What is an Ideal Customer Profile (ICP)

Within your TAM lives your ideal customer profile (ICP). An ICP, also known as an ideal buyer profile, defines the perfect customer for what your organisation has to offer and generated the highest Customer Lifetime Value. To identify your ideal customer profile, there are several components you have to take into account:

1. Firmo graphics such as industry, location, company size and sales cycles stage.

2. Behavioural characteristics such as personality traits, attitudes, beliefs, values, etc.

By building such a specific profile of your business’s best accounts, sales and marketing teams can develop personalised strategies that could convert these targets into top buyers. But there are additional factors that can play into your ICP, like referrals to new clients, testimonials, constructive feedback, customer insights, and advocates for your brand.

A framework to develop your ICP

1. Analyse existing customers

Creating an ICP starts with gathering the right data of all your accounts, either through your systems or through conversations with the sales team. The profile can be as detailed or general as you need it to be. However, there are some fundamental elements that every organisation should consider in order to fully understand the characteristics of their ideal customers or prospects:

• Industries

• Geography

• Size (number of employees & offices, annual revenue)

• Shortest sales cycle

Additionally, there are questions that you have to answer regarding costs:

• Who are your largest deals with?

• Which companies had the lowest customer acquisition cost?

• Which companies have renewed their contracts?

• Which companies have the most upsells and expansions?

• What’s the average cost of servicing a contract once you’ve won it? Higher? Lower?

2. Find the similarities

Clustering accounts by identifying similarities is the most effective way to identify your Ideal Customer Profile.

Here are some questions to ask to get you started:

• Are they in the same country/region?

• Are all organisations in the same company stage?

• Are they in a similar industry?

• What’s the employee count at these customers?

This set of characteristics becomes the foundation of your ICP.

You know it represents your best future customers because it’s based on your very best existing customers.

3. Prioritise and implement

Based on the results of your evaluation, develop a rating system to help you choose the accounts the better fit your ICP. You can then make a prioritisation list of which accounts you want to attack first, the resources you want to allocate, but also the marketing strategies you want to implement.

Here’s an example on how to prioritise and qualify accounts in order to have a strategic focus and decide on your sales and marketing strategy:

Best Fit: US-based companies, with over 500 employees, that manufacture and sell security software

Good Fit: North American companies, with over 200 employees, that distribute security software

Bad Fit: Companies outside North America, with fewer than
100 employees, that do not manufacture or distribute
security software

Letting AI do the work for you

Creating an ICP can be highly time-consuming, especially when you are expanding to new markets, and you are not sure where the biggest potential lie and what is the smartest choice to make to generate the biggest revenue with less risk/effort. 

For this reason, at Magnify, we let data science and AI do the work for you. Within minutes, you can find detailed dashboards indicating the number of countries that have the most potential for you. Next, you can filter and zoom in these countries by selecting the regions, the verticals and company sizes that would be more interesting for your company.

But this is not where the insights stop. After you get a grasp on the specific characteristic of your ICP in terms of regions, size and vertical, you can go even deeper and explore equally important information such as:

• The customer lifetime value

• The profit over the lifetime of the customer. 

• How quickly, you can close a customer within a certain segment 

• The win rate per segment

• The deal size per segment