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What is an ICP (Ideal Customer Profile) and Why Does it Matter?

15 September 2021

So, what is an ICP in business? Let's start with a metaphor.

You wouldn't give your mom the same rundown of a date as your best friend, right? For most of us, knowing our audience comes naturally. 

Or if you are frustrated at work, you might vent to a sympathetic colleague, 

"Just found out that Janice is leaving, and I got added as a co-lead to that social media project she's been messing up. Pretty sure she's going to leave me high and dry." 

You might even send a snarky meme. 

ideal customer profile meme

To your mother, you'd probably give a general recap— "One of our team leads is leaving the company and dumping a project they screwed up in my lap. Awesome." 

We instinctively know to adjust our message to our audience in everyday life. 

It's not so different in the marketing world (and we even use memes to do it!) 

In fact, Ideal Customer Profiles (ICPs) are about exactly this — understanding who your audience is and how to speak to them. 

And, for any reformed Juggalos out there, we are not talking about the American hip-hop duo ICP.   

What we are talking about is an issue I see Leadfeeder customers struggle with on a regular basis. 

That is, how to better understand the exact type of customers you have and the exact types of customers you should be targeting. 

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What is an Ideal Customer Profile (ICP) in business?  

An ideal customer profile (ICP) is a detailed outline of your ideal customer used to adjust marketing and lead generation tactics. 

You might think this is just a fancy word for a buyer persona?

Not quite.

So, what's the difference between an ideal customer profile and a buyer persona? 

A buyer persona is a fictional character you create to represent the types of people you want to target. 

They get names, jobs, and sometimes even pet dogs. 

The biggest difference is that buyer personas are more about creating a better user experience. 

ICPs are more about figuring out who would benefit the most from your product or service. 

Essentially, they approach the customer from different angles. 

Oren Greenberg, Managing Director at KURVE, shares insights into how his team views ICPs.

"One of the most common mistakes we see is confusing the ICP and the persona. The persona is set at a role level; your prospect's specific job title. But the ICP is a definition of the characteristics of your target on an account level. Essentially, a business name. The reason why getting clarity on ICP first is important is because you need to understand the viable total addressable market for your strategic planning. And then you need to be clear about building a hyper-relevant list of businesses to target. This is an effective method for businesses with a niche offering and a limited number of relevant customers – more of a sniper approach than a shotgun. These lists can be uploaded as custom audiences to LinkedIn, Facebook, Twitter, and even Google Ads. This is a key part of the account-based marketing methodology. "

At Leadfeeder, for example, our ideal customers are B2B Saas companies with over 10 employees — similar to ourselves. 

We use ICPs to define their roles, their goals, and how our marketing must be adapted to each type of customer—that's a good example of using an ICP in business.

Just like you use different language with your mother and your best friend, we use a different marketing approach for an account manager at a SaaS company and a CEO at a pharmaceutical enterprise. 

Why is your ideal customer profile important?  

Wasting money sucks— which is where ICP comes in. 

Understanding the unique characteristics of your ideal customers makes it easier to cut out the noise and laser focus your marketing campaigns—and budget—on prospects more likely to convert. 

Ben Keighley, Managing Director of Routes 4 Media, says “Identifying ICPs is a key first step that we take before we start spending any money on advertising. We take an in-depth look at the characteristics of a client’s customers and prospects to map out who these people are and then group them e.g. by industry, vertical, size etc. There are many other metrics that you can take into consideration, such as customer lifetime value, cost per acquisition, monthly revenue etc but I suggest picking a handful which is most relevant for your business. Once these are established, our advertising can be even more targeted, relevant and personalised and our clients fully benefit from this.”

You need to understand the groups you are targeting, so you can avoid the 'spray and pray' marketing approach.

(Which is a great way to waste a bunch of money on marketing.)  

Understanding your customers is also critical for creating personalized content and campaigns— which 77 percent of business professionals want

In Leadfeeder, it is especially important to understand your ICP so you can effectively find the opportunities amongst the dozens of organizations that might visit your site. 

After all, your site is an open door, right? 

Anyone can visit, but you are looking for the gold in the pile of visitors.  If you can find the companies that meet your ideal customer profile within Leadfeeder, then it's going to be much easier to send these leads on to a sales team or market to them yourself. 

How do you create an effective ICP?  

