Are You Working with the Right Customers?
Attaining quota continues to be a challenge for many salespeople. We recently conducted a research study with Selling Power to understand the keys to outstanding sales performance. According to the sales leaders responding to the survey, only 6% of their salespeople are attaining 85% or more of their quota, and as many as 37% of all salespeople are making less than 50% of their quota. This dismal reality is shocking and demoralizing for sales people, their managers and their companies.
While there are many potential reasons why salespeople miss their goals, I would like to dedicate this post to a fundamental misstep that many companies continue to make – one that can put their revenue goals at risk. Simply put, many sales reps are chasing the wrong customers. They are spending precious time and resources calling on customers that are not likely to buy, more challenging to work with, and much costlier to serve.
Do you know who your ideal customer is? According to our research, over 60% of sales leaders do not believe their sales reps have a clear understanding of their ideal customer profile and 15% of sales reps say they do not have one at all. If you do not know who your ideal customer profile is, then how can you make an impact on your most prized customers and prospects? How can you achieve your goals if you aren’t pinpointing your ideal customer target?
What is an Ideal Customer Profile?
The Ideal Customer Profile (ICP) is a description of the companies that are your most valuable customers. The ICP is the sweet spot at the intersection of the type of customer that is most valuable to your company AND the type of customer to whom your company can provide the most value.
You may be thinking that this is purely a Marketing thing, but, it’s not. This is a concept that Sales and the rest of the organization needs to embrace just as much as Marketing. Without knowing who your ideal customer is, you could be scoring leads incorrectly and spending costly resources calling on and serving the wrong type of company.
Why is it important?
Finding the right, synergistic relationship between you and the ideal customer helps you to maximize your sales activities, revenue, and profitability. The highest performing sales organizations have found that investing in a well-defined ICP can:
In short, the ICP is the foundation for all your company’s business efforts. Why? Because it brings your purpose, vision and strategy to life by defining who your company is in business to serve.
ICP vs Buyer Persona – which comes first?
Many people get confused about these two things. Both are important, but the key distinction is that ICP defines the kind of organization you should do business with, whereas the buyer persona defines the key buyers within that organization.
The ICP needs definition first. You cannot identify the buyer without knowing the type of company is the most valuable kind of customer to your business. Which kind of company will readily buy from you, buy a lot from you, require minimal effort from your company to satisfy or delight them, be a joy to work with, and be an enthusiastic brand advocate for your company? That would be an Ideal Customer!
Once you have figured out the ICP, then you can start to identify your buyer personas: who are the key buyers in that ICP? Dig down deep into understanding what keeps them up at night and how can you make a difference to those specific buyers. That’s when you can start to lay out the specific buyer personas you want your sales people to call on. Click here for an easy-to-use template to create and use your buyer persona.
How Do You Create Your ICP?
There is no such thing as a “universal” ICP. Your ICP must continually be adapted to current market conditions and opportunities in the market. It needs to be a living, breathing analysis that you constantly revisit to ensure total alignment with the customer being defined.
The ICP should be developed by looking at your existing most profitable customers. Using quantitative and qualitative data start looking at the following categories of information:
We have developed a simple form you can use to guide you through the definition of your ICP. This by no means is an exhaustive list of questions but will provide a launching pad for leading those conversations internally. Click here for an easy-to-use template to create and use your ICP.
Five Steps to Creating Your ICP:
Step One: Identify your top 20% of customers.
Look for common attributes that these top customers share. Factor in both qualitative and quantitative data. You can work with analytics software to analyze even larger datasets that could reveal even greater insights about what constitutes a high value customer.
Step Two: Engage key stakeholders in the process.
Begin working closely together with your marketing counterparts in a discussion about your customers. Engage all the key stakeholders in your business: sales, finance, customer success, customer support, services, and other cross-functional areas in your company that need to be aligned with the definition of your company’s ideal customer.
Step Three: Create a One Page ICP.
Once you have identified the characteristics, create a succinct description of your ideal customer. Consider using our template. Describe why you are serving this Ideal Customer: how does it fit fulfilling your company’s purpose, vision, and strategy?
Step Four: Integrate into all activities.
Communicate your ICP throughout the company, so everybody is working with the same definition of your ideal customer. Use your ICP to then lay out segmented Go-To-Market plans, territories, team structures, your key value proposition and messaging, your marketing campaigns and sales touchpoint strategies. Train your SDR’s on both ICP and Buying Personas; Integrate your ICP into new keywords, messaging, campaigns, and sales account strategies. Score your leads and opportunities with regular conversations comparing opportunities with your ICP.
Step Five: Monitor and Adapt.
Your ICP needs to be reflective of both what’s constant and what’s changing. Keep a running tab at all times about the criteria you deem most valuable as your most profitable customer. Always keeping your eye on environmental, market, and customer changes that could uncover new opportunities for your company. For instance, if there is a new regulatory or compliance requirement for your customers, consider how that affects the current ICP. As always, keep tracking your profitability metrics to make sure you are focusing on the right customers.
Your ICP will become the cornerstone of almost everything you do to attract, win, retain and grow your customer. By taking the time to determine who your most profitable and valuable customer is and by building alignment internally across your organization, you will not only make a difference in your company’s ability to achieve its goals; you will also be delivering the maximum value to your customers. By making a difference in the lives of the customers you serve—you and your customer both win.