Make no mistake, you are in a race to B2B profitability. You and your competitors are neck and neck. You need something extra to emerge from the pack: Your ICP.
Your technology will only give you the lead for a few laps, until another company pulls ahead. And they most assuredly will.
Segmentation, Targeting and Positioning, or STP, has been known as “the racer’s edge,” a catalyst to superior performance. Your STP is your Ideal Customer Profile, or ICP. STP + ICP = Profitability. It’s what will set you apart and propel you to the winner’s circle, with the wreath of customer lifetime value around your neck, and the loving cup of long-term profitability in your hands.
Formula One: A catalyst only works if you use it
In our experience, the concept of an Ideal Customer Profile is poorly understood, not properly defined, and rarely implemented. Often its use is limited to marketing briefs or orientation materials.
In practice, the ICP is often synonymous with the target customer (or any customer that might buy your product or service), the total addressable market or the universe of potential customers.
All these definitions are dead wrong and will cripple your potential and scuttle your profitability and longevity. Guaranteed. Unless you maintain focus on your ICP and use it to guide your marketing tactics.
Formula Two: The catalyst has to become integral to the way you go to market
Per Gartner, in the article The Framework for Ideal Customer Profile:
“The ideal customer profile (ICP) defines the firmographic, environmental and behavioral attributes of accounts that are expected to become a company’s most valuable customers. It is developed through both qualitative and quantitative analyses, and may optionally be informed by predictive analytics software.
“The ICP is a foundational concept, not an intellectual exercise, that aligns resources organization-wide – The C-suite, marketing, sales, service and CX [customer experience]. The ICP is integral to the strategy, tactics and implementation of high-growth companies focused on the highest-value accounts; it is most successful when coupled with ABM, or account based marketing deployment.”
Stop Wasting Time on Those Prospects
SuperOffice, in their article Stop Wasting Time on Prospects that Don’t Fit Your Ideal Customer Profile, gives some detail on the three main components of your ICP:
- “Firmographic – this is information to help categorize different types of organizations. This includes data on industry, size, vertical, revenue, etc.
- “Environmental – this gives information on the conditions they’re operating in. For example, the technology they use, regulations they must adhere to, etc.
- “Behavioral – how have they interacted with you, and how likely are they to buy? Will they download your content? What does the buyer’s journey look like for these organizations?”
SuperOffice provides a dry-eyed observation: “Research indicates that startups or businesses where less than 10% of their customer base fits their ICP are 50% less likely to survive over the next five years. This highlights the critical importance of ensuring that a significant portion of the customer base aligns with the ICP to sustain business growth and longevity.”
From our experiences I’d add:
- Your ICP must be dynamic, responding to the changes in your business and the marketplace, ensuring evolving alignment. Fresh data in the mix will make all the difference in keeping the ICP sharp and actionable.
- A consistent focus on prospects that match your ICP yields a high conversion and a shorter sales cycle (we hope) because these prospects are more likely to see and embrace the long-term value you bring.
- The result is greater customer satisfaction and retention, and most importantly, a significantly higher customer lifetime value.
Formula Three: You must expand your thinking and doing to take full advantage of a catalyst
Many times clients have said to me, don’t look at our current customer base, that’s not who we really want.
That is a direct result of short-term legacy thinking and doing, and it is a trap – a continuous loop of episodic commodity sales that struggles to keep up with customer attrition, a self-fulfilling prophecy. This is reinforced by the need for revenue: “We need to immediately find the low-hanging fruit to turn back the tide of attrition.” But the low-hanging fruit is not necessarily interested in the long-term value you can bring. Again, circular.
The Continuous Loop in Action
Here’s an example. A manufacturing company is investing heavily in software, to strategically move from unit sales into the SaaS arena, and recurring revenue. Sales, however, is compensated on the immediate sale and says, let’s not introduce the software now. It gets too many people involved. The unit sale is straight-forward. I don’t want to make them think too hard.
Many times we hear clients say, oh don’t look at our customer base. That’s not who we really want as future customers.
The underlying thought-process is, selling to the ICP is too hard, takes too long, and there are too many people involved. I need to make my quota.
Another example is Customer Experience (CX) or Customer Success. In most cases, CX is measured by add-on sales and retention, which have nothing to do with customer success. The department should rightly be named, Our Success.
In short, processes, like pursuing the ICP, that are neither measured nor rewarded tend not to happen. The catalyst is ineffectual because we’re not using it, and legacy thinking actually works against us using it.
The checkered flag
The Ideal Customer Profile only gets us to the Winner’s Circle if we use it and evolve our thinking and doing. It means we need to give these customers what they want. And that is their success, not yours. Let’s align ourselves around the catalyst and reap the benefits.
Here are the three recommended steps:
1. Adopt an Account Based Marketing (ABM) mentality
The companies in your ICP have the potential to really appreciate what you offer, use it to its fullest extent, incorporate it into their drivetrain, stay longer and buy more. They have the potential to generate the most profit for you over the long term.
Is it a more complicated sale? Yup.
Focus on ABM campaigns to penetrate these target organizations, delivering personalized value and a future vision to each of the decision makers and each of the influencers, and back it up with the human touch. OK, maybe not all campaigns because it’s really tough to kick the short-term / low-hanging fruit habit.
2. Put your best available athletes in the driver’s seat
B2B is personal. Always was and always will be. It’s the only way to build real trust.
The legacy paradigm of a separation between sales and marketing and CX is ineffective here. We all need to evolve. The differing job descriptions are old school and not serving our best interests, and are certainly not suited for success penetrating the ICP.
The best and most effective examples we’ve seen are individuals who are excellent marketers, consultative sellers, and are embracing their prospect’s and customer’s success. Most importantly, they stay with the customer from pre-sale, through sale, and through the life of the relationship, with a talented pit crew in support. One single point of contact, who cares, all the time, and is compensated appropriately.
3. Build accountability and trust
Customers only care about their own success. If you align your goals, if you commit your company to their success, you build trust. You also put a lot of distance between you and your nearest competitors.
Be accountable to their measures of success. Should we measure and reward the initial and follow-up sales and retention? Of course. But if we are promising that our solution, that our technology, that getting in the race car with us will result in their long-term success, measure your performance against their goal.
You say you have domain expertise – do you really? Prove it. How well will your technology work for this one specific customer? Will it increase their performance? By how much? How long will it take?
Put a line in the sand. Roll up your sleeves. Put some skin in the game. Stop at nothing.
Here are two case examples to chew on:
Company A has just won the contract over 5 competitors, all of whom were on the short list. We spoke to one of the decision makers and asked why? She said, “Because everyone else said, first get on our platform. Company A said, first let’s figure out how we address your challenges.”
We were interviewing the CEO of an internationally respected company and asked, what is the greatest benefit Company B provides to you? The executive replied without hesitation, “Our salesman. He understands us and is part of our team. He knows what we need and goes out and gets it.”
That will earn you the victory lap.
More great articles from Scott Hornstein:
- This Would be a Great Business if it Weren’t for all Those Annoying Customers
- Customer Satisfaction is the Pulse of Your Profitability
- AI’s Competitive Advantage is Not What You Think
- Marketing L&D isn’t funny. But should it be?
- Make ‘Em Laugh: The Power of Humor in L&D
- Do learning engagement and retention suffer as screens get smaller?
About the Author
International author, lecturer and consultant, Scott Hornstein has worked with clients in all phases of marketing strategy, research, and implementation. He has worked with companies large and small to build profitability, by improving marketing performance, and reengineering the customer experience to boost satisfaction, referrals, and customer lifetime value.