Ideal Customer Profiles for Customer-Led Companies
Principle four in my book Customer Led Growth: A CEO’s guide to building a B2B SaaS company is; “Build a deep understanding of value”. If I was to write the book now, I would change that to say “Build a deep understanding of customers”. The premise is the same: customer led growth is not possible without understanding customers in great detail but as I explain in another blog, I believe the phrase “customer value” is holding many companies back.
I often say, and believe fully, that understanding your customers better than your competitors is a source of sustainable competitive advantage. By deep, I mean understanding in detail:
What sort of companies experience the pain/gain our product(s) address?
Which pain/gain points matter most and to whom?
Which customer roles that are impacted?
How do they measure the impact of these pain/gain points?
What factors change their thinking and priorities about the pain/gain points we address?
Where do they look for solutions and advice?
What product capabilities are needed to address the pain/gain points`?
What help and advice can we provide to improve the performance of the key roles we serve?
What does good performance look like?
This deep understanding of customers helps shape every aspect of a B2B SaaS go-to-market approach:
What product capabilities will impact most the performance of the key roles we sell to and serve?
What marketing messages to use and where to place them?
What sales messages should we use at different stages and with different roles?
What resources should we provide to help key roles improve their performance and achieve their goals?
An Ideal Customer Profile (ICP), one of the five core CLG frameworks, is the repository for this information.
Components of an ICP
An ICP has three components:
Target Companies is a description of the companies that have the pain/gain points we address, even though they may not recognise it yet! Think of the following aspects when describing your target companies
Firmographics: the basic characteristics of a company such as revenue, headcount, industry, location, language.
Operational: how the company works, particularly in the domain you serve. Think about factors like:
Processes in use in your domain and how they relate to your products and services;
Systems in use, particularly those that operate in the domain you serve;
Attitude to innovation - early adopter or conservative;
Management style and decision making;
Approach to procurement: formal tenders or less structured;
Maturity: e.g. startup, growing or mature;
Role profiles describe, in detail, the roles involved in buying, using and exploiting your products. Some call these personas: a word I shy away from due its association with B2C marketing: “Susan from New York went to Yale, has two kids …..”. They are too woolly to have any real use in a B2B context. Role profiles are the most important element of a good ICP and one that, in my experience, most companies do badly. Remember, it is people, not companies, that decide what to buy: it is people that use your products: it is people that assess how your product has helped them with their job. Understanding them is the key to winning, satisfying, retaining and growing them.
A role profile should include the following:
A list of their key tasks;
Typical job titles;
The major pain/gain points they experience;
How their performance is measured;
The people, forums, events and publications they turn to for help and advice;
Their role in buying, using and/or exploiting your product;
Their motivation to address pain/gain.
Situational factors are the changes or triggers that require a response that influences their interest in your product. This could be a change in the company or in one of the key roles you sell to and service. This change may triggeri an interest in a first time purchase, renewal, expansion or in the use of your product. Many of these will be domain specific but here are a few generic examples:
Issues with performance;
A change in management, including a change in your champions;
Merger or acquisition;
A change of strategy or a new significant initiative;
New investment;
Acquisition of a complimentary or competitive system;
New or changed regulations;
A change in the measurable results your product delivers.
Building your ICP
How you build your ICP will depend on the stage of your growth and maturity. Wherever possible, base your decisions on data. Consider the following data sets:
The characteristics of companies that renew and churn. List both as, whilst closely related, one is not just the inverse of the other;
The characteristics of new business and expansion deals you win and lose;
The length of sales cycles - sales cycles affect the cost of acquisition and good fit customers often buy quicker as they ‘get’ the value proposition;
The response to marketing content from different roles and companies and conversion rates across the early buyer journey: what type of companies and roles drop out early - the tyre kickers;
Which user types use your product most;
The characteristics of the roles that advocate for you;
Here’s how I go about building ICPs:
Do the research and data collection. Summarise and circulate your findings. If you don’t have data, use your best endeavours and find ways to test your hypotheses;
Get representatives from all GTM teams, including product, into a room and brainstorm each element of the ICP. Refine and agree a first draft;
Circulate the draft widely for comments and amend as appropriate;
Test the resulting ICP against your data to confirm it:
Publish.
Developing an ICP is not a one-off activity. There is much involved so do not think you have to do everything immediately. Start with one use case and the two core parts: Target Companies and Role Profiles. Do not look for perfection: your ICP should be a dynamic thing that needs to be tweaked at regular intervals.
Now the real work begins to implement and maintain your ICP. And that’s the subject of another blog. [To follow]