There is no one-size-fits-all ICP in business— you've got to do the work to figure out the ideal customer profile for your specific business.

Luckily, it isn't a complicated process. 

Here's how to do it. 

Step 1: Make a list of your best customers 

The first step is to identify your best current customers and spot which characteristics they share. 

Do keep in mind that "best" customers might be defined in different ways. 

For example, you might compare their lifetime value, how long they stay with your company, how long they take to convert — or any mix of other metrics. 

Learn as much as possible about your current customers to get a better understanding of which one's are the best—and why they are the best. Is it the size of the company?

How fast are they growing? Or maybe their location? 

Once you have that list, move on to the next step. 

Step 2: Research common attributes 

What do common attributes do these customers share?

Are their companies growing fast?

Are they more focused on PPC marketing than SEO?

Have they all received funding in the last six months?   

For example, at Leadfeeder, we look at: 

  • Size of the organization - Are they a startup or enterprise level? Larger companies may take longer to market because there are more decision-makers. That isn't always a bad thing, but it does impact our strategy. For Leedfeeder, we found that 300 to 800 employees is really our sweet spot.    

  • Industry - The types of messages we send varies based on industry, so this is a critical aspect to understand. Our target is generally SaaS and B2B, but those can be vastly different.  

  • Country - Are they located in our home market, or somewhere else? For us, we find our ideal customer is in the US — but we are available globally. We have to take cultural and language differences into account. 

  • Growth Rate - Most of our customers are looking to grow fast, so that is an attribute we really look for. Faster growing companies are usually willing to invest in a tool like Leadfeeder.  

I strongly suggest gathering this data from a mix of sources, including surveys and tool-based analysis, such as uncovering firmographic profiles in Leadfeeder.

The more data, the better — at least at this point. 

ideal customer profile data

As you get more data, you'll be able to define the attributes they share and the challenges you face in marketing to them.

Make sure to create no more than two or three ICPs for your business using your current customer research.  

Step 3: Outline opportunities and challenges 

The next step is to define the challenges and opportunities your ICPs face and address how you will approach those issues. 

At Leadfeeder, one of our ICPs is sales managers and sales team directors. 

ideal customer profile leadfeeder

These are the people who own the sales process. They might work alongside the marketing team, work to hit sales targets, and are always looking to streamline and improve the sales process. 

They might use Leadfeeder to qualify leads and send them on to their team.

Or, they might spot-checking high profile companies to ensure they are being handled appropriately.

They may even set personal custom filters to make sure they catch extremely high value leads. 

In addition to how they will use your product or service, you want to consider what challenges each ICP faces and how you will address those challenges. 

For example, with Leadfeeder, sales managers might struggle with user adoption rates.

We might create information that helps them address this challenge and use terms and language that a sales manager would be familiar with. 

Step 4: Document your ICP 

You've gathered all the data, you've done all the work, and now you have a darn good idea of who your best customers are— and how to recognize them. 

The final step is to create a document that clearly outlines each ICP and lists all the awesome information you've gathered about them. 

Use a visual document, such as a slide show or PDF, rather than a spreadsheet.   

Now what? How do you use an ICP to grow your business? 

Once you've defined your ideal customer profile, you can use it to qualify high-quality leads that come into your site by using Leadfeeder. Those with characteristics that match your ICP should be ranked higher. 

Now, compare your ICP to the rest of your customer base — including current prospects and churned customers. You might notice patterns of new patterns. 

For example, you might discover that at certain ICP churns at a much higher rate. If so, you will want to consider where in the process they are struggling. Are you customizing your onboarding process for them? Are there certain tasks they are struggling to complete? 

Your ICP can also help you scale and reach new audiences. By building custom lists and lookalike audiences, you can scale digital advertising while staying focused on the ICP criteria

Great. Now what? 

Like everything in life worth having, uncovering your ICP takes a bit of work. 

There is no easy-to-fill-out template or ICP generator (at least not for the type of ICPs we're talking about.)

Uncovering your ICP requires digging into your own data. The good news is you only have to do it once, right? 

Nope, sorry.

Part of the reason ICPs are so incredibly effective is that they are grounded in data — which changes.

This means you should be re-evaluating your ICP at least once a year or after any major shifts in your product.

Now that you know how to use an ICP for business—get going!

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