Here’s our take on what an ideal customer should look like:
They found you organically or cost nothing to acquire, have the problem you’re trying to solve, experience the value of your product/service immediately, and don’t require support. They don’t churn, and they talk about your product/service a lot. What you offer gives them value for their business, so they don’t complain about prices. Finally, they offer great feedback that motivates your team and pushes you to improve as a business.
Yes, they exist! And what they do is give you maximum impact on what you are currently selling. This is the crucial role of defining your ideal B2B customer profile.
Many early-stage SaaS companies can accurately define their TAM (total addressable market) which sometimes results in a gap in their go-to-market strategies. Why? Because it’s inefficient especially when you have limited time and resources to get results. The solution lies in defining your ideal customer profile (ICP) and focusing your time and strategies towards customers who are a great fit. The result, as Gartner finds, is “faster sales cycles, higher conversion rates and greater lifetime values.”
Ideal Customer Profile vs. Buyer Personas
Here’s a simple way to differentiate the two: ICPs are the companies you should target, while buyer personas are the people who buy from you. ICP is grounded on quantitative data, while buyer personas focus on qualitative and subjective elements, such as your audience’s pain points or fears.
Digital Squad recommends defining both to fully understand your B2B target audience and form effective market strategies for your business.
Creating an ICP
An ideal customer profile is a detailed representation of your ideal business customer. It’s the blueprint that guides your marketing efforts towards the right audience. At Digital Squad, we look at three core dimensions – demographics, firmographics, and psychographics.
Demographics outline the essential characteristics of your target customers. It provides a foundational understanding of who your potential clients are on a surface level. Try to uncover this information:
- company size
- industry
- location
- employee count
- business model
While demographics tell you what a company looks like, firmographics reveal how it operates. It digs deeper, offering insight into the dynamics of your target businesses. Look into your customer’s—
- revenue
- market position
- technology stack
- procurement processes
Now, let’s go beyond the facts and figures. Psychographics delve into the psyche of your B2B customers. It uncovers the motivations driving their decisions and how your solution aligns with their objectives. Seek answers to questions concerning:
- pain points
- goals
- challenges
- aspirations
Quick Check: Have You Achieved Product-Market Fit (PMF)?
Before building your ideal B2B customer profile, you may want to evaluate your product’s market fit (PMF).
According to the 40% rule developed by well-known growth marketer and entrepreneur Sean Ellis, a company can be considered to have achieved product market fit when, at least, 40% of its surveyed customers say they’d be ‘very disappointed’ if they could no longer use the product.
Digital Squad suggests firmographics and demographics as primary methods of segmentation when you’ve reached product-market fit. Otherwise, focus on psychographic data to segment the market.
Build and Segment
Now it’s time to merge the demographic, firmographic, and psychographic data you’ve collected. This integration forms the foundation of your buyer persona, creating a sketch of your ideal customer profile (ICP).
Start with identifying the commonalities and trends within your data. Look for patterns that reveal shared characteristics among your existing customers. Do they come from a certain industry? Do they share similar paint points that your product or service addresses?
To add depth, consider the finer details such as:
- What are their day-to-day challenges?
- What are their long-term objectives?
- What motivates their decision-making?
This nuanced understanding allows you to create marketing messages that resonate on a profound level.
For example, instead of merely knowing that your target audience is in the healthcare industry, delve deeper to understand the unique challenges faced by healthcare professionals, such as compliance regulations, patient care pressures, or budget constraints. This level of detail enables you to tailor your messaging to address these specific pain points.
After building comes segmentation – the practice of dividing your target audience into distinct groups based on shared characteristics, needs, or behaviours. Each segment represents a unique customer profile, and tailoring your marketing efforts to these segments is the key to success.
Segmentation allows you to speak directly to each group’s specific pain points and interests within your target audience. It ensures that your messaging resonates and provides value to each segment, increasing the likelihood of engagement and conversion.
Keep your B2B Customer Profiles Relevant
B2B Customer profiles are not static; they evolve over time. Establishing mechanisms for keeping your profiles current and reflective of changing market dynamics is crucial.
Regularly update your B2B customer profiles by incorporating new data, insights, and feedback. Monitor industry trends, shifts in customer behaviour, and emerging technologies that may impact your target audience. Staying agile and adaptable in your profiling approach ensures that your marketing efforts remain effective in a dynamic B2B landscape.
In today’s fast-paced business environment, adaptability is a competitive advantage. As you refine your customer profiles, be prepared to pivot your marketing strategy in response to changes in the B2B landscape. What worked yesterday may not work tomorrow.