational Requirements
    Does your product require there is an existing internal organization? For example if you’re selling an HR solution, are they big enough to have a dedicated HR team or do they outsource this? If you’re selling a Sales/CRM tool do they have enough sales people that would allow you to sell them a multi-seat plan? Tip: Check out the company’s LinkedIn employee page to see more about what titles / orgs exist within company. 
  • Budget
    What’s the budget that these companies spend software/services? Do they have internal developers who build tools for the organization or are they friendly to SaaS vendors? What’s their vendor approval process? 
  • Financial Status
    Are they hiring? Can your product/service save them from having to hire full-time employees? Do they set yearly or quarterly budgets? Tip: check out their hiring page and see what positions they are hiring for. Are they hiring for a graphic designer? Can your agency provide graphic design work at a fraction of the cost of a full-time employee? 
  • Technology
    Are they friendly towards adopting new technologies into their business? How many decision makers are required to sign off and implement a new tool? Don’t only think about the end users. The executives and IT team may also have also have an influence on what technology their organization uses. 
  • Other characteristics
    What other unique characteristics do you know about these organizations that make them the perfect match for your product/service? 

Core Challenges/Pain Points:

  • What are the core challenges these businesses are facing that your solution solves for?
  • What are the inefficient processes that exist and can be streamlined with your solution?
  • Are there any communication gaps or knowledge waste caused by their current process?
  • Are there time savings and/or human resource savings you can provide?
  • Is there financial waste caused by an inefficient process? Can you measure it?

Red Flags/Potential disqualifiers for sales:

  • Do they already have an internal solution or existing solution?
  • Do they have budgeting constraints that disqualify them as an ideal customer?
  • Do they have a vendor assessment or compliance process that you can’t meet?
  • Do they have internal IT requirements that you don’t meet?

Ideal Contacts

  • Who are the executive level or decision maker level contacts?
  • Who are the end user contacts? What are their titles?
  • Who are the IT contacts?