4 Mistakes Startups Make When Creating an Ideal Customer Profile
Small to medium size businesses (SMBs) and startups reach out to us every single day to discuss their sales programs, their challenges, and why they are considering Leadium to be their outbound sales partner.
We listen, dig into their process, understand the gaps, and then inevitably, always ask the same question: what is your ideal customer profile (ICP)?
Many times, our clients and prospects are crystal clear about their target. They can tell us industry, geographic area, the size of business revenue, job titles and more that they would like to reach out to. Their data comes from analyzing their best customers or by looking at competitor customers to know exactly who will respond to their product or service.
On the flip side, we also hear a lot of responses that are undecided, too broad, generic, and un-researched. For companies just starting out, we understand it can be difficult to nail down the right ICP without any existing customer data. However, defining your ICP is such an integral part of your marketing and sales activities. Some benefits include:
- Your marketing team will get better leads.
- Your sales team will have higher conversion rates.
- Customers will be more loyal.
- Your product or service will be a better fit for your market.
- Executives will know where to take the company.
But be warned: there are many mistakes you can also make when creating your ICP. Mistakes that will lead your growth teams down dead-end roads and lost revenue. We share 4 big mistakes startups make here.
What is an Ideal Customer Profile?
Just to make sure we are all on the same page, it never hurts to have a quick refresher on what is an Ideal Customer Profile. There are a ton of definitions out there, but let’s use this one from Hubspot:
An ideal customer profile (ICP), commonly referred to as an ideal buyer profile, defines the perfect customer for what your organization solves for. This is a fictitious company that has all of the qualities that would make them the best fit for the solutions you provide.
ICPs are all about the account you are targeting at large and don’t go too deep into the buyer persona or individuals that you will be selling to. It can be different for every company but common characteristics in an ICP include:
- Company Size or Revenue
- Technology in use
- Product or Service Limitations
Now that we are refreshed on what an ICP is, here are some of the top mistakes we see startups and SMBs making when defining their ideal customer.
Mistake #1: Making your profile too broad
Steve Jobs once said, “Quality is more important than quantity. One home run is much better than two doubles.” Just like so many other life analogies, your ICP should align with the mantra, “Quality over quantity.” I mean if Steve Jobs says it, you should probably listen.
It’s time to focus. Depending on your business, the amount and types of segments within your ICP can vary widely. But within each of the segments, it’s best to get as specific as possible on the description to accurately identify and source the highest quality leads.
For example, in the case of one of our customers, they initially said their ICP included any company going through digital transformation within the United States. Well, ok, but in all honesty, that could literally be any organization right now. So we had to do some work to help them peel back the layers and get more focused.
How much revenue should the company have knowing the price of your product? What kind of problem does your product solve and for which specific person? What is their job title and department? Does your product work in any industry? What if it is highly regulated? What products should already be in their tech stack to make them a good qualified prospect for you?
And that’s how we narrowed in and focused their ICP further to uncover quality prospects.
Mistake #2: Relying solely on firmographic data
In a recent article on database enrichment, we outlined the many different data points you can research and collect on your ideal prospects. All the data points (company size, geographic area, industry, etc.) can be collectively classified as firmographic data. This is really good information to use when building your ICP.
However, for many businesses (not all), firmographic data may not be enough. There may be other specific requirements that you need to address within your ICP profile depending on your product or service. This can be especially true in SaaS or similar tech markets for example.
Just like the example above, perhaps your product can only integrate with a particular list of other products or are there integrations that are easier to sell into than others? Therefore, you will need to include a technographic attribute to your ICP and specify these details.
Mistake #3: Not outlining your no-go customer profile
So far we have driven the point home (we hope) that being focused and specific on who you want to sell to is valuable. They will be the most responsive to what you have to offer and in turn, become successful, satisfied customers.
But have you considered making a list of prospects to exclude?
We’re talking about those folks that come to your site a bunch, look around, and may even fill out an inbound form or two. It’s tempting - this looks like a super promising prospect! They are interested in what you have to offer and any lead is a good lead, right?
You will waste a TON of time trying to convert them into a customer. And there are so many reasons. Perhaps they are completely out of the company size range that your product or service serves or maybe they are in the wrong department and you know your product or service won’t work for their use case.
Make sure you have a quick list and absolute “no-go’s” as well. Thank them for their message, like them on social, but leave it at that.
Mistake #4: Not reaching out beyond your department
Sales and marketing teams can not work inside a bubble. You know this, right? It leads to assumptions and personal bias about who you think is the ideal customer. If there is data, you should collect it.
What do we mean by data? If you do have a few customers on board, you should definitely connect with customer-facing teams to get their insights. We’re talking about the customer success team, social engagement or marketing teams, account managers, and really anyone who has frequent interaction with current customers.
Get their insights (collect data) and mine it for valuable information that you may have been missing. Also, work with marketing or customer success to build send out a few surveys or requests for interviews to get data directly from your customers.
This also helps to create alignment among all teams working towards a common goal and understanding of who your best and most ideal customers are.
Learn from your mistakes
If you’ve made a few of these mistakes - don’t beat yourself up. Perhaps you are only a couple weeks into business or maybe you’re completely redefining and pivoting your product or service. No matter the case, creating an ICP can be a great exercise for anyone invested in the growth of your organization and align the whole team on who are the very best prospects for your business. You’ll be able to spot them in a snap.
There are many mistakes you can also make when creating your ICP. Mistakes that will lead your growth teams down dead-end roads and lost revenue. We share 4 big mistakes startups make here.