The disruptions of the past few years have sent many industrial companies looking for new partners and customers, perhaps driven by supply chain chaos, replacing lost revenue or taking advantage of emerging markets. Like almost anything else in business, scouting for new business should follow a process, and in this case it begins with creating an Ideal Client Profile (ICP).
An Ideal Customer Profile means identifying the companies that you can best serve and help drive value. It’s the intersection of your capabilities and their needs. An ICP is not something to invoke when you have lost a key customer or when you are in growth mode or the market is expanding. It’s an always-on mindset to help you focus on where you place your efforts with your finite resources. An Ideal Customer Profile also should help you identify what companies are going to work best with you.
In the most recent episode of the Industrial Marketer podcast, Joey and Nels discuss why all industrials should develop an Ideal Customer Profile. Here are some considerations.
Benefits of an Ideal Customer Profile
The ICP is a framework for scrutinizing the business opportunities you have in front of you and for developing a more targeted approach for marketing and sales. The structural foundation of an Ideal Customer Profile doesn’t entirely remove intuition or considerations such as short-term revenue needs. But all low-hanging fruit is not created equal, and having an ICP can help reduce the impact of emotions, the temptation to stray from your core competencies, and making decisions that may bring added risks and unintended consequences.
Creating an Ideal Customer Profile helps:
- Align sales and marketing – You will have shorter lists to target but also should be able to refine the marketing personas you are trying to reach.
- Focus strategies and tactics – Narrowing your target list allows you to refine your content and approach to various distribution channels.
- Transition to an Account Based Marketing approach – At this stage, you may be ready to create personalized marketing plans, with specific content directions specific people at appropriate times.
How to Develop an ICP
The best way to get started in developing an Ideal Customer Profile is to review the customers you already have. What makes them a good client, and how should that influence your criteria for bringing on new customers? Conversely, what is it about some customers that does not make them a good fit?
The most obvious consideration in developing an ICP is matching what you provide with what the prospect needs. Who benefits most from your products or services? And while this seems like a given, we can all recount times when someone wanted to bring on or chase after a shiny object that wasn’t a good match from a core product or service perspective. Remember those times when you thought or said, “That’s not really what we do.”
Keep it simple when you start documenting your list of considerations. Considerations to start with for determining an Ideal Customer Profile could include:
- Size of company
- Size of budget
- Lifetime customer value
- Deal velocity
- Product lead times
There also could be issues in manufacturing about competitive exclusivity, given concerns about proprietary information about products and terms.
When developing an ICP, take into account what is important to the different areas of your company. Bringing on a new client can produce big wins and growth opportunities (both in terms of monetary gains and expanding your capabilities). But it also will have unintended consequences. Having an Ideal Customer Profile can help identify better opportunities and mitigate some risks. Revenue is important, but margin is moreso. Will you be able to meet changing needs within your parameters, and if not, what will it cost?
Beyond Financial Considerations, Are You a Good Fit?
Some people have made the analogy that an Ideal Customer Profile is the company version of a marketing persona. The comparison is on the mark in terms of creating a target to go after. But there is a fundamental difference in that you can choose what companies to pursue more easily than you can determine which people you have to reach to close a sale.
The difference is meaningful because business development professionals advocate posing this question as they vet ICP prospects: If it weren’t for the monetary considerations, is this a company we want to do business with?
The considerations in answering that question include:
- Are your cultures compatible?
- Do you like the way they do business?
- Could you see that prospect as a sustainable long-term partner? Will they want to work with you to expand the relationship, add more value or reduce friction?
If the answers are yes, or more likely, based on what you know, probably so, then you proceed with your selling process. There is no perfection with an Ideal Customer Profile. Think of it as a tool in your scouting toolkit that can provide you with objective criteria.
Listen to the Podcast for More on Ideal Customer Profiles
For more insights into how to develop an Ideal Customer Profile, tune into Episode 25 of the Industrial Marketer podcast.
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