What does your ideal customer look like? Most businesses have Ideal Customer Profiles (ICP) in some form or another, but they’re not always 100%. If there’s a fine layer of dust forming over your ICP, not to worry. We’ll help you update or improve what you already have.
Reasons your ICP may not be working
By now, having an ICP is a standard practice for most digital businesses. It’s usually defined early on in the company’s growth period. But what you started out with may not be the same target customer profile you need now.
If your product or customers changed over time, they are likely to be out of line and out of step with the ICP you originally created. Think of it this way - If you had a business that started off selling soup, you may have seen lagging sales in the summer that led you to also offer ice cream. If the profile was built with only the soup customers in mind, you may be leaving out a lot of information unique to your ice cream customers. The profile should change as your offerings change.
Perhaps your target customer profile was poorly built to begin with. It was based on assumptions instead of data, or there wasn’t a lot of data at the beginning to collect and form conclusions. Now that you’re more well-established, you may be able to see things and make connections where you couldn’t before. In that case, it’s time for a refresh.
When it comes to refreshing the ideal customer profile, CS should take the lead. They’re closer to the customer and have access to the necessary data. However, other teams should support when possible. Once you’ve assembled your team, it’s time to redefine your ideal customer profile using the following framework.
Framework for redefining your ICP
Identify your healthy customers
Start by identifying a cohort of healthy customers using whatever criteria makes the most sense to your business. Think about anything that would identify your top customers by score, ranking, or activity. A few examples could include:
- Health score
- Renewal numbers
- Advocacy (testimonials, referrals, case studies)
- Nominated by CSMs
Identify your churned customers
Next, identify a cohort of churned customers. Ideally, these customers should be ones who have left in the last 6 months. Prioritize the people you thought perfectly fit your ICP and were surprised by their departure.
Review your ICP
Once you have your healthy and churned customers identified, review your ICP. Determine which attributes make the most sense for your company to review. This may include usage attributes, including:
- Number of users
- Daily logins
- Monthly active users
- Usage of X feature within the platform
This could also include customer profile attributes:
- Company size
- Tech stack
Compare the two cohorts and try to identify patterns. What activities seem to have made the most impact? For example, did one cohort receive more face time with a CMS versus another? Was one cohort using X feature, while the other didn’t? Was there a difference in the level of training that the healthy versus churn group received?
It may also be helpful to think about the experiences you’ve had as a customer where you felt a strong relationship. Any of the attributes that come to mind, if you see them reflected in the data you’re collecting about healthy customers, could be a sign that this contributed to the health of that group.
Consider differences in customer profiles in each group. Are customers of a specific size range doing better than others? Is there an industry that’s standing out to you? Or is there a difference in use case between groups? What did the feedback look like in each group?
What you need to get down to when analyzing using this framework is what healthy versus churned/unhealthy customers are doing on the platform. How often are they using the tool, what are they doing or not doing, and what value are they getting out of the tool? Try to identify the material differences between the two groups wherever possible.
Here’s an example that you may see between healthy and unhealthy customers. You look at your healthy customers group and see that they have used a feature of yours in-depth. Using an example from Catalyst, maybe these are the playbooks. The healthy customers are diving in, using multiple active playbooks, and have them set up in such a way that they are triggering tasks and emails. The unhealthy group, on the other hand, is using the feature at its bare minimum potential. For Catalyst, this could mean seeing that unhealthy customers are only using the playbooks as a note-taking tool. The only way you’ll be able to make this connection is by dividing customers into these groups and collecting and analyzing their usage data.
What to do with the information
The information you collect on healthy vs. churned customers can be invaluable for the CS team. You can use it to adjust your onboarding strategy and support resources. But, let’s take this one step further. You can also use this data to assist other teams.
It’s important for sales team members to gain a deeper understanding of which customers are most likely to succeed with your product. It will better tailor the discussions they have with prospective customers, and they can see from a mile away which goals will align with the traits shared by healthy customers. You can also help sales stay away from those most likely to churn by opting them out preemptively.
Marketing will be able to adjust their own customer personas to match your updated ICP. The more information you provide them, the more they’ll be able to course-correct their marketing campaigns accordingly. Your ideal customer profile should line up with your buyer persona, and armed with the information you now have, you're setting marketing up for success.
Your product team can take what you find and use it to inform their own product roadmap, whether it’s by fixing existing features or building new ones. You may uncover something that’s not as customer-friendly as the product team previously thought.
In conclusion, don’t skip the ICP refresh
Having an updated, comprehensive ideal customer profile can mean the difference between churn and healthy customers. Take the time needed to divide your customers into categories, identify the differences between them, and share that information with other teams that will likewise benefit. A little bit of effort can go a long way.