A brand-new business only has one concern when it comes to customers: getting more of them. But as soon as it reaches a certain size, you need to start worrying about getting the right kind of customer. What kind of person — or business — brings in the most revenue? Who is a natural fit for the product or service you offer? When you build an ideal customer profile, you’ll answer these questions and more, creating more revenue with less work.
Here’s how it works.
What is an ideal customer profile?
A customer profile is made up of characteristics that allow you to group up similar customers. These characteristics can include demographic information, the size of the company they work for, the average amount they spend on your product or service, and where they’re from. Companies will build multiple profiles to represent different customers and tailor their marketing strategy for each one.
An ideal customer profile (or ICP) represents the customers that bring in the most revenue for your business. By identifying your ICP, you can put more resources into selling and marketing to people and businesses that fit the profile — and reduce resources spent on less profitable profiles.
How to build an ideal customer profile
Step 1: Gather up your customer data
Whether you’re using a dedicated customer relationship management platform or a spreadsheet, building your ICP starts with getting all your customer data in one place. You’ll want to get as much detail as possible, meaning you might have to gather this data from multiple sources. You won’t need any contact information — beyond an address — but you’ll need as much data as you can get.
Step 2: Use the right characteristics to identify customer types
Once you have your customer data, it’s time to break it down. While the exact characteristics might vary depending on your business, these examples are usually pretty useful across all industries:
- How much they’ll pay: Note that this isn’t how much they’re paying for your product or service right now, but how much they can pay. For a B2B — business-to-business — company, that’ll be the size of the company the customer works at. For a B2C — business-to-consumer — company, that’ll be that customer’s budget or income level.
- Industry/Job: For B2B companies, industry will be one of the most important characteristics of your ICP. Is your product particularly tailored to mechanics? Retailers? White-collar professionals? For B2C companies, your customer’s job title can be an important part of their profile, too.
- Geography: Is your product more popular in specific neighborhoods? Maybe specific countries are more likely to purchase your online service? The scale of the geography involved will depend on your business’s reach. A local fast food joint might only care about nearby neighborhoods, while a multinational chemical corporation will analyze entire countries.
- Demographics: Some services are more popular with women. Some products are only accessible to people with a certain level of income. Ethnicity, education level, and even home ownership can be part of your customer’s demographics.
Step 3: Group similar customers together
Now that you’ve found the right metrics to identify your ICP, you need to use them to group up your customers. Find the similarities and the differences between them, and pretty quickly you’ll see these groups start to emerge. Maybe mid-size companies in the manufacturing industry are particularly likely to buy your product. Software engineers from Seattle who make six figures might be a big part of your customer base.
Step 4: Identify and name each profile
After you’ve created these groups, you’ll need to identify the ones that bring in more revenue. These groups will represent your ICP. You’ll likely have more than one — and that’s a good thing! You’ll want to name these groups with something that’s easy to remember and communicates some of their characteristics.
How to use location intelligence with your ICP
Location intelligence is what you get when you take data and represent it on a map. Most of the characteristics that make up your ICP — from demographics to income levels — can be used for this. With location intelligence, you’ll enrich your ICP, allowing you to enhance your marketing campaigns, optimize logistics, and more. Using tools like Smappen is the easiest way to combine location intelligence with your ICP and get even more data to work with. Here’s how that works.
Combine your ICP with demographic data
When you first build your ICP, you’re usually going to use internal data pulled from existing customers. But whether you don’t have enough internal data to build from or you just want to make your ICP more granular, demographic data is a great asset. Then, if you use a tool like Smappen to see how that data correlates with a specific location — like a new franchise — you can make your ICP that much more relevant.
Find your ICP in your trade area
One of the most useful ways you can combine location intelligence with your ICP is in market research. That’s because once you’ve identified your ICP, it will become an incredibly valuable tool for determining your total addressable market in a specific area. With the right tool, you can isolate potential customers that match your ICP to see how viable a pre-defined trade area is.
Compare your ICP with the competition
Combining your ICP with location intelligence isn’t just great for improving your business; it’s a great way to scope out the competition, too. If you can get a good idea of what their ICP is like — often it’ll be a bit different from yours — you can use location intelligence to scope out their territories and see how big their market is.
Here is one way to do this with Smappen:
- Spot your competitors with the Points of Interest database
- Create areas for your main competitors
- Get demographic data about their catchment areas
Building an ideal customer profile is essential for a growing business. It’ll help you hone in on your perfect customer, meaning you’ll spend more of your resources acquiring customers that bring in more revenue and less on customers that might only buy from you once or twice. By adding in a location intelligence tool like Smappen, you can then combine that customer profile with demographic information on a map to support marketing initiatives, logistics, and more.